By Robert G. Brody and Mark J. Taglia
 

Late last week the Small Business Administration (the “SBA”) released Form 3508, the Paycheck Protection Program Loan Forgiveness Application (the “Application”) and guidance on how to complete it.  Slowly, some answers are coming to light.   

The Application includes several measures to reduce compliance burdens and simplify the process for borrowers, including:

• Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles;
• Step-by-step instructions on how to perform the calculations to demonstrate eligibility for loan forgiveness;
• Borrower-friendly exemptions from loan forgiveness penalties based on rehiring of employees by June 30; and
• Addition of a new exemptions from loan forgiveness penalties for borrowers who have made a good-faith, written offer to rehire workers that was declined and for employees fired for cause.

The Application has four primary components:

• The PPP Loan Forgiveness Calculation Form (summary sheet and borrower certification);
• The PPP Schedule A (calculates loss of forgiveness based on the FTE (headcount) and/or payroll reductions);
• The PPP Schedule A Worksheet; and
• The PPP Borrower Demographic Information Form, which is optional.  

A special note to our clients who have borrowed in excess of $2 million in PPP Loans.  
As part of the Application the SBA requires borrowers who received an amount in excess of $2 million to check a box to notify the SBA of this fact. As we discussed in our prior article (click here to read), borrowers who have borrowed in excess of $2,000,000 are subject to an audit by the Treasury Department.

The SBA has promised it will issue additional regulations/guidance to assist with the completion of the Application.  Brody and Associates will continue to keep our clients updated as this guidance is forthcoming.  In the interim, we are ready to assist our clients in all aspects of complying with the PPP program (click here to review Form 3508, the Paycheck Protection Program Loan Forgiveness Application)   (click here to review the latest Guidance from the SBA).

The subject matter discussed in this post can be very technical.  It is an evolving area of law and very fact specific.  Our goal here is to simply alert you to some of the key issues involved.  We urge you to seek competent legal counsel before applying these ideas to your specific situation.  Brody and Associates stands ready to discuss your particular needs.