On Tuesday, June 16th,  Treasury and the SBA released updated PPP loan forgiveness applications, including an alternative EZ application that is designed to simplify the process for those who meet certain criteria.

Updates to the application incorporate the changes made to the PPP program in the recent PPP Flexibility Act, including updating the covered period from 8 weeks to 24 weeks.  Businesses with PPP loans who received funds before June 5 will still be able to choose an 8-week covered period at their discretion.

The extended 24-week period offers more time to utilize funds and capture qualified expenses; however, businesses that have already maximized their forgiveness in the original 8 week covered period may want to consider filing with the shorter 8 week covered period.

The application also provides additional detail on the exemptions from having your forgiveness reduced due to maintaining fewer FTEs or reductions in payroll by more than 25%. The safe harbor date to avoid those reductions is now measured as the earlier of December 31st, 2020, and the date the application is submitted, meaning that the timing of applications may play an important role in forgiveness.

Who can file the EZ Application?

The new EZ application allows businesses to skip through sections of the original application that calculate any reductions due to payroll changes. However, in order to use the simplified EZ, the borrower must attest to meeting at least one of the following conditions:

  1. Be a self-employed individual, independent contractor, or a sole proprietor with no employees.
  2. The borrower must not have reduced the wages of any employee by more than 25% during the covered period as compared to 1/1/2020 and 3/31/2020 AND the borrower must not have reduced the number of employees or their average paid hours between 1/1/2020 and the end of the covered period.
  3. The borrower must not have reduced the wages of any employee by more than 25% during the covered period as compared to 1/1/2020 and 3/31/2020 AND the borrower was unable to operate during the covered period at the same level of business as before 2/15/2020 due to compliance with requirements established by Health and Human Services, the CDC, or OSHA, related to the maintenance of standards of sanitation, social distancing, or any other safety requirement related to COVID-19.

Note that filers of the EZ application still need to maintain documentation that supports their certification that they qualify under the conditions listed above.

Have questions on which application you can use or whether your business should be using the 8-week or 24-week covered period? PBMares is here to help. Feel free to contact us anytime to speak with one of our advisors.