Finally! An “EZ” Solution to PPP Forgiveness
Can you answer “Yes” to any of the following questions? If so, you’re in luck! New SBA and Treasury guidelines have made a simple new form for those who qualify. If you do, your PPP forgiveness is on the path to “EZ” Street.
For EZ filers only, the lookback period is now January 1–March 31, 2020.
Say Yes
If you can say yes to any one of the following three questions, you are eligible to use the EZ forgiveness application:
- Are you self-employed with no employees? If your PPP loan application states you had neither employees nor used any employee compensation in your average monthly payroll computation, you are eligible for the “EZ” application.
- Has your business lost revenue since February 15, 2020 due to official compliance requirements, sanitation or social distancing standards, or any other safety requirement related to Covid-19? (Official guidance is considered that offered by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration.)
If you also did not reduce annual salaries or hourly wages by more than 25% compared to your lookback period, you are eligible for the EZ application. (Excludes employees who made over $100k in 2019.)
- Did you avoid reducing employee count and maintain average paid hours between January 1, 2020 and the end of your Covered Period? Exclude employees on 2/15/2020 who meet either of these two criteria from your calculations:
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- Those who refused an offer of rehire or restoration of hours on previous terms
- Those for whom you were unable to find a suitable replacement by December 31, 2020.
If you also did not reduce annual salaries or hourly wages by more than 25% compared to your lookback period, you are eligible for the EZ application. (Excludes employees who made over $100k in 2019.)
Required Documentation
Borrowers must maintain documentation supporting:
- Salaries and wage rates
- Job offers, refusals, firings, voluntary resignations, and reductions in work schedules
- FTE calculations
- Certification that Borrower operations were limited due to COVID-19 compliance requirements
For question No. 3, the SBA requires documentation of average FTE calculations from January 1 to the end of the Covered Period.
Borrowers aren’t required to provide Schedule A or individual employee information.
Only Two Options for Covered Period Length
Recent guidance defines the Covered Period more clearly. See our blog post Hidden Pitfalls of the New PPP Flexibility Act for detail on the Either/Or choice implicit in the legislation. Newer guidance confirms the Either/Or interpretation. The Covered Period is now defined as:
- The 24-week (168-day) period beginning on the PPP Loan Disbursement Date; or,
- for loans received before 6/5/2020, borrowers may elect to use an 8-week (56-day) Covered Period.
The definition of the Alternative Payroll Covered Period has not changed, and it accommodates the 24-week option as well. (See New Guidance Clarifies the PPP Forgiveness Period for more information and definitions on Covered Period and Alternative Payroll Covered Period.) As always, borrowers should compare their Covered Period to their lookback period. For EZ filers only, the lookback period is now January 1–March 31, 2020.
As Always, Allevity is Here to Help
Recent legislation is daunting. If you have questions, we’re ready to help you find answers. Give us a call at (800) 447-8233 and let’s chat. Or, if you prefer we reach out to you by email, click here.