MPL General Counsel Corner – PPP forgiveness tent has definitely expanded
There have been numerous updates related to the PPP forgiveness application. Importantly, a new EZ version and revised full version were posted with instructions. In my reading of the details, the PPP forgiveness tent has definitely expanded.
Rather than reinvent the wheel, I thought that Trout CPA put out an excellent overview and video highlighting the key points (see below). Also, if interested, an interim final rule (creatively named the Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules) was also published on 6/17 explaining the new forgiveness details.
The EZ version of the forgiveness application applies to 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 new and revised full version of the forgiveness application has the following updates:
- The employee forgivable pay cap is expanded to $46,154 if 24 weeks is selected and remains at $15,385 if 8 weeks is selected.
- Owner compensation is expanded up to $20,833 (or 2.5 months’ worth of 2019 pay if less) if 24 weeks is selected and remains at $15,385 if 8 weeks is selected.
- New FTE reduction exceptions and safe harbors from the PPP Flexibility Act have been added.
- New clarification that health insurance paid during the covered period does not qualify for S-corporation owners.
Links for applications, instructions, and worksheets:
Video Overview of New Applications by Trout CPA Tax Manager Dan Chodan, CPA
EZ Loan Forgiveness Application
EZ Loan Forgiveness Instructions
EZ Loan Forgiveness Application Worksheet
Loan Forgiveness Application
Loan Forgiveness Instructions
Loan Forgiveness Application Worksheet
Here are some other things that may be important or relevant for you:
- EIDL: I wanted to correct an error from my email earlier this week. You can receive up to a $200k loan without (not “with” as I originally wrote) a personal guarantee. Apologies for any confusion. I must have hit send too quickly.
- Main Street Lending Program is now ready to go. As a reminder, this loan program was for businesses that were not able to take advantage of the smaller business relief programs.
- PPP funds available through 6/14 are still about $130B. If you can use the funds, please reach out to your financial institution (or any SBA approved lender) to apply.
- Upcoming Webinars and Helpful Resources
Finally, I know I was going to send these out on Fridays. However, I felt the two updates this week were important for everyone to know given it was updates to the forgiveness portion of the PPP. Barring another major announcement, I will get back on the Friday schedule next week.