SBA Releases Updated PPP Forgiveness Guidelines

The SBA and the Treasury released updated forgiveness forms and guidance for PPP loans, based on the changes made by the “PPP Flexibility Act” signed into law on June 5.

The updated forms clarify that the automatic forgiveness based on “owner-compensation replacement” is raised for borrowers who opt for the 24-week covered period from an 8-week amount (which still applies if borrowers choose the 8-week covered period) to an amount equal to 2.5x their average monthly net income.  Thus, independent contractors who opt for the 24-week covered period are eligible to have their full PPP loan automatically forgiven under the new guidelines.  These borrowers must still complete and submit a forgiveness application to their lenders.

In addition to updating the earlier forgiveness application form to reflect the lower 60% requirement for payroll expenses (down from 75%) and the extended 24-week covered period (borrowers who received their loans before June 5 can opt for either an 8- or 24-week period; borrowers who received them after must use 24-weeks), it also created a streamlined “EZ Forgiveness Application.”

The EZ Forgiveness Application is for borrowers that:

  • Are self-employed and have no employees; OR
  • Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
  • Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.

The deadline to apply for a PPP loan is June 30.  The program still has funding available but unless Congress acts to extend it will close at the end of the month, so interested individuals/businesses should be sure to apply with an SBA lender before that date.

NAR has updated its resources to reflect these changes; you can find the updated FAQ linked to below, as well as the new application forms and other resources from the Treasury/SBA.

NAR SBA FAQ page
PPP “EZ Forgiveness Application”
PPP “Full Forgiveness Application”
Treasury June 17 Announcement of Updated Forgiveness Forms
SBA Interim Final Rule (reflecting the PPP Flexibility Act Changes)

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