On June 16, 2020, the Small Business Administration (“SBA”) and the U.S. Treasury Department released revised forms of loan forgiveness application and the accompanying instructions to reflect amendments to the Paycheck Protection Program (the “PPP”) under the Paycheck Protection Program Flexibility Act of 2020 (the “PPPFA”). The updated documents include a revised standard forgiveness application and a new short form “EZ” forgiveness application. For eligible borrowers, the EZ forgiveness application simplifies the loan forgiveness process by reducing calculations and documentations required.
The EZ forgiveness application may only be used by borrowers that meet any of the following requirements:
· The Borrower is self-employed, an independent contractor, or sole proprietorship and has no employees at the time of the PPP loan application and did not include any employee salaries in the calculation of the PPP loan amount;
· Did not reduce the annual salaries or hourly wages of their employees by more than 25% during the Covered Period or Alternative Payroll Covered Period, compared to the period between January 1, 2020, and March 31, 2020, and did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period; or
· Experienced reductions in business activity as a result of health directives related to COVID-19 as before February 15, 2020, and did not reduce the annual salaries or hourly wages of their employees by more than 25% during the Covered Period or Alternative Payroll Covered Period, compared to the period between January 1, 2020, and March 31, 2020.
“Covered Period” means either (i) the period beginning on the date the PPP Loan is first disbursed by the lender and ending on the earlier of (x) 24-weeks thereafter or (y) December 31, 2020, or (ii) if the borrower received a loan prior to June 5, 2020, the borrower may elect to use an 8-week covered period.
“Alternative Payroll Covered Period” means an alternative period for borrowers with a biweekly (or more frequent) payroll schedule to calculate eligible payroll costs using (i) the 24-week period or (ii) for loans received before June 5, 2020, at the election of the borrower, the 8-week period, that begins on the first day of the first pay period following the date the borrower received the loan proceeds from the lender.
The forms can be accessed here and the accompanying instructions can be accessed here.