• Brian Senjem

PPP Updates and New Loan Forgiveness Application(s)

The SBA and Treasury have released further guidance and updated loan forgiveness application(s) for the PPP

For the revised Loan Forgiveness Application, click here. For instructions on how to complete the revised application, click here. For the EZ PPP Loan Forgiveness Application, click here. For instructions on how to complete the EZ application, click here  * More details regarding who is eligible to complete this application can be found in #5 below For the full text of the most recent Interim Final Rule, click here. Important updates are as follows: 1) Covered Period  a) If the borrower received their loan BEFORE June 5, 2020, they may elect to use either the 8-week Covered Period (or Alternative Payroll Covered Period if applicable) or the 24-week Covered Period when seeking forgiveness      b) Borrowers who received their loan AFTER June 5 MUST use the 24-week Covered Period (or Alternative Payroll Covered Period) 2) Prorated Wage Cap      a) Annual salaries of $100,000 or greater will be prorated based on the Covered Period (8 weeks vs 24 weeks)      b) 8-week Covered Period: the maximum wages that can be reported for any one individual are $15,385 * For this period, payments to owners (owner-employees, general partners) are capped at $15,385 or the 8-week equivalent of their applicable compensation in 2019, whichever is lower      c) 24-week Covered Period: the maximum wages that can be reported for any one individual are $46,154 * For this period, payment to owners are capped at $20,833 or the 2.5 month equivalent of their applicable compensation in 2019, whichever is lower 3) Qualifying Payroll Costs    a) Health insurance contributions paid by the company for owner-employees of S-corporations ARE NOT eligible      b) Retirement plan contributions made by the company ARE eligible 4) FTE Reduction Safe Harbors      a) To comply with the FTE reduction safe harbor, FTEs must be restored to February 15, 2020 levels by the EARLIER OF a) December 31, 2020 or b) the date the loan forgiveness application is submitted.            - This means that borrowers who are utilizing these safe harbors - and who have met the requirements at the end of the 24-week period -  don't have to wait until December 31 to apply for forgiveness. 5) EZ Loan Application      a) Borrowers can apply for forgiveness using the EZ Loan Forgiveness Application if any one of the following applies:           - 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 when applying           - The Borrower did not reduce annual salary or hourly wages of any employee by more than 25% during the Covered Period (or Alternative Payroll Covered Period) compared to the period between January 1, 2020 and March 31, 2020 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* * You will still be allowed to complete this application, if you were/are unable to hire similarly qualified employees for unfilled positions on or before December 31st or you offered to bring an employee back to work and they refused.           - The Borrower did not reduce annual salary or hourly wages of any employee by more than 25% during the Covered Period (or Alternative Payroll Covered Period) compared to the period between January 1, 2020 and March 31, 2020 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 government regulations issued between March 1, 2020 and December 31, 2020 As further guidance/clarification is provided, we will continue to share this information. We recommend you work closely with your CPA and/or attorney throughout this process.

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