U.S. Small Business Administration and the Department of the Treasury announced new applications to see PPP loans forgiven.
As information comes in, we want to continue to keep you informed. Below is information complied from the Business Journal that may help as you consider completing the PPP loan application process.
A revised application for Paycheck Protection Program loan forgiveness is now available.
The U.S. Small Business Administration and the Department of the Treasury announced Wednesday two new applications to see PPP loans forgiven. One is a “borrower-friendly” application that accounts for changes made to the program through the Paycheck Protection Program Flexibility Act of 2020. President Donald Trump signed the more flexible terms into law June 5.
The new version of the forgiveness application asks borrowers to show at least 60% of their PPP funds were spent on payroll costs, rather than the original requirement of 75%.
In addition, a separate form, dubbed by the SBA as the “EZ version,” was introduced to streamline the process for certain borrowers. The EZ application can be used by:
• Those who are self-employed and have no employees.
• Those who did not cut back pay for their employees by more than 25% and did not reduce their head count or workers’ hours.
• Those who saw a drop in business activity because of health directives related to Covid-19 and did not cut back employees’ pay by more than 25%.
According to the SBA’s Wednesday announcement, the EZ application asks borrowers to perform fewer calculations and provide less documentation.
For business owners who received their PPP loans before June 5, both forgiveness applications allow the option of calculating forgiveness based on the original eight-week covered period for spending the funds, or the extended 24-week period.
“These changes will result in a more efficient process and make it easier for businesses to realize full forgiveness of their PPP loan,” the announcement states.
The new forms were released amid calls to improve the forgiveness process for companies that participated in the federal government’s primary Covid-19 relief program for small businesses. Last week, for instance, Senate Democrats sent a letter to the SBA and Treasury asking for a number of changes to the forgiveness process.
The letter criticized the original forgiveness application, released May 15, as “tremendously cumbersome and overly complex, especially for very small businesses, sole proprietors and underserved borrowers.”
The new forgiveness forms appear to address at least some of the concerns raised by those lawmakers. In their letter, the legislators requested adjustments to the process, including an “easy-to-use form that requires a simple attestation on fund use and minimal documentation” for borrowers who took out “low-dollar” loans.
They did not set a threshold for “low-dollar.” The EZ form released Wednesday is not based on the size of loans, but it might in practice address the request.
Senators also wanted guidance for lenders that provides safe harbor protection when low-dollar borrowers make certifications in the forgiveness process. In addition, they asked for a suite of online tools and resources to help business owners navigate the forgiveness process and a “well-staffed help line” for PPP borrowers and lenders.
Through Tuesday evening, the stimulus program has served 4.61 million businesses with a net $513.05 billion, according to the SBA. The totals reflect loan cancellations.