On June 17, 2020 the Small Business Administration (SBA) announced a new two-page EZ application (SBA Form 3508EZ) as well as borrower-friendly revisions to the full PPP loan forgiveness application. These changes are anticipated to make the application process easier on borrowers and increase efficiency for lenders.

Revised Loan Application Highlights

The revised PPP Loan Forgiveness Application and instructions include a number of changes to include the following:

  • Health insurance costs for S corporation owners cannot be included when calculating payroll costs; however, retirement costs for S corporation owners are eligible costs.
  • FTE reduction safe harbor can be applied as of the date the loan forgiveness application is submitted. Borrowers do not have to wait until December 31 to apply for forgiveness to use the safe harbors.
  • Borrowers that received loans before June 5 can choose between using the original eight-week covered period or the new 24-week covered period.
  • Eligible payroll costs are capped at $15,385 (if the 8-week period is used) or $46,154 (if the 24-week period is used).

New EZ Application

To determine if a borrower is eligible for the EZ application, borrowers must meet at least one of the following criteria:

  • The borrower is a self-employed individual, independent contractor or sole proprietor who had no employees at the time of the PPP loan application; or
  • The borrower did not reduce the annual salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; or
  • The borrower was unable to operate at the same level of business activity because of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.

If you meet at least one of the criteria above, complete the SBA Form 3508EZ and submit it to the lender that is servicing your loan. If you are unable to meet the criteria above, you must apply for forgiveness of your PPP loan using SBA Form 3508.