In response to the Paycheck Protection Program Flexibility Act (“PPPFA”) the Small Business Administration (“SBA”) released two new PPP Loan forgiveness forms with instructions (linked below):
- Revised PPP Loan Forgiveness Application and instructions
- EZ PPP Loan Forgiveness Application and instructions
SBA also released some interim rules to further implement PPPFA. Significantly, the new EZ Form is much simpler but is only for borrowers who:
- Are self-employed and had no employees at the time of the Application and included no employees in the calculation of the loan amount,
- Did not reduce salary or wages of any employee by more than 25% during the covered period, and did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period, or
- Did not reduce salary or wages of any employee by more than 25% during the covered period, and is able to document an inability to return to the same level of business activity as before February 15, 2020, as a result of Covid-19-related health directives. (This was added by PPPFA)
Consistent with PPFA, borrowers who made loans before June 5 may use either an 8-week or 24-week covered period. The SBA did by rule limit owner-employee compensation and owner replacement income for self-employed persons to the lesser of (1) $20,833 for a 24-week covered period ($15,385 for an 8-week period) or (2) 2.5/12 of 2019 wages or self-employment income (8/52 of 2019 amounts for an 8-week period). The effect is that forgiveness with respect to owner-employees and self-employed persons cannot exceed the amount loaned for these individuals.