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U.S. Treasury Releases Updated Guidance and Revised PPP Loan Forgiveness Applications

At Gettry Marcus CPA, P.C. we continue to stay apprised as to the status of the Paycheck Protection Program (“PPP”) loan updates as provided by the U.S. Treasury. Yesterday, the U.S. Treasury released additional guidance related to the Paycheck Protection Program Flexibility Act (“PPPFA”) as well as new loan forgiveness applications, which are Form 3508EZ and Form 3508. This information provides insight into the changes associated with the PPP loans and loan forgiveness protocols, and include the following certain key provisions:

  • For PPP loan borrowers utilizing the 24 week (168 day) Covered Period:
    • Employee (non-owner) compensation allowable for PPP forgiveness will max out at gross compensation of $46,154, plus add-ons for health insurance, retirement benefits and state unemployment insurance
    • Owner compensation allowable for PPP forgiveness will max out at gross compensation of $20,833.  Health insurance and retirement benefits on behalf of the owner are no longer part of the PPP loan forgiveness calculation
  • The U.S. Treasury introduced Form 3508EZ, which is a simplified loan forgiveness application that can be utilized by a borrower if certain provisions are met.  If any of the following 3 situations are met, the borrower may utilize Form 3508EZ to apply for PPP forgiveness:
    • The borrower is a self-employed individual, independent contractor or sole proprietor who had no employees at the time of the PPP loan application
    • The borrower did not reduce salary/hourly wages of any employee (who earned $100K or less in 2019) by more than 25% during the Covered Period (or Alternative Covered Period) when compared to the period between January 1, 2020 and March 31, 2020 and the borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period (except for the application of the safe harbors and any exemptions)
    • The borrower did not reduce salary/hourly wages of any employee (who earned $100K or less in 2019) by more than 25% during the Covered Period (or Alternative Covered Period) when compared to the period between January 1, 2020 and March 31, 2020 and the borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established by certain regulations to combat COVID-19

However, if a borrower has reduced salary/hourly wages for employees or had reductions in their employee headcounts, a borrower must complete PPP Loan Forgiveness Application Form 3508, which is more detailed and considers calculations for these reductions.

  • In general, Form 3508 is similar to the prior, and now superseded, PPP Loan Forgiveness Application released by the U.S. Treasury on May 15, 2020.  Certain key changes are:
    • Payroll versus non-payroll parameters were changed to 60%/40% from 75%/25%
    • Expansion of the FTE (full-time equivalent) exemptions as detailed within the PPPFA

If you would like additional information please contact your Gettry Marcus Advisor or Gabe Shurek, or Nicholas Backmann the authors of this article.

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