On Tuesday, the US Small Business Administration (SBA) and Treasury released the promised revised Form 3508 Paycheck Protection Program (PPP) Loan Forgiveness Application. Form 3508 can be found here, and its instructions here. The new streamlined form incorporates the PPP loan forgiveness changes contained in the recently enacted PPP Flexibility Act, including the expanded 24-week Covered Period for calculating qualified expenses for loan forgiveness and the new exemptions from FTE and salary and wage reductions. In addition, the much-anticipated new Form 3508EZ was also released, providing even greater simplicity for those Borrowers eligible to use it. Form 3508EZ can be found here and its instructions here. Those eligible to use the EZ version include:
- Those who are self-employed with no employees, or
- Those who did not reduce salary or wage by 25% or more during the Covered Period for any employee making less than $100,000 and there was no reduction in full-time equivalent (FTE) employees between January 1, 2020, and the end of the Covered Period (taking into account certain reduction safe harbors and exemptions), or
- Those who did not reduce salary or wage by 25% or more during the Covered Period for any employee making less than $100,000 and the Borrower can certify that it was unable to operate during the Covered Period at the same levels as before February 15, 2020, due to compliance with government health directives related to COVID-19.
The new PPP loan Forgiveness forms also take into account guidance contained in an Interim Final Rule (IFR) issued yesterday. The IFR can be found here. The IFR makes revisions to previously issued IFRs to bring them into compliance with the PPP Flexibility Act provisions. Of note, the IFR makes clear that when Borrowers use the 24-week Covered Period, the cap on compensation for non-owner employees is $46,154 – tripling the prior $15,385 cap based on the 8 week Covered Period. However, employee-owners are capped at $20,833 when the 24 week Covered Period is used. While these latest publications provide some answers to ongoing questions, more guidance is expected as has been the case throughout the PPP loan process.