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New PPP applications simplify loan forgiveness

June 18, 2020

The U.S. Small Business Administration released a revised loan forgiveness application for the Paycheck Protection Program on Wednesday while also unveiling a new EZ application for forgiveness of PPP loans. Both moves have earned praise from the local business community.

The EZ application, which grants full PPP loan forgiveness, can be used by self-employed borrowers that have no employees. (Generally, the EZ application requires fewer calculations and less documentation than the full application.)

“There are so many sole proprietor small businesses who have needed help, so the new guidance will be a big relief for those folks,” says Dawn Starns, who oversees the Louisiana chapter of the National Federation of Independent Business. “This new guidance and passage of the PPP Flexibility Act will help more small businesses survive the economic shutdown.”

Also eligible to apply for loan forgiveness through the EZ application are borrowers that did not reduce the salaries or wages of their employees by more than 25% and did not reduce the number or hours of their employees. Additionally, borrowers who experienced reductions in business activity as a result of COVID-19 but didn’t reduce the salaries or wages of their workers by more than 25% can apply.

Meanwhile, the revised PPP loan forgiveness application clarifies that borrowers that received loans before June 5 can choose between using the original eight-week covered period or the new 24-week covered period. Among other highlights:

• Health insurance costs for S corporation owners cannot be included when calculating payroll costs; however, retirement costs for S corporation owners are considered eligible costs. 

• Safe harbors for excluding salary and hourly wage reductions and reductions in the number of full-time equivalent employees from loan forgiveness reductions can be applied as of the date the loan forgiveness application is submitted, meaning borrowers don’t have to wait until Dec. 31 to apply for forgiveness to use the safe harbors.

“We’re glad to see that Congress’ intent to make the PPP more practically usable for businesses, business owners and independent contractors is being put into practice,” says Liz Smith, senior vice president of economic competitiveness for the Baton Rouge Area Chamber. “Hopefully, the new flexibility will lead to greater numbers of businesses taking full advantage of the program, and the benefits of translating to a smoother economic recovery.”

Smith reminds businesses that the deadline to apply for a forgivable PPP loan is June 30. Baton Rouge companies in need of a bank referral can reach out to BRAC, she says.

Still, it’s imperative that state and federal officials “continue to do whatever it takes” to save Main Street small businesses across the country, says LABI President Stephen Waguespack.

For local businesses seeking additional relief, Starns points to the state’s Main Street Recovery Fund, which will launch July 1, as another potential avenue.