Borrower-Friendly Versions of PPP Loan Forgiveness Applications Available

By David B. McClintock, CPA | June 19, 2020

On the heels of legislation that makes the Small Business Administration loans provided through the Paycheck Protection Program easier to be fully forgiven, updated, borrower-friendly forgiveness applications are now available. Along with the new, shorter form to be submitted through participating businesses’ lenders, the SBA released an EZ version primarily meant for self-employed individuals or businesses not affected drastically by the COVID-19 crisis.

Recent bipartisan legislation made full forgiveness of the loans easier by decreasing the threshold for the amount of the loan spent on salary to at least 60%, and it added the option of extending the period for businesses using their loan from eight weeks to 24 weeks. These changes and others are reflected in the forgiveness applications, and the new EZ form provides even more flexibility for certain business owners. It can be used if a borrower meets one of the following criteria:

  • Self-employed individual, independent contractor or sole proprietor with no employees at the time of the PPP loan application and did not include employee salaries in computation of average monthly payroll in borrower application
  • Did not reduce annual salary or hourly wages of any employee during the covered period by more than 25% and did not reduce employee hours
  • Did not reduce annual salary or hourly wages of any employee during the covered period by more than 25% and was unable to operate at same level of business activity because of compliance with governmental rules related to COVID-19

See the instructions for the EZ forgiveness application here and the standard application here.

The PPP was enacted through the CARES Act as way to help small businesses pay employees and cover certain non-payroll expenses as governmental shutdowns closed the economy, including the shuttering of postsecondary educational institutions. Forgiveness is based on maintaining or rehiring employees quickly, along with maintaining salary levels.

For small businesses or qualifying postsecondary institutions that have not taken advantage of the program, the deadline for applying for a loan is June 30.

Looking for more information on the program or other matters affecting postsecondary institutions during COVID-19? Reach out to McClintock & Associates here and don’t miss our COVID-19 resource page.