As of June 16, 2020, The U.S. Small Business Administration (SBA) released the updated PPP (Paycheck Protection Program) Loan Forgiveness Application, which replaces the application that was released last month on May 15, 2020.
H. R. 7010, commonly known as The Paycheck Protection Program Flexibility Act, was signed into law on June 5, 2020. The new application makes new changes to the PPP, streamlining the application process. As well as establishing a 24-week Covered Period, instead of the original 8-week Covered Period.
On June 17, 2020, The United States Treasury released Revisions to the Third and Sixth Interim Final Rules, this release coincides with H.R. 7010 (PPPFA) and addresses some questions that were previously unanswered.
Covered Period: Every PPP loan borrowers will now automatically have a 24-week Covered Period. If your loan originated before June 5, you could elect to use the 8-week covered period as the Paycheck Protection Program was written initially. The new application removed the 8-week option, increasing it to 24-weeks, with the possibility of filling out an additional form to elect an 8-week covered period.
Compensation Per Employee: The Maximum Cash Compensation Per Employee amount is calculated by prorating $100,000 over the 24-week Covered Period, which totals $46,154, or $15,385 if the 8-week coverage period is elected.
Owner Compensation: Before this revision, a business owner’s compensation was limited to 8-weeks of 2019’s net profit capped at $15,385. With the latest change, PPP loan borrowers using the 24-week Covered Period can now include two and a half months’ worth of 2019 net profit totaling $20,833.
SBA Announces Application Form 3508EZ (Form EZ).
On June 16, 2020, The SBA started distributing the new Paycheck Protection Program Loan Forgiveness Application Form 3508 EZ (Form EZ).
The simplified version of the loan forgiveness application is called Form EZ, this application is for PPP loan borrowers who will certify they have met at least one of the criteria below:
The Borrower is Self Employed: You must be a self-employed individual and did not have employees at the time of the PPP loan application. You must also not include any employee salaries in the calculation of average monthly payroll when you fill out the PPP loan application.
The borrower had No Annual Salary, Hourly Wages Reductions, or FTE Reductions: The hourly or annual wages of any employee were not cut by more than 25% during the Covered Period. Or compared to the period of January 1 through March 31, 2020, AND also did not reduce employees or reduce the average paid hours of employees from January 1, 2020, through the Covered Period.
No Salary or Hourly Wages Reductions or Unable to Maintain Level of Business Activities: The PPP Loan borrower did not reduce hourly wages or the salary of any employee by more than 25 percent during the Covered Period or from January 1, 2020, through March 31, 2020, AND was unable to operate during the Covered Period or generate the same kind of business before February 15, 2020, due to compliance with newly established requirements or guidance issued between March 1, 2020, and December 31, 2020, by HHS, the CDC or OSHA, or the standards of sanitation, social distancing measures, as well as any other work or customer safety requirement related to COVID-19.
Zomma Group Can Help
With the current fluidity of the multiple stimulus packages, small-to-medium sized businesses can take advantage of, having Zomma Group in your corner can make a world difference. Contact us if you need help with your PPP or MSLP loan applications.
Call us at 305-444-8288 or send us an email at email@example.com.