The SBA has now published its PPP Loan Forgiveness Application (SBA Form 3508) which can be downloaded here. The two steps you need to take to ensure that your PPP Loan is forgiven in full are to spend the PPP Loan proceeds only on approved costs and scrupulously document your spending during the eight weeks following receipt of the PPP Loan proceeds. The basic requirements for PPP Loan forgiveness remain the same:

1. 1. At least 75% of the loan proceeds must be spent on eligible payroll costs;
   2. The company must maintain the average number of full-time equivalent employees (“FTEEs”) for each pay period falling within the eight weeks at the same level experienced by the employer during the FTEE Measuring Period; and
   3. The company must maintain employee salaries for employees making under $100,000 annually at a level equal to 75% or greater than their previous salary, but for the employees with an annual salary of over $100,000, salaries can be reduced to $100,000.

SBA Form 3508 is made up of several parts including (1) a Loan Forgiveness Calculation Form, (2) a PPP Schedule A, (3) a PPP Schedule A Worksheet, (4) a list of documents and information that must be submitted with the completed Application and a list of documents that must be maintained by the Borrower for a period of 6-years, (5) a PPP Borrower Demographic Information Form and (6) instruction for each.

Generally, SBA Form 3508 is clear in its requirements and the instructions provide answers to some of the lingering questions about how PPP Loan forgiveness is going to work.

1. 1. The Covered Period is defined as the eight-week (56-day) period beginning on the PPP Loan Disbursement date. Borrowers with a biweekly (or more frequent) payroll schedule, may elect an alternate Covered Period, which will be the eight-week (56-day) period beginning on the first day of the pay period following the PPP Loan Disbursement date.
   2. Payroll Costs that are eligible for forgiveness include both Payroll Costs paid during the Covered Period and Payroll Costs that are incurred during the Covered Period. For Payroll Costs that are incurred, such costs must be paid on the next pay day following the Covered Period for those Payroll Costs to be forgiven.

The PPP Schedule A Worksheet walks the Borrower through the necessary calculations to determine whether the entire amount of the PPP Loan is eligible for forgiveness, and if not, calculates the amount of necessary reductions.

Each Borrower is required to maintain the following documents and/or information for a period of 6-years after the date the loan is either forgiven or paid in full:

1. 1. PPP Schedule A Worksheet or its equivalent.
   2. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.
   3. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.
   4. Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.
   5. Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”
   6. All records relating to the Borrower’s PPP loan, including:
      1. documentation submitted with its PPP loan application,
      2. documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan,
      3. documentation necessary to support the Borrower’s loan forgiveness application, and
      4. documentation demonstrating the Borrower’s material compliance with PPP requirements.

The Borrower is also required to permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.

This Article is based on information available as of May 18, 2020. The information is subject to change as additional guidance is provided.