Quiet Friday Evening Interrupted by Long Awaited SBA Guidance on PPP Loan Forgiveness

Ruder Ware

You’ve been waiting.  We’ve been waiting.  Another week went by with no meaningful guidance on the forgiveness provisions of the Paycheck Protection Program.  What better time to issue it than a beautiful Friday evening!  We now have the official Paycheck Protection Program Loan Forgiveness Application, and instructions.  Not drafts, but the actual form and instructions that borrowers will use to request loan forgiveness.  The form and instructions can be found here.

In publishing these documents, the SBA states that the forms and instructions “include several measures to reduce compliance burdens and simplify the process for borrowers” and goes on to cite one of these measures as the option for borrowers to calculate payroll costs using an alternative payroll covered period that aligns with borrowers’ regular payroll cycles rather than a hard and fast eight week period that starts on the date the PPP loan originated.

The instructions are packed with the specificity we’ve been asking for (for example an “FTE” is based on a 40 hour week, not the borrower’s own definition of full-time employee).  And the rules for reduction in loan forgiveness due to reductions in FTEs or salaries/wages have their own schedules to the forms which must be carefully considered because up until now all we have had is the language in the CARES statute which is a little confusing (to be generous!).

While we wouldn’t say throw out the window everything you thought you knew about PPP loan forgiveness, the detail and specificity of the form and instructions AND the importance of securing maximum (legal!) loan forgiveness means the application should be completed very carefully and with the instructions close at hand.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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