PPP: Easing the Forgiveness Requirements

Dear clients,

The never ending string of updates to the PPP program continues. Thankfully, the most recent threads are welcomed. The SBA recently issued interpretations of the PPP Flexibility Act of 2020. Here’s the distilled version that you should know about:

  1. The SBA provided a new simplified forgiveness application (Form 3508EZ) for certain PPP recipients.  You qualify to use this very simple application if (1) you had no employees (that’s for you ICs) or (2) you did not reduce wages by more than 25% for any lower-paid employees during the covered period and you didn’t reduce FTE headcount. The covered period is the 24 weeks after receiving the PPP funds.
  2. If you received the PPP before June 5th, you have the option of using the 8 week period when applying forgiveness. However, since we’ll be filing the forgiveness applications for most of you (i.e. most of our clients requested we do so), we recommend waiting until the end of the 24 weeks. The reason being is that it’s all but guaranteed you’ll get full forgiveness during that extended time assuming you did not reduce wages by more than 25% and you restored your full team by December 31st of this year.  
  3. If you don’t restore salaries and FTE headcount by December 31st for good reason, such as the inability to get your practice back to full business activity, then you will not see a reduction in PPP forgiveness. What does this mean? Congress and Trump basically don’t want you to give it back.   
  4. Remember, any EID grant you received (i.e. the $1,000 per employee) will be a dollar-for-dollar reduction to your PPP forgiveness. So if you received $50,000 of PPP, and $5,0000 of EID grant. Your max (and likely) PPP forgiveness will be $45,000, with a remaining PPP loan of $5,000 to be paid over 2 or 5 years (depending on when you received it) at a 1% interest rate.

That’s our quick update.  It’s great to see you all back into battle!

Thrive!

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