On the evening of Friday, May 15, 2020, the SBA released the Paycheck Protection Program (“PPP”) Loan Forgiveness Application and detailed instructions for the application. The form and instructions clarify how borrowers may apply for forgiveness of their PPP loans. However, the SBA indicated that it will issue still further regulations and guidance to those seeking forgiveness.

The form and instructions, available here, clarify several outstanding loan forgiveness issues and provide additional options for borrowers as they seek to maximize loan forgiveness, including:

  • An option for borrowers to calculate payroll costs using: (i) the 8-week period beginning on the disbursement of the PPP loan; or (ii) an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
  • An option to include eligible payroll and non-payroll expenses paid or incurred during the 8-week period after receiving their PPP loan
  • Step-by-step instructions on how to perform the calculations to confirm eligibility for loan forgiveness
  • The addition of the exemption from the loan forgiveness reduction for borrowers who have made good-faith, written offers to rehire workers that were declined
  • Clarification that the FTE calculation will be based on an employee working 40 hours/week
  • An intent to have borrowers calculate any reduction in salary/wages on an employee-by-employee basis

While the form and instructions certainly do not answer every question regarding forgiveness, for PPP borrowers who have become concerned about the lack of guidance on forgiveness, this is a welcome start. These documents, however, reveal that seeking forgiveness will be a complex and time-consuming process. Borrowers are encouraged to carefully review the application and to begin the compiling the relevant information sooner rather than later.

We remain available to help guide your business through this complicated process and to answer any questions you may have. Please do not hesitate to contact us for assistance.

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