New PPP Loan Forgiveness Applications Released

On Tuesday, June 16th Small Business Association released two new versions of the PPP Loan Forgiveness application to correspond with changes made after the Flexibility Act was passed. One version is similar to the original application and extending the forgiveness period allowable (from 8 to 24 months) and includes sections to report full-time equivalent (FTE) counts to determine a reduction in forgiveness for not having restored the FTE or having reduced employee wages.

Borrowers may be eligible to fill out the new EZ application and bypass FTE reporting on the application if they can check one of the following three boxes:

  • The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form (SBA Form 2483).
  • The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000); AND The Borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. Also ignore reductions in an employee’s hours that the Borrower offered to restore and the employee refused. See 85 FR 33004, 33007 (June 1, 2020) for more details.
  • The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000); AND The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

Keep in mind, although the EZ form does not require any FTE or salary reduction information, employers should still maintain documentation for 6 years. At the bottom of instruction document is a section called “Documents that Each Borrower Must Maintain but is Not Required to Submit.” This section gives PPP loan recipients important information to have ready to supply to the bank or SBA if a request is made.

We will continue to monitor and keep you updated as additional information and guidance is released. If you have any questions or concerns, please contact us at 517.323.7500 or email: maner@manercpa.com.