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PPP Flexibility Act of 2020 Results in Additional Guidance, a Revised Loan Forgiveness Application and a New EZ Application for Qualifying Borrowers

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Since passage of the Paycheck Protection Program Flexibility Act of 2020 on June 5, 2020, the Small Business Administration has continued to bring current and prospective borrowers up to speed through a series of interim rules for the program, as well as the release of a revised loan forgiveness application, a revised loan borrower application, and a new EZ form of the loan forgiveness application.

Updated PPP Loan Forgiveness Application (and a new EZ Version)

On June 17, the Small Business Administration released a new Paycheck Protection Program loan forgiveness application (click here to access) to accommodate changes introduced by the Flexibility Act. The new application contains revisions based on the new extended period including by giving pre-Flexibility Act borrowers filling out the application the option of using the 8-week period granted from the CARES Act in March or of taking advantage of the new 24-week period.

The SBA also released an EZ version of the loan forgiveness application for self-employed borrowers or those without employees (click here to access), or those who did not implement a salary or wage reduction greater than 25% (and did not reduce hours worked by employees). Borrowers who reduced business operations to comply with health-related guidance in the face of COVID-19 but who did not reduce employee wages by more than 25% are may also complete the EZ version.

The new EZ application requires fewer calculations and less documentation for eligible borrowers.

June 30 Deadline Remains to Apply for PPP Loans – Benefits Under the Flexibility Act

There is still government money available until the June 30 deadline for self-employed individuals and small businesses who wish to apply for a PPP loan. As of this writing on June 18, nearly $130 billion remains from the second round of funding provided by the SBA. And several elements of the Flexibility Act—the extended period of coverage and the lowered requirement for only 60% of loan funds to be used for payroll expenses, which is down from 75% in the original CARES Act—should encourage business owners who have not yet applied to consider doing so due to loosened loan forgiveness restrictions.

Businesses that applied for PPP loans before passage of the Flexibility Act on June 5 may opt to choose coverage for the 8- or 24-week period by filling out the appropriate part of the updated loan forgiveness application (as mentioned above). But businesses that applied after June 5 (or those who still plan to apply) before the June 30 deadline need to choose coverage for the 24-week period (a period which can extend no later than December 31, 2020). Borrowers under the Flexibility Act also benefit from a loan forgiveness period extended by the Flexibility Act from two years to five years.

On June 12, the SBA released an updated PPP loan application for applying borrowers (click here to access), which reflects changes under the Flexibility Act. We encourage business owners who have not yet taken advantage of this loan program to do so.

Borrowers will be required to submit their loan forgiveness applications no longer than 10 months following the 8- or 24- week period for which they applied for loan funds or face the requirement of beginning to pay the loan principal and interest (in an amount that has not yet been determined).

Please contact Richard Morris or Angie Prochaska via our online contact form with any questions about the Paycheck Protection Program.

Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.   

Contact Richard E. Morris, CPA, MSTView Profile

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