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PPP Loan Forgiveness Application

Understanding the PPP Loan Forgiveness Application and the EZ Application Process

Learn the New Government Guidelines for the PPP Loan Forgiveness Application

The government and SBA recently released the PPP Loan Forgiveness Application. Once the PPP Loan Flexibility Act was passed, the government released an updated PPP Loan Forgiveness Application as well as an EZ Application.

The updates for the PPP Loan Forgiveness Application makes changes to the application that addresses the amount of time available to use the loan, as well as the amount of the loan required to be used for payroll. In addition, specific categories are no longer required as part of the application.

The EZ Application is designed for specific categories of people that may not have all the same payroll needs or expenses. Below is a breakdown of the changes and updates regarding these applications.

What Is the Updated PPP Loan Forgiveness Application?

Forgiveness for the PPP loan is not automatic. You must apply for forgiveness, so the SBA and treasury know if you used the loan as directed, and not to expand your business or even hire new employees. However, the old forgiveness application is geared towards the original terms of loan forgiveness before passing the PPP Loan Flexibility Act.

The new application makes appropriate changes to allow employers to receive forgiveness under the proper laws. Here are some of the changes to the application:

  • Employers may attest they used the loan in 24 weeks as opposed to 8 weeks.
  • Employers must claim 60% as opposed to 75% is used for payroll purposes.
  • Employers may elect either 8 weeks or 24 weeks of forgiveness options based on their use.
  • Employers electing 8 weeks may claim $15,383 per person, whether they are an employee or owner.
  • Employers claiming 24 weeks, the amount is capped at $44,164 per employee.
  • Employee reimbursement can include benefit payments, such as health insurance, retirement savings, and unemployment insurance.
  • The owner or self-employed person’s reimbursement is capped at $20,833 and does not include any benefit premiums or payments.
  • Forgiveness is based on an annual salary of $100,000 per person.

What Is the EZ Application?

The EZ Applications is intended for a specific group of employees. The application requires much less information. However, to qualify for this application process, you must:

  • Be self-employed with no employees.
  • Did not reduce the hours for employees and did not reduce the salary by 25%.
  • Covid19 laws and health directives forced business shutdowns or reduction of force, however employees only loss 25% of their salaries at most.

The EZ Application does not require adjustment calculations found on the PPP Loan Forgiveness Schedule A Application. Therefore, employers must only account for payroll, utilities, mortgage interest payments, and basic calculations relating to the total amount of forgiveness. The line items are as follows:

  1. Payroll costs
  2. Business mortgage interest
  3. Rent or mortgage payments
  4. Utility payments
  5. Potential forgiveness amount (add lines 1-4)
  6. Loan amount
  7. 60% of payroll (line 1 divided by 0.6)
  8. Forgiveness amount (the smallest total between lines 5, 6, and 7)

We Are Here to Help.

The PPP Loan Application and EZ Application are sometimes difficult to navigate. Determining the best application for your needs may be overwhelming, especially when working on reopening your business or implementing new CDC guidelines.

The dedicated and knowledgeable HR professionals at Workplace HCM can help you navigate the process and determine the best application for your loan forgiveness needs. Contact us today at (856) 334-9711 for help and guidance throughout the process.

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