PPP Forgiveness Update

July 7th, 2020

Last month the SBA provided additional flexibility to PPP Loan recipients that you may want to consider. The main change is an extension to the 8-week covered forgiveness period.

The SBA has given you the option to extend your forgiveness period up to 24 weeks, if you need the extra time to spend the PPP loan funds. Keep in mind that the longer you choose to extend forgiveness, the longer you must maintain records and manage your funds.

In an effort to help you prepare, we are offering some guidance on the forgiveness documentation provided by the SBA. Currently, there are two different applications for loan forgiveness that you can use based on your situation:

SBA PPP EZ Form – You can use this application if you meet any of the following 3 requirements:

  1. You are a self-employed individual, independent contractor or sole proprietor with no employees at the time of the PPP loan application and did not include any employee salaries in calculating the average monthly payroll.
  2. You did not reduce annual salary or hourly wages of any employee by more than 25% during the Covered or Alternate Covered Period compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);
    • AND – You did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period. (Ignore reductions that arose from an inability to rehire those individuals who were employees on February 15, 2020 or backfill those positions on or before December 31, 2020. Also ignore reductions in an employee’s hours that the Borrower offered to restore and the employee refused.)  
  3. You did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000); 
    • AND – You were unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements/guidance issued between March 1, 2020 and December 31, 2020 related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

If you do not meet any of the requirements for the EZ Application, you must complete the Regular PPP forgiveness application.

In addition to the PPP  forgiveness application, you may also need to provide the following documents that cover the forgiveness period your chose (if they are applicable to your situation):

  • Detailed Payroll Reports
  • Bank Statements
  • Interim Profit and Loss Statement
  • Copies of Canceled Checks
  • Paid Invoices and Receipts for qualified non-payroll expenses

We hope this information helps you prepare for the forgiveness process. For more information, please visit the SBA’s PPP webpage.

The LiftFund team will be contacting our PPP clients to help them process the forgiveness application. In the meantime, please begin gathering the documents listed above.