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In light of the newly executed Paycheck Protection Program Flexibility Act (the “Act”), discussed fully here, the SBA (in consultation with the U.S. Department of Treasury) issued a revised PPP loan forgiveness application, as well as a new “EZ” version of the forgiveness application.
It is a good idea for PPP loan borrowers to review these applications and instructions even before the borrower is ready to apply for forgiveness, as the information contained in the applications and instructions will help guide borrowers in their compliance with forgiveness criteria. This includes details about documentation that each borrower must submit with the forgiveness application and documentation that each borrower must maintain for records, but does not need to submit.
The revised PPP loan forgiveness application reflects the borrower-friendly changes implemented in the Act and works toward the goal of streamlining forgiveness. The EZ version is an even more simplified application, consisting of just three pages, but is reserved for only certain borrowers.
The EZ form may be used by three categories of borrowers:
- Self-employed individuals, independent contractors or sole proprietors who had no employees at the time they applied for the PPP loan and did not include any employee salaries in the computation of average monthly payroll in their application.
- Borrowers who did not reduce the annual salary or hourly wages of any employee by more than 25 percent AND did not reduce the number of employees or the average paid hours of employees.
- Borrowers who did not reduce annual salary or hourly wages of any employee by more than 25 percent AND suffered reduced levels of business activity due to compliance with requirements or guidance issued related to COVID-19 health directives.
More details and guidance on which borrowers are permitted to use the EZ application can be found on the instructions for the form.