SBA Releases New EZ Application for PPP Loan Forgiveness

By Jennifer Mailhes, CPA – Business Advisory Shareholder

The Small Business Administration (SBA) has released an easier-to-complete EZ forgiveness application form for certain Paycheck Protection Program (PPP) borrowers to apply for its desirable loan forgiveness opportunity. Although the new form may be enticing to many due to its simplicity, it is important for borrowers to understand when this form applies and when it doesn’t. Gain more insight on the EZ application below to determine whether you qualify for this option.

EZ Form Application Details

The new EZ form was designed to simplify the forgiveness filing process for borrowers who have not reduced their headcount or payroll during their covered periods by only requiring them to certify this has been the case in lieu of submitting detailed calculations for reductions of employees or wages. It is important to note, this does not change how employee headcounts and forgiveness expenses are calculated or the need to keep documentation.

Certification Alternative

Eligible borrowers looking to take advantage of this simpler format will need an authorized company representative to make a certification on its application that one of the following is true:

• The company did not reduce its employee headcount or the average paid hours of employees between Jan. 1, 2020, and the end of the covered period. Exceptions to this rule include any reductions that arose from an inability to rehire individuals who were employees on Feb. 15, 2020, or to hire similarly qualified employees for unfilled positions on or before Dec. 31, 2020.
• The company was unable to operate between Feb. 15, 2020, and the end of the covered period at the same level of business activity as before Feb. 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020, and Dec. 31, 2020, by the Secretary of Health and Human Services (HHS), the Director of the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration (OSHA), related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

The borrower and the authorized representative will also need to certify the company did not reduce salaries or hourly wages by more than 25% for any employee during the covered period or alternative payroll covered period compared to the period between Jan. 1, 2020 and March 31, 2020. For purposes of this certification, the term “employee” includes only those employees who did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000.

If you are unable to make these certifications, your business is likely not eligible to leverage this simplified loan forgiveness form. This can be verified by completing the checklist on the form’s instructions. Instead, borrowers must use the revised forgiveness application.

Covered Period Considerations

Borrowers should also consider how their calculations and chosen covered period will impact their forgiveness amount. For many borrowers, leveraging an eight-week covered period could provide the highest level of forgiveness. Doeren Mayhew further explores borrower options when it comes to the loan’s covered period for forgiveness in this article.

The PPP loan forgiveness application continues to evolve, and Doeren Mayhew stands ready to guide you through the process. For assistance with evaluating which application is most suitable for your business to obtain full loan forgiveness, contact us today.