Sole proprietors and self-employed individuals who received a loan through the federal Paycheck Protection Program now have an easier way to ask for forgiveness.
The Small Business Administration has released what it’s calling an “EZ Forgiveness Application,” which the agency says will require “fewer calculations and less documentation” and reduce the bureaucratic burden for smaller recipients.
Almost 20% of the PPP [program]’s 4.5 million loans were for under $100,000, according to the SBA’s most recent report, but many borrowers have felt stifled by the confusing forgiveness process and its thicket of red tape. Earlier this month, Congress passed legislation to give the PPP [program] more flexibility, including reducing the percentage that recipients must use on payroll from 75% to 60%. The forgiveness period was also extended from 8 to 24 weeks.
According to the SBA, the new EZ application is part of an effort to make the program more flexible. It applies to the following types of borrowers:
- Borrowers who are “self-employed and have no employees”
- Borrowers who “did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees”
- Borrowers who “experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%”
In addition to the EZ application, the SBA also revised its full forgiveness application to comply with the new flexibility rules. Both applications give borrowers the option of choosing the 24-week forgiveness period or sticking with the original 8-week period.