Here’s how small businesses can apply to get their PPP loans forgiven

WASHINGTON, D.C. — The U.S. Small Business Administration (SBA) and the U.S. Department of the Treasury on Friday night released a Paycheck Protection Program (PPP) loan-forgiveness application.

The form and detailed instructions let borrowers know how to apply for forgiveness of their PPP loans, which were authorized under the federal CARES Act (the COVID-19 stimulus law) to help small businesses and nonprofits stay afloat and keep their workers during the coronavirus crisis.

How much they end up getting forgiven could be a make-it or break-it proposition for some small companies and their employees.

The SBA and Treasury Department say the form and instructions include several measures to cut 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. For example, they can use the first day of their first pay period following the date they received their loan money from their bank or credit union, instead of the day the loan funds arrived
• Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan from their lender
• Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
• “Borrower-friendly” implementation of legal exemptions from loan-forgiveness reduction based on rehiring workers by June 30
• Addition of a new exemption from the loan-forgiveness reduction for borrowers who have made a “good-faith, written offer” to rehire workers, but had the employees turn down the offer

Borrowers are usually eligible for forgiveness of their payroll costs over an eight-week (56-day) period from the start of the loan or the alternative payroll date, the agencies said. Employers need to have spent at least 75 percent of the potential forgiveness amount on payroll. They are required to list how much they paid to owners (owner-employees, a self-employed individual, or general partners). The total amount of cash compensation eligible for forgiveness cannot exceed an annual salary of $100,000, or $15,385 over eight weeks, for each of those people.

Eligible nonpayroll costs cannot surpass 25 percent of the total loan-forgiveness amount. Nonpayroll costs eligible for forgiveness include business-mortgage interest payments, business rent or lease payments, and utility costs like electricity, gas, water, and telecommunications during the eight-week period, as long as the property and services were in place before Feb. 15.

You can access the loan-forgiveness application and instructions here. It is also available at www.sba.gov/ppp in the Loan Forgiveness section of the web page.

The SBA said it will also soon issue regulations and guidance to further help borrowers to complete their applications and to provide lenders with guidance on their responsibilities under the program.