On June 17, the Small Business Administration (SBA) released two new Paycheck Protection Program (PPP) loan-forgiveness application forms. The first is a revised Full Forgiveness Application (FFA); the second is a slightly shorter “EZ” application form. The SBA has marketed the changes to the FFA and the addition of an EZ form as making the forgiveness application process more “borrower friendly.” However, the bulk of the substantive changes to the FFA merely implement the changes made by the PPP Flexibility Act of 2020, which increased the amount of time businesses had to spend PPP funds, reduced proportion of funds that had to go to payroll and allowed business to defer payroll taxes without losing eligibility for debt forgiveness. The EZ form is virtually identical to the FFA; the main difference between the two – and the reason the EZ form is shorter – is that the EZ form leaves out some calculations, like Full Time Equivalent (FTE) and salary reductions, which are superfluous for anyone meeting one of the eligibility requirements.
EZ Form Eligibility
Only borrowers who meet at least one of three following conditions may use the EZ form:
- Self-employed and have no employees
- Did not reduce the salaries or wages of their employees by more than 25% AND did not reduce the number of hours of their employees
- Did not reduce the salaries or wages of their employees by more than 25% ANDexperienced reductions in business activity as a result of the heath directives related to COVID-19
In other words, borrowers that have employees and reduced salaries or wages by more than 25% will not be able to use the EZ form.
Our COVID-19 Task Force will continue to monitor the ever-changing landscape of options and issues for businesses to consider as we navigate through the pandemic and beyond.