SBA Releases New PPP Guidance and Application Forms
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The Small Business Administration released a revised version of Form 3508 Paycheck Protection Program (PPP) Loan Forgiveness Application on June 16, 2020. The revised application reflects the following changes enacted by the PPP Flexibility Act of 2020:
- 60% payroll cost requirement (reduced from 75%)
- Covered period of either 8 or 24 weeks, not extending beyond December 31, 2020. Only borrowers who received a PPP loan before June 5, 2020 are eligible to use the 8-week covered period.
- Owner compensation for owner-employees, self-employed individuals, and general partners includes employer health insurance and employer retirement plan contributions and is capped at the lower of the following:
- 8-week covered period
- 8-week equivalent of 2019 compensation
24-week covered period
- 2.5-month equivalent of 2019 compensation
- 8-week covered period
- Maximum compensation (gross salary/wages, gross tips, gross commissions, paid leave, & allowances for dismissal or separation) is $15,385 for the 8-week covered period or $46,154 for the 24-week covered period per employee.
- The inclusion of the additional FTE Reduction safe harbor if a borrower was unable to operate between February 15, 2020 and the end of their covered period at the same level of business activity before February 15, 2020 due to health regulations from COVID—19.
- The safe harbor date for restoring payroll rate and full-time equivalents has been adjusted to be the earlier of the forgiveness application date or December 31, 2020.
The SBA has also released Form 3508EZ which is a simplified application if the borrower meets one of the following criteria:
- The borrower is a self-employed individual, independent contractor, or sole proprietor with no employees.
- The borrower did not reduce the salary or wage rates of their employees by more than 25 percent compared to 1st quarter 2020 and did not reduce the number of employees or average paid hours of their employees between January 1, 2020 and the end of the covered period.
- The borrower experienced reductions in business activity during the covered period compared to February 15, 2020 as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25 percent compared to 1st quarter 2020.
Form 3508EZ eliminates Schedule A and the Schedule A Worksheet and is a simplified forgiveness application for qualified borrowers.
Below are the links to the revised applications:
Click here for Form 3508 PPP Loan Forgiveness Application
Click here for Form 3508 PPP Loan Forgiveness Application Instructions
Click here for Form 3508EZ PPP EZ Loan Forgiveness Application
Click here for Form 3508EZ PPP EZ Loan Forgiveness Application Instructions
Our team will continue to review the updated information and send updates as additional guidance becomes available.