Last Friday on May 18th the Small Business Administration (SBA) released the Paycheck Protection Program Loan Forgiveness Application with instructions. This application will be used by borrowers of the PPP loan to determine the amount of the loan that may be forgiven by their bank or lender.
The forgiveness application and the 11 pages of instructions include two important schedules; Schedule A and the worksheet to Schedule A. Below are some measures that were included in the application and instructions to reduce compliance burdens and simplify the process:
- Option 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 preform 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 made a good faith, written offer to rehire workers that were declined
The SBA is expected to issue additional regulations to assist borrowers as they complete their applications and provide lenders with guidance reviewing the forgiveness applications. In addition, some in Congress are proposing changes that would allow forgiveness for expenses beyond the 8-week covered period and eliminate restrictions limiting non-payroll expenses to 25 percent of loan proceeds.
If you have any questions regarding the PPP Loan Forgiveness Applications, please do not hesitate to call our office.