On June 16, 2020, the Small Business Administration (SBA) made additional changes to the Paycheck Protection Program(PPP). Some of these changes, which will benefit nonprofits, include a revised PPP loan forgiveness application, a new streamlined EZ PPP loan forgiveness application for certain applicants, and revisions to the third and sixth interim final rules.
The PPP loan forgiveness application now includes a walk-through calculation on determining the forgiveness amount taking into account any reduction of full-time equivalent employees if the borrower was unable to operate during the covered period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020, and December 31, 2020, by the Secretary of HHS, Director of the CDC, or OSHA, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirements related to COVID-19.
The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. In addition, payroll costs during the covered period are capped at $46,154 per employee (for those using the 24-week covered period) or $15,385 per employee (for those using the 8-week covered period) plus covered benefits for employees. Compensation for owner-employee, self-employed, or general partner, however, will be limited to $20,833 or 2.5 months of the owner’s 2019 compensation if electing the 24-week covered period or $15,385 for those electing the 8-week covered period.
New EZ PPP Loan Forgiveness Application
Borrowers who meet any one of the following criteria can now use the new EZ PPP loan forgiveness application:
- The borrower is self-employed, an independent contractor, or a sole proprietor that had no employees at the time of the PPP loan application;
- The borrower did not reduce annual wages or salaries of any employee by more than 25% during the covered period or alternative payroll covered period as compared to quarter 1 of 2020 and the borrower did not reduce the number of employees and the average paid hours of employees between January 1, 2020, and the end of the covered period (ignoring reductions from the inability to rehire individuals and reductions in hours offered to be restored and refused); and
- The borrower did not reduce annual wages or salaries of any employee by more than 25% during the covered period or alternative payroll covered period as compared to quarter 1 of 2020 and the borrower was unable to operate during the covered period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020, and December 31, 2020, by the Secretary of HHS, Director of the CDC, or OSHA, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirements related to COVID-19.
