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Thursday, 25 June 2020 18:00

PPP News: Loan Application Deadline is June 30, New Forgiveness Documents, Other Updates

Index

The PPPFA amended several key provisions of the Paycheck Protection Program (PPP), but one item that did not change is the application deadline. This means all PPP applications are due by June 30. 

Applications must receive a Small Business Administration (SBA) loan number by June 30, and any interested applicants should work with their lender prior to this date to ensure submission of the application. Details on the terms of the PPP loans may be found in our prior client alerts. 

 

New Forgiveness Applications

 

On June 16, the SBA released revised forms of the loan forgiveness application and corresponding instructions to reflect the PPPFA amendments. The updated documents include a revised standard forgiveness application (Form 3508), as well as corresponding instructions, and a new short form “EZ” forgiveness application (Form 3508EZ), as well as corresponding instructions, which can only be used if certain conditions are satisfied. 

 

The revised standard forgiveness application includes calculations related to reductions of salary or full-time employees by borrowers and the revised application instructions provide details about these calculations.

 

As expected, the key updates revolve around the calculation of the covered periods, the full time equivalent and salary/wage reduction measurement periods and the 60/40 thresholds for payroll and non-payroll expenses. A detailed breakdown of the changes can be found in our revised FAQs.
 
The EZ version of the forgiveness application, which is only three pages, may only be used by borrowers who do not have employees; who did not reduce salaries or hourly wages by more than 25% during the covered period and did not reduce employees between January 1 and the end of the covered period; or who did not reduce salaries or hourly wages by more than 25% during the covered period and who were unable to operate during the covered period at the same level of business activity as before Feb. 15 due to compliance with requirements established or guidance issued between March 1 and Dec. 31 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.

 

Each of these conditions are explained further in the instructions for the EZ form. The EZ forgiveness application is intended to simplify the forgiveness process for borrowers who have maintained their employees and salaries/wages during 2020.  

 

Based on the revised applications and instructions, borrowers may apply for loan forgiveness as soon as the covered period expires (whether the borrower uses the 24-week covered period or elects to use an eight-week covered period) and their lender is able to accept forgiveness applications.  Borrowers may not apply before the end of the applicable covered period.  

 

Borrowers using either forgiveness application form will be required to disclose the number of employees at the time of the forgiveness application.  


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