On Friday evening, May 15, 2020, the U.S. Small Business Administration, in consultation with the U.S Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application.

The multi-part form and instructions inform borrowers how to apply for forgiveness of their PPP loans. SBA will also soon issue regulations and guidance to further assist borrowers as they complete their applications, and to provide lenders with guidance on their responsibilities.

PPP Loan Forgiveness Application and Instructions

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
  • Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
  • Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined

Clarification of Full-time Equivalents (FTE)

This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period. For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.

  • A borrower’s loan forgiveness will not be reduced by FTE reductions that fall within one of the following exceptions: (1) employees who rejected rehire attempts; and (2) employees who were fired for cause, who voluntarily resigned, or who voluntarily requested and received a reduction in hours.

Contact one of experts with any questions you have on the loan forgiveness application. Give us a call at (888) 388-1040.

As guidance continues to be released, we share updates.

Last updated: May 16 at 4:30 p.m.