The SBA has released an updated loan forgiveness application and instructions for the Paycheck Protection Program (“PPP”) to account for certain changes made in the Paycheck Protection Program Flexibility Act of 2020 (the “PPP Flexibility Act”) signed into law by President Trump on June 5, 2020. As discussed in a previous client alert, the PPP Flexibility Act, among other things, increased the loan forgiveness covered period from 8 weeks to 24 weeks and decreased the forgivable amount needed to be spent on payroll expenses from 75% to 60%. See our prior client alerts for more general information about the PPP and PPP loan forgiveness.
The SBA also released an EZ loan forgiveness application and instructions, which requires fewer calculations and less documentation than previously required. The EZ loan forgiveness application is available for a PPP borrower who meets any one of the following three criteria:
- Is a self-employed individual, independent contractor or sole proprietor, with no employees;
- Did not reduce salary or wages for any employee by more than 25% during the covered period and did not reduce the number or hours of its employees (ignoring both (i) reductions from an inability to rehire employees if unable to hire similarly qualified employees and (ii) reductions in an employee’s hours that the borrower offered to restore and the employee refused); or
- Did not reduce salary or wages for any employee by more than 25% during the covered period and was unable to operate during the covered period at the same level of business activity as before February 15, 2020, due to complying with certain COVID-19-related work or customer safety requirements or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration (including the maintenance of sanitation standards or social distancing).
