Paycheck Protection Program: SBA Streamlines PPP Forgiveness Application
The updated Paycheck Protection Program loan forgiveness application was released by the Small Business Administration. It’s requiring less documentation and fewer calculations than previously required.
Does the current PPP Loan Forgiveness Application seem complicated? Thankfully a new form has arrived to help make things a little easier for most borrowers. Form 3508EZ applies to borrowers who meet any one of these three criteria:
- Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
- Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.
While the form is shorter, you may still need a little guidance. Be sure to take advantage of the SBA's instructions on how to complete Form 3508EZ.
Paycheck Protection Program Flexibility Act
SBA also updated the regular Form 3508 to reflect recent changes made by Congress in the PPP Flexibility Act and issued a new interim final rule that implements changes made by the PPPFA. Recent changes to PPP loan forgiveness requirements include:
- Expanding the period during which the borrower can spend the funds from 8 weeks to 24 weeks
- Extending the time frame for businesses to restore payroll that was reduced during the pandemic through December 31, 2020 (extended from the original June 30 deadline)
- Decreasing the percentage of the funds that must be spent on payroll costs from 75% to 60%
The bill also gives loan recipients a longer period of time to repay the loans and lets companies receiving loan forgiveness defer payroll taxes.
If you submitted a Paycheck Protection Program loan application with Vast Bank, please note that we are not yet accepting applications for forgiveness. You will receive communication when this information becomes available. In the meantime, we encourage you to familiarize yourself with the current applications and information to get prepared.
- Download Form 3508EZ
- Download the instructions for Form 3508EZ
- Download the revised Form 3508
- Download the instructions for Form 3508
- Read the interim final rule