Treasury Department and SBA Issue New Guidance Following Passage of the Paycheck Protection Program Flexibility Act
The Paycheck Protection Program Flexibility Act (“PPPFA”) was signed into law June 5, 2020 and now the SBA and the Treasury Department have issued additional guidance:
- A revised PPP loan application form was created and is now available for use.
- Those potential borrowers with felony criminal histories now may have an easier time obtaining a PPP loan. The look-back period has been reduced from 5 years to 1 year to determine eligibility for applicants, or owners of applicants, who, for non-financial felonies, have (1) been convicted, (2) pleaded guilty, (3) pleaded nolo contendere, or (4) been placed on any form of parole or probation (including probation before judgment).
- For those potential borrowers with felony criminal histories involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance, the look back period remains 5 years.
- A revised PPP loan forgiveness application form was also created (https://www.sba.gov/document/sba-form-paycheck-protection-program-loan-forgiveness-application-revised-6-16-2020), as was a new EZ version of the loan forgiveness application (https://www.sba.gov/document/sba-form-paycheck-protection-program-ez-loan-forgiveness-application-6-16-2020).
- The revised PPP Forgiveness Application incorporates the new terms of the PPPFA as regards the term of maturity, length of time used to show the PPP funds were used for forgivable purposes, and incorporates the new requirements of payroll expenses only having to be 60% of the PPP funds.
- The EZ Forgiveness Application requires less information and documentation and is meant to be used by 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%.
Contact us if you have any questions about these changes or the PPP Loan program in general.
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