SBA Releases New PPP Loan Forgiveness FAQs and Guidance
The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, recently released a new FAQs document addressing Paycheck Protection Program (PPP) loan forgiveness.
The 11-page FAQs focus on four main areas of concern that address different aspects of how borrowers should determine how much of their loan is forgivable:
• General loan forgiveness – including sole proprietors, independent contractors, and self-employed individuals with no employees at the time of loan application.
• Loan forgiveness payroll costs – including partial pay periods, group health care benefits and payroll costs incurred or paid outside of the eight-week or 24-week covered periods.
• Loan forgiveness nonpayroll costs – including costs incurred or paid outside the eight-week or 24-week covered periods and that the Alternative Payroll Covered Period does not apply to nonpayroll costs.
• Loan forgiveness reductions – including how borrowers should calculate the reduction in their loan forgiveness amount due to reductions in employee salaries or wages.
On Aug. 12, the FAQs were updated with three new questions answered regarding PPP and the Economic Injury Disaster Loans (EIDL). The new FAQs cover:
• How a lender will be able to confirm the amount of any EIDL advance that will be automatically deducted by the SBA from a PPP borrower’s loan forgiveness amount when the borrower has received both EIDL and PPP funds.
• How lenders should handle any remaining balance due on a PPP loan after the SBA remits the forgiveness amount to the lender, including if there has been a reduction in the forgiveness amount for an EIDL advance.
• What a lender should do if a borrower received an EIDL advance in excess of the amount of its PPP loan.
Additionally, two new answered questions were added to the PPP FAQs originally published in April, and an interim final rule was issued to establish procedures for prospective borrowers who want to appeal certain SBA loan decisions.