On Tuesday, June 16th, the Small Business Administration (SBA) released an updated Paycheck Protection Program (PPP) Loan Forgiveness Application. The document provides updated guidance as well as some specific instructions to further inform borrowers on how to apply for forgiveness of their PPP loans. Key takeaways include:
- The ability to choose either an 8-week or 24-week forgiveness “covered period.”
- For borrowers using the 24-week forgiveness covered period, the maximum amount of compensation per employee that can be included for forgiveness is $46,154.00 USD.
- Under the 24-week covered period, self-employed individuals, general partners, and owner-employees, have their maximum eligible cash compensation capped at 2.5 months of 2019 compensation or $20,833.00 USD, whichever is lower.
- Health insurance contributions made on behalf of self-employed individuals, general partners, or S corporation owner-employees are not eligible for forgiveness.
In addition, the SBA released an EZ Forgiveness Application which can be used in one of three instances:
- If the borrower did not reduce any individual employee’s pay by more than 25% or reduce their average FTE.
- If the borrower did not reduce any individual employee’s pay by more than 25% and they are using the new “unable to operate at the same level of business activity” FTE safe harbor created in the PPP Flexibility Act.
- If the borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application.
These are just a few of the items found in the updated Applications. For a more comprehensive summary or to learn how they impact you, reach out to our Corporate Finance Consulting team today.