SBA Finally Releases Loan Forgiveness Application for Paycheck Protection Program

Last updated May 16, 2020

The SBA finally released the long anticipated forgiveness application. The SBA also announced that it will issue regulations and guidance soon to further assist borrowers with the completion of their applications and to provide lenders with guidance on their responsibilities.

The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:

  • Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles;
  • Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan;
  • Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness (including head count and wage reductions);
  • Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30th; and
  • Exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.

Borrowers selecting the “alternative payroll covered period” will have their administrative burdens lessened by aligning the eight-week (56-day) forgiveness period with their regular payroll cycles. For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is 56 days later – in this example, Saturday, June 20.

The application also allows for the forgiveness of the payment of eligible non-payroll expenses paid during the 56 days after the receipt of the funds and eligible non-payroll expenses incurred during the 56-day period but paid after the 56-day period if paid on or before the next regular billing date. The limit on payment of eligible non-payroll expenses remains at 25% of the total forgiveness amount.

The instructions also provide a list of documents each borrower must submit with the application and a list of documents they must retain for six years and provide upon request.

We will post additional information on our website when the SBA issues forgiveness regulations and when it provides additional guidance.

For additional information pertaining to the coronavirus outbreak, please visit CSG’s COVID-19 Resource Center.

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