SBA Releases New PPP Applications

Earlier this week the SBA released a few items of guidance regarding the recently enacted Flexibility Act and new forgiveness applications.  

As a reminder, the Flexibility Act extended the PPP forgiveness period from 8-weeks to 24-weeks. Borrowers still have the option of using an 8-week forgiveness period. It also reduced the amount required to be spent on payroll to obtain forgiveness from 75% to 60%. If opting for the 24-week period, business owners have until December 31 to restore employees and wages.

The new guidance released this week covers how to calculate self-employed owner’s compensation and employee compensation under the new rules.

  • Sole Proprietors and Partners: 8-Week Covered Period = 8 weeks’ worth (8/52) of 2019 net profit with a max of $15,385. 24-Week Covered Period = 2.5 months’ worth (2.5/12) of 2019 net profit with a max of $20,833.
  • Employee Compensation: Non-owner employee salaries, wages and tips paid during the covered period, capped at $100,000 annualized. For the 8-Week Covered Period the max is $15,385 per individual ($100,000 * 8 / 52). For the 24-Week Covered Period the max is $46,154 per individual ($100,000 * 24 / 52).

The guidance did not directly identify Employee Owners (S-corps and C-Corps). However, following the logic above and the reasoning provided by the SBA, it is presumed that the $20,833 cap will apply to Employee Owners as well.

The SBA also released two new PPP loan forgiveness applications. They have revised the full-loan application and created an EZ version.

The revised full-loan application reduces the length to 5 pages and provides some simplifications to the calculations.

The EZ version can be used by those that:

  • Are self-employed and have no employees, or
  • Did not reduce their employees’ wages by more than 25% and did not reduce the number of employees or their hours worked, or
  • Experienced reductions in business activity because of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.

The EZ application contains fewer calculations and requires less supporting documentation.

FULL LOAN APPLICATION

EZ LOAN APPLICATION

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