Insights

Employee or Independent Contractor Status Clarified Further by The U.S. Department of Labor

Corporate Transparency Act Ruled Unconstitutional. The Impact On Beneficial Ownership Information Reporting.

Reminder of Annual Election of New York State and New York City Pass-through Entity Tax (PTET)

House Passes Bill Expanding Child Tax Credit and Business Breaks

New PPP Loan Forgiveness
Applications Released

COVID-19 Business Update

The U.S. Small Business Administration (SBA), in consultation with Treasury, recently released a revised loan forgiveness application for the Paycheck Protection Program (PPP). The SBA also unveiled a new EZ application for forgiveness of PPP loans.

The applications reflect changes to the PPP made by the Paycheck Protection Flexibility Act of 2020, which became law June 5. The applications and instructions are available in the links below:

In addition, the SBA issued a new interim final rule providing guidance on how to calculate employee and owner compensation for loan forgiveness in the new 24-week covered period created by the Paycheck Protection Flexibility Act.

Application highlights

The revised PPP Loan Forgiveness Application and instructions include a number of notable items. Among them are:

  • Health insurance costs for S corporation owners cannot be included when calculating payroll costs; however, retirement costs for S corporation owners are eligible costs.
  • Safe harbors for excluding salary and hourly wage reductions and reductions in the number of employees (full-time equivalents) from loan forgiveness reductions can be applied as of the date the loan forgiveness application is submitted. Borrowers don’t have to wait until December 31 to apply for forgiveness to use the safe harbors.
  • Borrowers that received loans before June 5 can choose between using the original eight-week covered period or the new 24-week covered period.

New EZ application details

The EZ PPP Loan Forgiveness Application requires fewer calculations and less documentation than the full application. The EZ application can be used by borrowers that:

  • Are self-employed and have no employees;
  • 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 EZ application requires fewer calculations to be done and less documentation is needed for eligible borrowers. Details about the applicability of the various provisions are available in the instructions accompanying the new EZ application form.

Both applications give borrowers the option of using the original eight-week covered period (if their loan was made before June 5, 2020) or the extended 24-week covered period provided under the new law. The SBA and Treasury said the changes would result in a more efficient process and make it easier for businesses to realize full forgiveness of their PPP loan.