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Update: New PPP Loan Forgiveness Guidelines and Application

Updated: Mar 16, 2021


The U.S. Small Business Administration (SBA), in consultation with Treasury, released Wednesday a revised loan forgiveness application for the Paycheck Protection Program (PPP). The SBA also unveiled a new EZ application for forgiveness of PPP loans.

The applications and instructions are available in the links below:

Key Takeaways:

  • Borrowers that received PPP loans prior to June 5 may elect to use an 8-week or 24-week covered period, but borrowers that received loans on or after June 5 must use the 24-week period;

  • Loans made before June 5 will continue to have a two-year maturity, unless the borrower and lender mutually agree to extend maturity for up to five years, and loans made on or after June 5 will automatically have a five-year maturity, as long as forgiveness applications are filed no later than ten months after the end of the 24-week period; 

  • Forgiveness applications are due no later than ten months after the end of the 8-week or 24-week covered period, and if applications are not received by then, the borrower must start making principal and interest payments; 

  • The ability for certain borrowers to avoid complicated calculations and use the EZ Forgiveness Application if they meet any of the following requirements: 

  • they do not have employees; 

  • they did not reduce salaries or hourly wages by more than 25% during the Covered Period and did not reduce employees between January 1, 2020 and the end of the Covered Period; or 

  • they did not reduce salaries or hourly wages by more than 25% during the Covered Period and 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 established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19;

  • An “alternative payroll covered period” for borrowers using a bi-weekly or more frequent payroll period that aligns with their regular payroll period, as opposed to the covered period; 

  • Flexibility to include eligible payroll costs, rent, mortgage interest, and utility expenses that are paid or incurred during the covered period; 

  • Limiting the maximum any “owner-employee” can have forgiven to either (i) eight weeks’ worth (8/52) of 2019 net profit (capped at $15,385) if the borrower elects to apply the eight-week Covered Period or (ii) 2.5 months’ worth (2.5/12) of 2019 net profit (capped at $20,833) if the borrower elects to apply the 24-week Covered Period; 

  • Exemptions from the loan forgiveness reduction based on FTEs (1) for borrowers who made a good-faith, written offer to rehire workers that was declined, and (2) for employees who (a) were terminated for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction in their hours; and

  • Bonuses and hazard pay for employees whose total compensation does not exceed $100,000 on an annualized basis may be included as forgivable payroll costs. 

Please contact us today for advice and assistance understanding the PPP loan forgiveness application.

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