The SBA and Treasury have issued a number of new guidelines in recent weeks that affect both current and potential PPP loan recipients. We have summarized the new guidelines below and what these changes mean for PPP loan forgiveness and public disclosure for borrowers.
New Loan Forgiveness Applications
To account for the enactment of the Paycheck Protection Program Flexibility Act of 2020 (PPPFA) and additional program changes, the SBA and US Treasury issued updated PPP Loan Forgiveness Applications on June 17th. Two applications were released, as promised: the updated Full Forgiveness Application and the new EZ Forgiveness Application.
Changes made to the Full Forgiveness Application (and included in the new EZ Forgiveness Application) include an extended 24-week loan forgiveness period. For loans taken out prior to June 5th, the borrower may opt to use the original 8-week period. The Applications reflect the change from 75% to 60% for the PPP loan amount spent on payroll costs and the new Safe Harbor provisions provided in the PPPFA.
The EZ Forgiveness Application, which requires less documentation and fewer calculations, is now available to:
- self-employed individuals/independent contractors/sole proprietors without employees at loan origination and who did not include employees in original loan application
- businesses that did not reduce salaries/wages of employees by more than 25% during the covered period compared to first quarter 2020 AND the number of employees and average paid hours of employees was not reduced between January 1, 2020, and the end of the covered period
- businesses that did not reduce salaries/wages of employees by more than 25% during the covered period compared to first quarter 2020 AND were unable to operate at the same level of business activity due to COVID-19 health directives from the Department of Health and Human Services, the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration.
For additional details on changes relating to the PPPFA, you may also view our previously recorded webinar, and/or download the presentation slides.
Enhanced Loan Transparency
On June 19th, the SBA and Treasury, after a bipartisan agreement with leaders of the U.S. Senate Small Business Committee, issued their decision to disclose the business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, jobs supported, and the loan amount by range (see below) for recipients of PPP funds in excess of $150,000. Personal information regarding a borrower’s ownership will not be disclosed. The loan amount disclosure ranges are:
$150,000 – $350,000
$350,001 – $1,000,000
$1,000,001 – $2,000,000
$2,000,001 – $5,000,000
$5,000,001 – $10,000,000
“I am pleased that we have been able to reach a bipartisan agreement on disclosure which will strike the appropriate balance of providing public transparency, while protecting the payroll and personal income information of small businesses, sole proprietors, and independent contractors,” said Secretary Steven T. Mnuchin.
Individual information will not be disclosed for loans that are less than $150,000; instead, those loans will be disclosed in total by zip code, industry, business type, and various demographics.
As of June 20th, the Treasury had been issuing reports mainly geared toward lender data, loans by industry sector, total dollars approved, and total dollars remaining. At this time, it is unclear when the new disclosure will occur, but be on the lookout for additional updates.
Applying for PPP loan forgiveness? Learn how our PPP Services Group can help you submit a complete and accurate application for expeditious and favorable responses.
by Barton Haag, CPA
Please note: We are actively working on incorporating these changes into our PPP Loan Forgiveness Workbook. As with the original version, the updated workbook will be a useful planning tool to do “if, then” analysis regarding your headcount and payroll costs.