Modifications are result of new Flexibility Act to make it easier for borrowers
The Treasury Department and Small Business Administration on Wednesday posted new “borrower-friendly” applications for loan forgiveness under the Paycheck Protection Program, or PPP.
The revised forms to apply for the loan to be forgiven are a result of the PPP Flexibility Act that was signed into law on June 5. That bill made several changes that benefit restaurants, including expanding the period when the loan can be used after disbursement from eight weeks to 24 weeks, and extending the deadline for rehiring workers or restoring wages to Dec. 31 to earn forgiveness.
The Flexibility Act also creates a safe harbor for businesses, like restaurants, that have not been able to return to pre-COVID-level business activity because of government or health department restrictions. Last week, SBA and Treasury officials unveiled new revised guidelines outlining Flexibility Act changes.
On Wednesday, the SBA posted two new forms, which can be used by employers to apply for the loans to be forgiven if at leaset 60% of loan funds have been used for payroll. Both give borrowers the option of using the original eight-week covered period (if their loan was made before June 5) or using an extended 24-week covered period.
Borrowers have the option of using a revised full form, which is five pages, or a streamlined three-page EZ version.
The EZ version is eligible for those who are:
self-employed
employers who did not reduce salaries or wages by more than 25% and did not reduce the number or hours of employees during the covered period.
employers who experienced a COVID-19-related reduction in business activity as a result of health directives, and who did not reduce salaries or wages by more than 25% during the covered period.
The EZ application requires fewer calculations and less documentation for eligible borrowers, the SBA said.
While the move toward streamlined forms is an attempt to make the PPP easier for borrowers, some confusion remains, said attorney Patrick Dennison in Pittsburgh, a partner in the law firm Fisher Phillips.
The new guidance doesn’t clear up the question of how to calculate the potential reduction in hourly wages, and whether it should be based on a total hourly wage or an average that might include overtime, for example.
The SBA also said this week that it has resumed processing applications for the Economic Injury Disaster Loan, or EIDL, Advance grants. The $10,000 advance is for businesses experiencing a temporary loss of revenue and it does not have to be repaid.
The agency had stopped accepting new applications for the grants on April 15. But the SBA said it will resume processing those applications on a first come, first serve basis, and it began accepting new applications for the advance grants on June 15.
The PPP program was created as part of the Coronavirus Aid, Relief and Economic Security, or CARES Act and Congress has approved close to $660 billion in total for the program. To date, the SBA has approved 4.6 million PPP loans totaling $513 billion. The deadline for applying for a PPP loan is June 30.
Contact Lisa Jennings at [email protected]
Follow her on Twitter:@livetodineout
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