The SBA has issued a revised PPP Loan Forgiveness Application incorporating the changes enacted by the Paycheck Protection Program Flexibility Act of 2020. In addition, the SBA has also issued an “EZ” version of the application form aimed at simplifying the application process for certain borrowers. Borrowers eligible to use the EZ form include:
- Self-employed individuals, independent contractors or sole proprietors with no employees; or
- Borrowers who did not reduce salary/wages by more than 25% and did not reduce headcount during the covered period; or
- Borrowers who did not reduce salary/wages by more than 25% but were unable to operate during the covered period at the same level of business activity as before the pandemic due to compliance with health organization requirements.
The application also provides further clarity regarding the maximum compensation per employee allowable for forgiveness if a borrower elects the 24 week covered period. The original rule was compensation eligible for forgiveness for any employee could not exceed an annual salary of $100,000, as prorated for the covered forgiveness period. Under the original 8 week covered period this equated to $15,385 per employee. The new application confirms this will be adjusted to correspond with new 24 week covered period, increasing the maximum to $46,154 per employee. For amounts paid to owners (owner-employees, self-employed individuals, or general partners) the maximum is increased from a 2 month equivalent of $15,385 to a 2.5 month equivalent of $20,833.
The new applications and other guidance issued by the SBA can be found here.
by Matt Touma, CPA