Over the past week, the Department of Treasury and the Small Business Administration (“SBA”) released multiple sets of revisions to the final rule, which the most recent revision can be found here. These revisions explain the application process for Paycheck Protection Program (“PPP”) loan forgiveness after the update from the Paycheck Protection Program Flexibility Act (“PPPFA”). We discussed the changes made by the PPPFA, in our previous post here. Below, borrowers can find the steps necessary to apply for loan forgiveness.
Borrowers must submit a loan forgiveness application with their lender within 10 months after the end of their loan forgiveness covered period. The new full loan forgiveness application can be found here, while the EZ loan forgiveness application can be found here.
Borrowers can use the streamlined EZ form if the borrower
- is self-employed/a sole proprietor,
- did not reduce employee salary or hours of any employee by more than 25% during the covered period and did not reduce the number of employees or average number of hours paid by 25%, or
- did not reduce employee salary or hours of any employee by more than 25% during the covered period, and “the Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance….”
Afterward, the lender will submit the application to the SBA, and the SBA will make a determination on the loan forgiveness. The lender must notify the borrower of the loan forgiveness amount remitted by the SBA (or that the SBA determined that the loan will not be forgiven) and the date your first payment is due. No principal or interest payments will need to be made on the loan before the date on which the SBA remits the loan forgiveness amount to the lender.
As always, the Business Group at Stock and Leader can help business owners navigate their PPP loans or any other matter relating to the CARES Act. Contact a member of Stock and Leader’s COVID-19 Business Response Team for further guidance: