On Friday May 15, 2020 the Small Business Administration (SBA), in consultation with the Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application.
The form and instructions inform borrowers how to apply for forgiveness of their PPP loans, consistent with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). SBA will also soon issue regulations and guidance to further assist borrowers as they complete their applications, and to provide lenders with guidance on their responsibilities.
The form and instructions include 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
• Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
• 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 statutory exemptions from loan forgiveness reduction based on rehiring 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 that were declined
The PPP was created by the CARES Act to provide forgivable loans to eligible small businesses to keep American workers on the payroll during the COVID-19 pandemic. The documents released today will help small businesses seek forgiveness at the conclusion of the eight-week covered period, which begins with the disbursement of their loans.
Source: National Association of Professional Employer Organizations
PPP Loan Forgiveness and Job Refusals
The instructions released on Friday gave further guidance on the topic of job refusals and loan forgiveness. In order for the loan forgiveness amount to not be impacted by an employee’s refusal to return, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower.
Based on this guidance, ESC recommends that each employee recalled for work be provided with a written offer. Additionally, an employee’s rejection of the written offer should then prompt you to fill out a Job Refusal Checklist to suffice as documentation. Please contact us if you need more information or assistance extending an offer to return to employees currently on furlough or lay off.
Important Reminder: The information in this article is current only as of the date of the posting. The situation is rapidly evolving. Please check our website frequently for the latest guidance.