Last week, the U.S. Small Business Administration (SBA), in consultation with the U.S. Department of the Treasury, released the application for seeking forgiveness of loans granted under the Paycheck Protection Program (PPP).
The PPP was part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) enacted at the end of March to help small businesses weather the economic upheaval caused by the COVID-19 pandemic.
The May 15 news release announcing availability of the loan forgiveness application stated that the SBA would soon issue regulations and guidance to provide further help to borrowers in completing their applications and guidance to lenders about their responsibilities.
According to the news release, small businesses can seek forgiveness of the PPP loan at the conclusion of the eight-week covered period, which begins with the disbursement of their loans.
The detailed instructions provided with the application explain how borrowers are to calculate payroll and nonpayroll costs eligible for forgiveness. Measures described by the release as reducing compliance burdens and simplifying the process for borrowers include:
• Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles.
• Flexibility to include eligible payroll and nonpayroll expenses paid or incurred during the eight-week period after borrowers receive their PPP loan.
• Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
• Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
• Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.
The Treasury Department updated its document with frequently asked questions about the PPP this week.