This morning the SBA issued a new interim final rule to provide revisions to the third and sixth interim final rules to accommodate changes from the Paycheck Protection Flexibility Act. They also issued updated forgiveness applications. There are two loan forgiveness applications available to borrowers. The Form 3508EZ and the Form 3508. In order to utilize the Form 3508EZ, you must review the Checklist for Using SBA Form 3508EZ and meet at least one of three qualifications. The instructions for both Forms have been separated from the applications.
Important updates include:
· Clarifies that individual employee compensation for a 24 week covered period may not exceed $46,154 (annual salary of $100,000 prorated for the covered period). The interim final rule did indicate this would only be reached if the borrower reduced its FTEs but was eligible for an exception or safe harbor from the resulting reduction in forgiveness.
· The owner compensation replacement for the 24 week period is updated to 2.5 months of 2019 net profit, up to $20,833 (the 2.5 month equivalent of $100,000 per year). This amount should exclude any qualified sick or family leave equivalent amounts for which a credit is claimed under the Families First Coronavirus Response Act.
· The maturity of PPP loans made before June 5, 2020, is two years unless the borrower and lender mutually agree to extend the maturity of such loans to five years. All loans made after June 5, 2020, will have a maturity of five years.
We know the continued changes to the Payroll Protection Program can feel overwhelming and confusing. Rest assured that we are doing our best to stay on top of these changes and are happy to answer your questions.