Update on PPP Loan Forgiveness

Last Friday, May 15th, the SBA issued the long-awaited loan forgiveness application and instructions for the Paycheck Protection Program (Click here to download).  While the form and instructions provide details on how to apply for and calculate forgiveness, it still falls very short in resolving significant issues and raises even new questions. 


Even with the release of the application and instructions, this is just the start.  The SBA has already indicated that additional guidance in the form of FAQs or interim final rules will follow.  As of today, that has yet to happen.


The application and instructions are the initial attempt by the SBA to "reduce compliance burdens and simplify the process for borrowers."  Here's what the application and instructions do make clear:

  • Borrowers have the option to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles

  • There is flexibility to include eligible payroll and non-payroll expenses incurred during the covered period but not paid until after the next billing cycle (e.g., utilities, rent, etc.)

  • The calculation clarifies that the 75% rule relates to the potential forgiveness amount used for payroll costs, rather than 75% of the total loan proceeds have to be used for payroll costs.

  • The ability to exclude from the loan forgiveness reduction any worker who declined a good-faith, written offer to be rehired

  • The basic mechanics of the calculations required by the CARES Act to confirm eligibility for loan forgiveness.

While we encourage clients to review the application and instructions, much uncertainty still exists.  As a result we are cautious to be quick to advise clients at this point on how to best maximize the forgiveness.  This has been a moving target and likely only the first of additional installments of guidance yet to come.  Therefore, we do not advise clients to complete the application until we have more clarity and possibly even more generous provisions extended.


We remain vigilant daily for new guidance and are committed to advising clients for the best possible outcome.  Look for us to send out an invitation for a live webcast as soon as the SBA puts out additional guidance.


In the meantime, review the current application and instructions and reach out to us with questions.

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