SBA Publishes PPP Loan Forgiveness Application

Print PDF



SBA Publishes PPP Loan Forgiveness Application

On Friday, May 15, 2020, the Small Business Administration (SBA) published the Paycheck Protection Program (PPP) Loan Forgiveness Application (Application). The Application can be found here. 

To apply for forgiveness for a PPP loan, a borrower must complete the Application and submit it to their lender. The Application contains instructions, a worksheet and guidance for borrowers to calculate the amount of loan forgiveness to which they are entitled. Additionally, Page 10 of the Application provides a list of documents that each Borrower must submit with its Application and other documents which the Borrower must maintain for six years after the date the loan is forgiven or repaid in full, but is not required to submit.  

In addition to the Frequently Asked Questions published by the SBA, found here, the Application clarifies previously published guidance while also providing previously unpublished instructions.

Alternative Payroll Covered Period

For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the "Alternative Payroll Covered Period"). Thus, for some calculations, Borrowers can elect an Alternative Payroll Covered Period instead of the "Covered Period" which runs from the date they received PPP funding. For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20.

FTE Reduction Exceptions

Following up on FAQ # 40, which states that PPP loan forgiveness is not affected by an employee's rejection of a re-hire offer, the Application takes into consideration: (1) any Full-Time Equivalent (FTE) positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours. Any FTE reductions in these cases do not reduce the Borrower's loan forgiveness.

FTE Reduction Safe Harbor

A Borrower is exempt from a reduction in loan forgiveness based on FTE employee levels if both of the following conditions are met: (1) the Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and (2) the Borrower then restored its FTE employee levels by not later than June 30, 2020 to its FTE employee levels in the Borrower's pay period that included February 15, 2020.

330 North Wabash Avenue, Suite 2100
Chicago, Illinois 60611-3607
T: 312.840.7000
F: 312.840.7900