The recent enactment of the Paycheck Protection Program Flexibility Act enhanced borrowers’ ability to have their Paycheck Protection Program (PPP) loans forgiven. On June 16th the SBA and Treasury Department provided a revised forgiveness application and related instructions which incorporated the provisions of the Flexibility Act.
In addition to the revised forgiveness application, a new “EZ” version has been unveiled. Borrowers eligible to file the EZ with their lender can request forgiveness with less effort. Loan size is NOT a factor in eligibility but the borrower must generally meet one of the following:
-The borrower is self-employed and had no employees at the time of application.
-No employee’s salary or hourly wage was reduced by more than 25% AND the number of employees or their average paid hours through the end of the covered period did not decrease (subject to safe-harbors).
-No employee’s salary or hourly wage was reduced by more than 25% AND the borrower was unable to operate at the same level of business activity as before February 15, 2020 due to compliance with various federal requirements and guidance related to Covid-19.
Finally, the SBA issued a revised interim final rule for determining payroll costs and owner compensation in calculating PPP loan forgiveness under the new 24-week covered period.
We expect further guidance and clarifications to the PPP program. As your initial 8-week covered period comes to an end, start evaluating whether you want to select this as your covered period instead of the 24-week timeframe. And if you have not yet applied, $130 billion is still available; the submission due date is June 30th.
Source: Mann Weitz & Associates