FLORIDA SMALL BUSINESS DEVELOPMENT CENTER AT IRSC
NEW FORM TO APPLY FOR PPP
LOAN FORGIVENESS MADE SIMPLER
TCBusiness.com 29
The SBA has released the new PPP Loan
Forgiveness Application Form 3508EZ,
which is designed to streamline PPP forgiveness
for certain businesses who qualify.
While applying for forgiveness may still
seem daunting — even with this simpler
form — the EZ form requires fewer calculations
and less documentation for eligible
borrowers.
Here we’ll walk through it together and
answer some frequently asked questions.
Who Can Use This Form?
The PPP forgiveness EZ form is designed
for businesses that meet at least one of the
following criteria:
• Are self-employed and have no employees;
or
• Did not reduce the salaries or wages of
their employees by more than 25%, and
did not reduce the number or hours of
their employees; or
• Experienced reductions in business
activity as a result of health directives
related to COVID-19, and did not reduce
the salaries or wages of their employees
by more than 25%.
The instructions for Form 3508EZ elaborate
on these points. You must qualify under
one of the following three categories.
If you do, then you may use this simplified
form to apply for forgiveness with your
lender. If you do not, then you must use
the standard forgiveness form.
Again you must meet at least one of
the following criteria in order to use
Form 3508EZ:
The Borrower is a self-employed individual,
independent contractor, or sole
proprietor who had no employees at the
time of the PPP loan application and did
not include any employee salaries in the
computation of average monthly payroll in
the Borrower Application Form (SBA Form
2483).; or
The Borrower did not reduce annual
salary or hourly wages of any employee by
more than 25 percent during the Covered
Period or the Alternative Payroll Covered
Period (as defined below) compared to the
period between Jan. 1, 2020 and March
31, 2020 (for purposes of this statement,
“employees” means only those employees
that did not receive, during any single
period during 2019, wages or salary at an
annualized rate of pay in an amount more
than $100,000); and
The Borrower did not reduce the
number of employees or the average paid
hours of employees between Jan. 1, 2020
and the end of the Covered Period. (Ignore
reductions that arose from an inability to
rehire individuals who were employees on
Feb. 15, 2020 if the Borrower was unable
to hire similarly qualified employees for
unfilled positions on or before Dec. 31,
2020. Also ignore reductions in an employee’s
hours that the Borrower offered to
restore and the employee refused.); or
The Borrower did not reduce annual
salary or hourly wages of any employee by
more than 25 percent during the Covered
Period or the Alternative Payroll Covered
Period (as defined below) compared to the
period between Jan. 1, 2020 and March
31, 2020 (for purposes of this statement,
“employees” means only those employees
that did not receive, during any single
period during 2019, wages or salary at an
annualized rate of pay in an amount more
than $100,000); and
The Borrower was unable to operate
during the Covered Period at the same
level of business activity as before Feb.
15, 2020, due to compliance with requirements
established or guidance issued
between March 1, 2020 and Dec. 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.
What is the Covered Period?
The PPP Flexibility Act changed the Covered
Period for purposes of the calculations
above. (Note there is more than one
“Covered Period” in the CARES Act. Here
we are talking about the one that refers to
when you spend the funds to qualify for
forgiveness.)
The Covered Period is either:
(1) the 24-week (168-day) period beginning
on the PPP Loan Disbursement Date, or
(2) If the Borrower received its PPP
loan before June 5, 2020, the Borrower
may elect to use an eight-week (56-day)
Covered Period.
For example, if the Borrower is using
a 24-week Covered Period and received
its PPP loan proceeds on Monday, April
20, the first day of the Covered Period is
April 20 and the last day of the Covered
Period is Sunday, Oct. 4. In no event may
the Covered Period extend beyond Dec.
31, 2020.
What is the Alternative Payroll
Covered Period?
Not all businesses’ payroll periods match
up perfectly with the date when they
receive their PPP funds so there is an Alternative
Payroll Covered Period under which
the business can spend PPP funds and still
qualify for full forgiveness. This is called
the Alternative Covered Payroll Period and
the instructions describe it this way: >>
BY GERRI DETWEILER
Gerri Detweiler is a leading, nationally
recognized financing and credit expert, with
more than 20 years of experience. During the
2008/2009 financial crisis, Detweiler was interviewed
hundreds of times, providing insightful
expertise and actionable advice for traversing
the turbulent landscape and unknown change.
Today, she is education director for Nav, the
trusted financing partner of over 1.2 million
businesses, where she gives Nav’s customers
certainty in an uncertain world through expertise
and actionable advice.
/TCBusiness.com