Today, June 17, 2020, the U.S. Small Business Administration (SBA), in consultation with the Department of the Treasury, posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application implementing the PPP Flexibility Act of 2020, which was signed into law by President Trump on June 5, 2020.
In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application. Form 3508EZ can be used by borrowers who:
- Are self-employed and have no employees; OR
- Did not reduce the salary or wages of any employee by more than 25%, and did not reduce the number or average paid hours of their employees; OR
- Did not reduce the salary or wages of any employee by more than 25%, and experienced reductions in business activity as a result of health directives related to COVID-19.
For the 25% compensation reduction in 2 and 3 above, only employees who earned less than an annualized rate of $100,000 for each pay period in 2019 are considered.
The EZ application requires fewer calculations and less documentation for eligible borrowers. Details regarding the applicability of these provisions are available in the instructions to the new EZ application form.
Both applications give borrowers the option of using the original 8-week covered period (if their loan proceeds were received before June 5, 2020) or an extended 24-week covered period. These changes will result in a more efficient process and make it easier for businesses to realize full forgiveness of their PPP loan.
As we have been doing with all coronavirus legislation and SBA guidance during these past few months, we will be sure to update you with any additional insight as soon as possible. Continue to check back here for the most up to date tax information and changes in response to coronavirus. If you have questions about this or related topics contact an MCB Advisor at 703-218-3600 or click here.
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