Friday the U.S. Small Business Administration, in consultation with the U.S Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application. The form and instructions inform borrowers how to apply for forgiveness of their PPP loans, consistent with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
The SBA said its form and instructions are designed to reduce compliance burdens and simplify the process for borrowers and include:
- Options for borrowers who use a biweekly or more frequent payroll schedule 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. Form instructions state that non-payroll expenses that are incurred during covered period must be paid by the next billing cycle to be included.
- Step-by-step instructions on how to perform the calculations required by the CARES Act to conform eligibility for loan forgiveness.
- Implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
- 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 by the workers.
Click this link for the Application and Instructions:
https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf
The instructions give needed details throughout such as to how to calculate FTE’s, including safe-harbor details, clarify that rent/lease costs include real and personal property, clarify some of the payroll cost calculations, etc. Page 10 also includes guidance on what records must be provided with the application as support (and retained for 6 years).
Lastly, the SBA will also soon issue regulations and guidance to further assist borrowers as they complete their applications, and to provide lenders with guidance on their responsibilities.
Shannon & Associates will issue another alert once more guidance is forthcoming. As always, please reach out with your questions.
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