The U.S. Department of the Treasury and U.S. Small Business Administration released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application. Click here to view the application and instructions.
The application sheds new light on the forgiveness process, raises a few new issues and confirms previous information which, candidly, we hoped would change.
Among those items:
1. The application provides a step by step calculation methodology which will help the borrower identify reductions in the forgiveness amount.
2. Instructions on the application maintain the 75%/25% thresholds for payroll versus nonpayroll expenses in the forgiveness calculation.
3. Flexibility has been provided for the Covered Period of the loan. It now allows for an eight-week period that begins on the first day of the borrower’s first payroll period following their PPP Loan Disbursement Date (Alternative Payroll Covered Period).
4. It appears that the SBA will decide whether the borrower should have refinanced an Economic Impact Disaster Loans (EIDL) and determine how that affects the borrower's forgiveness.
5. The borrower must, once again, affirm and acknowledge that they received a PPP loan with an original principal amount in excess of $2 million.
6. Borrower certifications, like those in the original application process, are included in the Loan Forgiveness Application, along with a clear warning:
The Borrower’s eligibility for loan forgiveness will be evaluated in accordance with the PPP regulations and guidance issued by SBA through the date of this application. SBA may direct a lender to disapprove the Borrower’s loan forgiveness application if SBA determines that the Borrower was ineligible for the PPP loan.
7. The borrower must provide information on individual employee payroll expenses, rather than averages.
8. The application once again affirms that the forgiveness amount will not be affected for instances in which the borrower made a good-faith, written offer to rehire an employee during the Covered Period which was rejected by the employee. It also allows for a reduction in the number of FTEs for any employee who was fired for cause, voluntarily resigned or voluntarily requested a reduction of their hours.
9. The application provides additional safe harbor for any borrower who reduced FTE employee levels between February 15 and April 26, but who restored those employee levels no later than June 30.
Community bankers who continue to have trouble with the SBA's E-Tran and SBA Connect Lender Gateway portals can direct assistance questions to the SBA at 833-572-0502 or firstname.lastname@example.org. Additional guidance and resources are available on Treasury’s PPP webpage