SBA revises PPP loan forgiveness form in light of flexibility law
The Small Business Administration released revised versions of Form SBA 3508, Paycheck Protection Program Loan Forgiveness Application, and its instructions on June 16, which have been updated to comply with the Paycheck Protection Program Flexibility Act (PPPFA). .
Each employer who acquires a paycheck protection program loan does not automatically obtain the repayment of the loan principal and must instead submit the SBA 3508 form in a timely manner to the lender from whom they acquired the loan so that the lender can determine the percentage of the principal for which the pardon is applicable.
SBA Form 3508 and its instructions were previously available as a unified document, but the revised form and his revised instructions were published as separate documents. Employers requesting forgiveness of a Paycheck Protection Program loan must submit to the lender who provided this loan two parts of SBA 3508, the PPP Loan Forgiveness Calculation Form, and PPP Schedule A , both of which are now compliant with the PPPFA, which was enacted on June 5. .
Changes to the PPP Loan Discount Calculation Form
Line 10 of the PPP Loan Exemption Calculation Form has been updated to indicate that there is now a ‘60% salary cost requirement’, which replaces the indication of the previous version in line 10 a “75% wage cost requirement”. This change reflects the PPPFA provision that for costs covered by a Paycheck Protection Program loan for which an employer is requesting a rebate, at least 60% of the costs must be salary costs for the employer to be eligible for a full forgiveness of the loan principal. , down from the 75% level in effect before the enactment of the PPPFA.
The first attestation on the second page of the PPP Loan Cancellation Calculation Form for which an authorized representative would provide the initials has also been updated to reflect the provisions of the PPPFA.
The third point of the first certification has been updated to reflect the decrease in the percentage from 75% to 60% for covered costs which must be salary costs for the full principal discount to be available, and accordingly indicates that the The employer certifies that the requested exemption amount “includes salary costs equal to at least 60% of the exemption amount”, replacing the statement in the previous version that the amount “does not include non-salary costs greater than 25% of the amount requested ”.
The wording of the first certification preventing the remittance from including the applicable pro rata annual compensation of an owner-employee greater than $ 100,000 has been updated in accordance with the provision of the PPPFA which increased the maximum duration of the period covered for a paycheck protection program loan at 24 weeks, up to from eight weeks. The fourth point of the first certification initialed on the revised form reflects the new standard covered period of 24 weeks, with the stated limit of $ 20,833 determined by dividing $ 100,000 by 12 for the number of months in a year and multiplying that amount. monthly by the indicated multiplier of 2.5 months. The PPPFA option for employers who acquired a loan prior to the enactment of the PPPFA to maintain an eight week covered period is reflected in the fifth point of the first certification initialed on the revised form, with the stated ceiling of 15,385. $ determined by dividing $ 100,000 by 52 for the number of weeks in a year and multiplying that weekly amount by the indicated multiplier of eight weeks.
A condition established by the PPPFA, known as Safe Harbor 1 for the reduction of full-time equivalents (FTEs), which limits the degree to which an employer’s loan cancellation would be diminished due to a reduction in Full-time equivalent employees was referenced through a new certification on the second page of the PPP Loan Forgiveness Calculation Form, with its addition increasing the number of certifications on the page from seven to eight. Certification refers to an employer’s use of this safe harbor in Annex A of the PPP.
Amendments to Annex A of the PPP
The Calculation of Full-Time Equivalent (FTE) Reduction section of PPP Schedule A has been updated to reflect the ability for an employer to use Safe Harbor 1 for FTE reduction. If Safe Harbor 1 of the FTE Reduction applies to an employer, the employer checks the box associated with this Safe Harbor on Schedule A of the PDP.
Under Safe Harbor 1 for FTE Reduction, an employer would not be subject to a reduced loan forgiveness due to downsizing if, in good faith, it can prove that it is not. able to return to at least the activity level at which it was operating before February 15, 2020, as it complied with the requirements or directives issued from March 1 to December 31, 2020, by the Department of Health and Services social security, the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration with respect to maintaining standards for sanitation, social distancing, or other worker or customer safety requirements related to the response to the coronavirus epidemic.
A safe harbor that was available before the enactment of the PPPFA, which, thanks to the publication of the revised SBA Form 3508 has been renamed Safe Harbor 2 for FTE reduction, can still be used to reduce the degree to which the cancellation An employer’s loan would be reduced because of a downsizing. The extent to which an employer can benefit from this Safe Harbor is always determined using the PPP Schedule A spreadsheet, which although not required to be filed with a lender, must be kept by an employer as part of its records. Annex A of the PPP has been revised to now have a box that an employer would check if they use this safe harbor.
As part of the FTE reduction, Safe Harbor 2, which although numbered after the FTE reduction, Safe Harbor 1 was established by the CARES Act (Coronavirus Aid, Relief, and Economic Security) enacted on March 27, if the portion of an employer’s loan eligible for the discount would be reduced due to a downsizing that occurred from February 15 to April 26, 2020, the employer could avoid the reduced discount if, at the applicable due date, the employer hires enough employees to such an extent that the employer had had this total number of full-time equivalent employees during the period covered by the loan, there would have been no reduction loan forgiveness eligibility.
The applicable deadline date for the reinstatement of the number of full-time equivalents has been modified by the PPPFA to December 31, 2020, replacing the initially applicable deadline set by the CARES law of June 30, 2020. Step 4 in the steps Calculation The applicable degree of this Safe Harbor on the PPP Schedule A worksheet has been updated to reflect this change.
Simplified loan waiver request
The SBA has also released simplified versions of SBA Form 3508 and its instructions that a borrower can use if they meet the specified conditions.
The simplified form, SBA Form 3508EZ, can according to his instructions be used if the borrower has not reduced the annual compensation of any of its employees (other than employees paid at an annualized rate of more than $ 100,000 during a pay period in 2019) by more 25% by comparing the period covered by paycheck protection Program Loan to the period from January 1 to March 31, 2020, and the borrower also either:
- has not reduced its number of employees and the average number of paid hours of its employees from January 1, 2020 to the end of the period covered by its loan; or
- fulfilled the FTE Reduction Safe Harbor conditions 1.
With respect to determining the degrees to which an employer reduced its number of employees or the average paid hours of its employees from January 1, 2020 to the end of its covered period, a borrower’s reductions in these respects would not be not counted if they result from:
- the borrower not being able to rehire former employees who had worked for the borrower on February 15, 2020, the borrower not being able to hire before December 31, 2020, employees of similar qualification to replace these former employees; or
- an employee of the borrower was offered to reinstate his working hours, but the employee refused to have those working hours reinstated.
A borrower can also use SBA Form 3508EZ if they are self-employed, independent contractors, or sole proprietors and had no employees when they applied for a Paycheck Protection Program loan.
Separately, the SBA released on June 12 a slightly revised version of Form SBA 2483, Paycheck Protection Program Borrower Application Form. The form is virtually identical to the version released on June 11, the only change being that the June 12 version is a fill-out PDF, while the June 11 version was not formatted as a fill-out PDF.