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SBA and US Treasury Release PPP Loan Forgiveness Application

Tim O’Neill

May 19, 2020

General

Late Friday, May 15th, the Small Business Administration (SBA) and Department of the Treasury jointly released the Paycheck Protection Program (PPP) Loan Forgiveness Application and instructions for the application. While the SBA does not currently have regulations and guidance for lenders, additional information will be released in the weeks to come.

The SBA and Treasury have attempted to simplify the compliance burden by adding the following:

  • Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles;
  • Flexibility to include eligible payroll and non-payroll expenses paid, or incurred during the eight-week period after receiving their PPP loan;
  • Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness;
  • Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30; and
  • Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.

Contents of the Application

The four-page application includes a supplemental schedule (Schedule A) and detailed worksheet to help borrowers accurately calculate the forgivable amount of payroll costs, adjustments for full-time equivalency (FTE), and salary/hourly wage reductions.

Also included in the instructions, is a supplemental guide of documents that each borrower should maintain. While not required to submit with the loan forgiveness application, borrowers are instructed to keep all records related to employee compensation, job offers and refusals, firings for cause, and a list of other payroll-related items for a term of six years after the forgiveness (or full repayment) of the loan. The borrower must permit authorized representatives from the SBA access to these files upon request.

Borrower Demographic – Optional Information

Lastly, the borrower may, at their discretion, submit a PPP Borrower Demographic Information Form (included with the application and instructions) to provide Veteran, gender, race, and ethnicity data to the SBA for reporting purposes only, as noted on the form. In bold, the SBA states “disclosure is voluntary and will have no bearing on the loan forgiveness decision.”

Access the full application and instructions issued by the SBA here.

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