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New Versions of the PPP Loan Forgiveness Applications

By Martin Fox, CPA/ABV, CVA

June 18, 2020

On Tuesday, June 16, the SBA released two new versions of the PPP Loan Forgiveness Applications, including an EZ version for certain borrowers. These forms replace the previously released Loan Forgiveness Applications.

Many businesses are nearing the end of their 8 weeks from the date of the loan. This was the period in which businesses had to use the loan proceeds to pay for payroll costs, rents, utilities, and mortgage interest in order to receive full or partial loan forgiveness from the SBA. All borrowers are required to submit a completed Loan Forgiveness Application Form to their lenders.

The original Application was 11 pages and covered the rules that were in place at that time. As you’re probably aware, the recently passed PPP Flexibility Act of 2020 included some major changes that are now reflected on the forms. The major changes included:

  • Borrowers have the option of using a 24-week period in which to use the loan proceeds
  • 60% of the proceeds must be used for payroll costs
  • Reductions in employee headcount will not include workers who voluntarily resigned or reduced hours, declined offers to return to work, or situations where employment reduction was due to guidelines imposed after 3/1/20

The new EZ form (SBA Form 3508EZ) is only 3 pages and can be used for these borrowers:

  • Self-employed with no employees
  • Borrower did not reduce salaries by more than 25% AND did not reduce FTEs
  • Borrower did not reduce salaries by more than 25% AND borrower was unable to operate at same level as before 2/15/20 due to compliance with guidelines issued after 3/1/2020

All other borrowers must use the longer Form 3508 to apply for loan forgiveness.

The SBA has yet to release additional guidelines that are needed to answer many of the questions our clients have had. We were hoping to include those rules with this announcement, but we’re still waiting.

Many borrowers were planning to submit their applications in the next few days. However, our advice is to wait until the SBA releases new guidance before completing the forms. All borrowers who received funds prior to June 5 can elect to use either the 8-week period or the new 24-week period. The application does not have to be submitted immediately, so you can make an informed decision once the new rules are issued.

Your bankers will be inundated with applications once the new rules and processes are in place. You’ll want to be sure that your forms are complete and supported by the necessary documentation. Grimbleby Coleman is ready to assist with whatever level of help you require… gathering the necessary documentation, calculating the loan forgiveness or completing the application package.  You can count on us to understand these rules to ensure your obligations are met, contactus@gccpas.net, 209-527-4220.