On Friday May 15, 2020, the U.S. Small Business Administration (SBA), in consultation with the Department of Treasury, announced the release of the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions to go along with it. Both the form and instructions explain to borrowers how they can apply for forgiveness of their PPP loans, consistent with the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The application form and coinciding instructions outline a number of measures aimed to ease compliance burdens and simplify the process for borrowers. These measures include:
- 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.
In addition, the SBA will soon issue regulations and guidance to provide borrowers with further assistance as they complete their applications, and to provide lenders with guidance on their responsibilities in the process.
Through the CARES Act, Congress established the PPP to provide forgivable loans to small businesses during the coronavirus pandemic. PPP funds are available to small businesses that were in operation on February 15, 2020 with 500 or fewer employees, including not-for-profits, veterans’ organizations, Tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. The principal objective of the PPP loans is to help support these organizations facing economic hardships created by the COVID-19 crisis and assist them in keeping employees on the payroll.
To view the PPP loan forgiveness application and instructions, click here.
As we await further guidance, other resources are available to you including our COVID-19 Resource Center, which contains several insights and think pieces regarding the coronavirus pandemic and the impact on your business.
Still have questions about how the Payment Protection Program applies to your specific business?
Disclaimer: This material has been prepared for informational purposes only, and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional tax planner or financial planner. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.