Latest Paycheck Protection Program Forgiveness Guidance from SBA and Treasury Includes New ‘EZ’ Application

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June 17, 2020

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Earlier this morning, Wednesday, June 17, the Small Business Administration and Treasury Department issued official new guidance on the Forgiveness portion of the Paycheck Protection Program.

This new guidance, issued on the tail of Senate testimony last week, most notably creates a new EZ application and also includes a new interim final rule, as well as a revised standard application.

New PPP Guidance from SBA and Treasury as of June 17

While our team will be providing an in-depth analysis of the new guidance during a special, dedicated Q&A session tomorrow—register here—here are the top-level takeaways every bank and credit unions should be aware of immediately.

New Application Form 3508EZ
The EZ form is a simplified application that reduces complexity for forgiveness calculations and documentation, including removing the necessity for the Schedule A Worksheet. There is no loan size restriction for using the 3508EZ. Any borrower who meets the below criteria is eligible to use the EZ form, including those who:

  • Are self-employed with no employees; OR
  • Did not reduce salaries/wages by more than 25 percent AND did not reduce employee hours; OR
  • Did not reduce salaries/wages by more than 25 percent AND experienced reductions in business due to health directives

Revised Application Form 3508
The revised Form 3508 includes terms and timing changes set forth in the Flexibility Act. Key forgiveness application changes include:

  • Reducing the percentage of funds required to be used for payroll to 60 percent from 75 percent
  • A new FTE reduction safe harbor for business that experienced reductions in business due to health directives

New Interim Final Rule
This new Interim Final Rule provides revisions to the Third IFR regarding eligibility criteria and the Sixth IFR regarding disbursements based on the provisions outlined in the Flexibility Act. Key details include:

  • Extension of the covered period to 24 weeks at the borrowers request
  • Longer loan maturity for loans originated after passage of the Flexibility Act
  • Reduction in the payroll percentage to 60 percent
  • Clarification that the maximum forgiveness for an owner’s compensation is $20,833

Staying In The Loop on Paycheck Protection Program Updates

To help, we’re continuing to dedicate some of our Weekly Insights Sessions to providing in-depth analysis on updates to the Paycheck Protection Program for banks and credit unions.

The next PPP Q&A session will be tomorrow, June 18 at 3:30PM ET. Save your seat now.

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