On June 16th, the SBA issued the REVISED Paycheck Protection Program (PPP) Loan Forgiveness Application and a new EZ Forgiveness Application. Generally, a borrower can apply to have PPP Loan amounts forgiven related to certain payroll and non-payroll costs paid during the “covered” period (generally either 24 weeks, or, if the loan was made before June 5, 2020, an 8-week period can be elected).
The borrower must make certain certifications, some of which are:
- The funds were used for eligible costs (payroll costs to retain employees; business mortgage interest payments; business rent or lease payments; or business utility payments)
- All applicable reductions due to decreases in the number of full-time equivalent employees and salary/hourly wage reductions are included,
- Payroll costs equal at least 60% of the forgiveness amount
- If a 24-week covered period is used, forgiveness does not exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $20,833 per individual, ensuring full forgiveness for self-employed and independent contractors who took the maximum loan based on 2.5 times their 2019 monthly income
- If an 8-week covered period is elected (only available for loans made before June 5, 2020), forgiveness does not exceed 8 weeks’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $15,385 per individual
Here are the maximum salary amounts that can be forgiven for the 8-week and 24-week covered periods.
8-week covered period 24-week covered period
Owner-employee $15,385 $20,833
Non-owner employee $15,385 $46,154
The new 3-page EZ Forgiveness Application requires less documentation and calculations. It is generally for the following borrowers:
- Self-employed borrowers with no employees; OR
- Borrowers that did not reduce employees’ salaries by more than 25% AND did not reduce the number or hours of their employees; OR
- Borrowers that experienced reductions in their business activity as a result of health directives related to COVID-19, AND did not reduce employees’ salaries by more than 25%.
Click here for the SBA PPP Full Forgiveness Application PDF.
Click here for the SBA PPP EZ Forgiveness Application PDF
Reach out to our team at MWB for any questions you may have on anything above or ANY impact you are seeing to your business during this time.