The Small Business Administration (SBA) and the Treasury Department, on Friday, issued a Paycheck Protection Program (PPP) Loan Forgiveness Application, along with detailed instructions and worksheets.
Dealership PPP borrowers will use the application to apply to their lender for forgiveness of costs properly incurred and payments properly made in conjunction with their eight-week forgiveness-covered period.
The new application, instructions and worksheet provide clarity on several PPP loan forgiveness issues but questions still remain. For example, the new documents do not address whether any floorplan interest payments will be forgivable. SBA is expected to issue rules and guidance to further assist PPP loan forgiveness applicants and their lenders.
The application, instructions and worksheets are designed to simplify the forgiveness application process by including:
- An alternative option for calculating payroll costs using an “alternative payroll covered period” that aligns with a borrower’s regular payroll cycle.
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during a borrower’s eight-week covered forgiveness period.
- 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 the statutory exemptions from loan forgiveness reductions, including a “safe harbor” based on rehiring employees by June 30, 2020.
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made good-faith, written offers to rehire workers that were declined or who have other former employees who departed under certain conditions.
- A description of many of the documents that will need to be submitted in support of a forgiveness application.