PPP Loan Forgiveness Application Updates: Highlights
The SBA recently released its new version of the forgiveness application following some recent legislative changes to the terms of the program. Below are the highlights. Refer to our step-by-step forgiveness application instructions for more details on completing your application.
24-week Loan Covered Period:
Borrowers who received their loan before June 5, 2020 will have the option to use the new 24-week loan Covered Period or either of the 8-week Covered or Alternative Covered Periods.
Borrowers who received their loans after June 5th will be subject to the 24-week covered period.
The 24-week loan covered period ends on the earlier of 24-weeks from the date of loan disbursement or December 31, 2020.
FTE Safe Harbors and exceptions have been expanded and modified.
Borrowers now have until December 31, 2020 to restore FTE levels to the same as before.
A new Safe Harbor has been added for businesses unable to operate at full capacity due to HHS, CDC, or OSHA regulations or guidelines issued from March 1, 2020 to December 31, 2020 related to Covid safety.
For employees who decline an offer of reemployment or restoration of hours, reference to the employer’s requirement to report said employees to the state unemployment office has been removed from the application and instructions. As we await new SBA guidance, the question still remains whether this requirement has changed or if this is simply just a verbiage change and the requirement still stands.
Maximum cash compensation per individual has changed for borrowers using the 24-week period.
For those using an 8-week period, max cash compensation for any individual employee cannot exceed $15,385 ($100,000 annualized).
For those using a 24-week period, max cash compensation cannot exceed:
For any individual employee, $46,154 ($100,000 annualized);
For any owner-employee, self-employed individual, or general partner, $20,833 (2.5 months-worth of $100,000 annualized salary), not to exceed 2.5 months-worth of 2019 compensation.
The 75/25 rule has been modified to 60/40: 60% of the forgiveness amount must have been used for eligible payroll expenses or the loan won’t be forgiven.
Some borrowers may be eligible to utilize a new “EZ” version of the application form on the SBA’s website if they can meet certain requirements.