The Small Business Administration (SBA) and the 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 (CARES) Act. The SBA will soon issue regulations and guidance to assist borrowers as they complete their applications, according to a news release from the Department of the Treasury.
The application and instructions will help small businesses seek forgiveness at the conclusion of the eight-week coverage period, which begins with the disbursement of their loans.
The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, according to the Department of the Treasury. The application includes the options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with the borrowers’ regular payroll cycles and the flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan. The form also includes step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness and the 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. The application includes a borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
Under the PPP, small businesses--companies with 500 employees or fewer--can apply for partially forgivable loans that can cover operating expenses. Borrowers can apply for loans up to 2.5 times the company’s monthly payroll costs for the period between February 15, 2020 and June 30, 2020, or $10 million, whichever is smaller. Originally allocated $349 billion as part of the CARES Act, funding for the PPP ran out within two weeks. The government was quick to approve a bill including an additional $310 billion for the PPP.