SBA and Treasury streamline PPP loan forgiveness requests

The Small Business Administration and the Treasury Department have unveiled a simpler loan forgiveness request for the Paycheck Protection Program to reflect changes to the PPP Forgiveness Act, which was enacted this month. and provides more flexibility for small businesses to receive a discount on their SBA. ready.

The PPP was included as part of the CARES law, the $ 2.A $ 2 trillion program that included economic impact payments to individuals and aid to businesses in response to the novel coronavirus pandemic. The program was originally launched on April 3 with $ 349 billion in funding to help small businesses keep their doors open and retain employees. The loans would be canceled as long as the companies retained their employees for up to eight weeks.

However, many small businesses struggled to access or apply for loans, and the funding quickly ran out as large businesses were successful in securing the loans with the help of their banks. Congress provided an additional $ 320 billion and the program resumed on April 27. But the rules and criteria for eligibility and forgiveness have constantly changed, prompting many companies to take a wait-and-see attitude. There is about $ 120 billion to $ 130 billion left in the program, and it doesn’t run out until June 30. Lawmakers have expressed frustration that the Treasury and the SBA do not provide more transparency about which companies got the loans and for how much. .

In an effort to encourage more businesses to register and to alleviate concerns about the possibility of getting loans canceled for businesses like restaurants that were unable to open to customers, Congress offered more flexibility by passing the Check Protection Program Forgiveness Act earlier this month. It extends the period covered from eight weeks to 24 weeks. It also changes the requirement that no more than 25% of the loan forgiveness amount be allocated to non-salary costs and allows up to 40% to be used for non-salary costs. The bill also included several other changes, such as extending the deferral of payments of loan principal, interest and fees, from the current six months, until the date on which the SBA pays the amount of the loan. remittance to the lender.

The SBA’s new loan forgiveness request reflects these changes. Along with the review of the full rebate request, the SBA is also introducing a new EZ version of the rebate request that applies to borrowers who:

  • are self-employed and have no employees; or
  • have not reduced the wages or salaries of their employees by more than 25% and have not reduced the number or hours of their employees; or
  • Has experienced reductions in business activity due to health guidelines related to COVID-19, and has not reduced their employees’ wages or salaries by more than 25%.

The EZ app requires fewer calculations and less documentation is required for eligible borrowers. Details on the applicability of the various provisions are available in the instructions accompanying the new EZ application form.

Both applications give borrowers the option of using the initial eight-week coverage period (if their loan was made before June 5, 2020) or the extended 24-week coverage period provided for under the new law. The SBA and Treasury said the changes would lead to a more efficient process and make it easier for businesses to get full forgiveness on their PPP loan.

Click here to view the EZ Forgiveness Request.

Click here to view the full forgiveness request.

Separately, payroll company Paychex released the PPP Loan Forgiveness Estimator and Forgiveness Report as part of its Paychex Flex bundle of cloud-based HR software to help small businesses track their PPP loans and loan cancellation requirements. last week. It includes amendments to the PPP Forgiveness Act. Accountants can access the forgiveness estimator for each of their clients through the Paychex AccountantHQ dashboard to provide more strategic consultation and help clients optimize PPP loan cancellation.

Another company, Smart Communications, introduced a PPP loan forgiveness request solution Wednesday to streamline applications and speed up processing for banks and other lenders.

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