PPP Loan Forgiveness UpdateMay 18, 2020
Late Friday, May 15, the U.S. Small Business Administration and Department of the Treasury unveiled the much-anticipated application for loan forgiveness under the Paycheck Protection Program (PPP). While the application does provide instructions, additional guidance and regulations are expected soon from SBA to help with the Loan Forgiveness Application process for both borrowers and lenders.
The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined
Unfortunately, businesses are still limited by the June 30 deadline to rehire employees as stipulated in the forgiveness portion under the CARES Act, which could be problematic for many small businesses unable or unlikely to reopen by that time.
Please click here to download the application.