As I reported Friday evening, the SBA has released their PPP loan forgiveness application — and it’s not all the good news we had hoped for, unfortunately.

Because some politicians involved with the drafting of the forgiveness rules had been saying on twitter that a longer time-frame and more flexibility on how the funds can be spent were key to making the PPP more effective, we had been hoping for an application reflecting these characteristics — but it did not turn out that way. The entire thing at this point feels like “too little, too late”.

What Were Hoping For But Did Not Get (The Bad News)

• An extension to the 56-day (8-week) forgiveness period (at least for restaurants, bars, cafes and other fully- or partially-closed businesses)
• Simplified rules for FTE and salary/wage reduction calculations
• EIDL advance funds used for non-PPP purposes exempt from forgiveness subtraction (per analysis by many colleagues, this is still the case; but on the application it is not apparent, and many banks will not understand the subtle distinctions)

What We Did Get (The Good News)

• Unpaid rent and utilities from a period prior to forgiveness can be paid during the forgiveness period
• Rent and utility payments made shortly after the forgiveness period can also be included, if for services during the 8-week timeframe
• Forgiveness period — as it relates to payroll costs (including employer portion of health insurance and retirement) — can be delayed to coincide with the first pay period after disbursement
• If an employee was fired, quit, or voluntarily had their hours reduced due to non-pandemic reasons, their FTE and salary/wages will not count against the employer
• Safe harbor for salary/wage reduction (however, additional complicated calculations are required)
• Safe harbor for FTE reduction (however, additional complicated calculations are required)
• Clarification on various calculations (e.g., FTEs, forgiveness phase-out, and forgiveness reductions)

There is a lot more to unpack, of course, but those are some highlights. I recommend the following excellent articles for step-by-step explanations and analysis (no, I do not have any affiliation with Forbes — I just think they are writing some of the best material on the topic these days). Also, many thanks to colleague Andrea Carr CPA for preparing a Fillable Version of the SBA PDF Forgiveness Application.

• Tony Nitti’s Line-By-Line Deep Dive — https://www.forbes.com/sites/anthonynitti/2020/05/16/sba-releases-paycheck-protection-program-loan-forgiveness-application-a-deep-dive/#52fc05661b2f
• Brian Thompson’s Step-By-Step for Schedule C Filers —
  https://www.forbes.com/sites/brianthompson1/2020/05/18/ppp-loan-forgiveness-application-guidance-for-the-self-employed-freelancers-and-contractors/#5aaf6804457b

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