How The New PPP Applications Simplify Loan Forgiveness

Good news for entrepreneurs! Just as the first batch of Payroll Protection Program (PPP) loan recipients are becoming eligible to apply for loan forgiveness, the Small Business Association (SBA) announced today that it has simplified the loan forgiveness application. These new forgiveness applications have been updated in response congressional pressure to simplify the process for entrepreneurs as well as the recent passage of the Payroll Protection Program Flexibility Act (PPPFA) (Click here to read the relevant highlights of that law).

There are two versions of the PPP loan forgiveness application: 1) the EZ Forgiveness Application and 2) the revised Full Forgiveness Application.

Which PPP Loan forgiveness application is right for me?

You may use the EZ Forgiveness Application if you:

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

If none of the above are true, then you should use the Full Forgiveness Application.

PPP Loan Forgiveness Applications have been simplified.

Both the EZ and Full Applications have been simplified to streamline the forgiveness process. The EZ Forgiveness Application is the simplest. It is three pages long, requires fewer calculations and less documentation. The Full Forgiveness Application requires more calculations and documentation, but has been reduced from eleven pages to five pages.

Both applications give you the option of using the original 8-week covered period or an extended 24-week covered period. The new 60/40 Rule applies to both applications. Hopefully the revisions to the application will result in a more efficient forgiveness process and make it easier for you to ensure you receive full forgiveness from the SBA.