We woke up to several new forms from the SBA regarding the PPP forgiveness application on Wednesday. We’re breaking down a few high-level updates below as PPP borrowers begin to navigate the forgiveness process, including when to apply and which application they should use.
When to Apply
One of the most frequent questions we’ve been asked lately is whether borrowers have to wait until the end of their covered period to apply for loan forgiveness, especially now that a new 24 week covered period was introduced in the Paycheck Protection Program Flexibility Act (PPPFA).
While today’s updates still haven’t addressed these questions directly, in testimony given at a Senate hearing last week, Treasury Secretary Mnuchin stated that borrowers can apply for forgiveness whenever they have used all of their loan funds (i.e., they do not have to wait until the end of the 24 weeks).
Although we’re still waiting on this information to be included in an Interim Final Rule or addressed in new FAQs, we are reasonably confident that the SBA and Department of Treasury will not turn back on this sworn testimony. Borrowers should reach out to their lenders to discuss the process of applying for forgiveness.
New Shortened “EZ” Application
The SBA issued a new “EZ” forgiveness application that simplifies the application process and requires less documentation and calculations. This EZ application can only be used by borrowers that meet at least one of the requirements listed below:
Revised Standard Application and Instructions:
The revised standard forgiveness application and instructions were updated to be shorter and reflect updates from the PPPFA, including a 24 week covered period option.
One clarification we have been waiting for is whether the new 24 week period would come with updates to the cap on employee and owners’ payroll costs during the covered period. The following updates are applicable regardless of what application form a borrower uses:
While the above includes general information regarding the new forgiveness applications, borrowers should seek individual guidance from their lender as well as tax and legal professionals. Please reach out to our team if you have any specific questions regarding your PPP loan and your particular circumstances.