The Treasury Department and the Small Business Administration released new “borrower-friendly” requests for loan relief under the Paycheck Protection Program (PPP) on Wednesday.
The revised loan waiver application forms are the result of the PPP Flexibility Act, which came into force on June 5th. This bill has made several changes that will benefit restaurants, including extending the period the loan can be drawn from after disbursement from eight weeks to 24 weeks and extending the deadline for hiring workers or restoring wages to December 31st for forgiveness.
The Flexibility Act also creates a safe haven for businesses like restaurants that were unable to resume business prior to the COVID-19 illness due to government or health department restrictions. Last week officials from the SBA and Treasury Department unveiled new revised guidelines with changes to the Flexibility Act.
On Wednesday the SBA published two new forms with which employers can apply for loans if at least 60% of the loan funds have been used for payroll. Both offer borrowers the option of extending the original eight-week coverage period (if their loan was signed before the 5th of April).
Borrowers have the option of a revised full form, which is five pages long, or an optimized three-sided one EZ version.
The EZ version is eligible for those who:
- Employers who have not reduced salaries or wages by more than 25% and have not reduced the number or hours of employees during the period covered.
- Employers who have experienced a COVID-19-related restriction in business activity due to health regulations and who have reduced salaries or wages by no more than 25% during the period covered.
The EZ application requires fewer calculations and fewer documentation for eligible borrowers, the SBA said.
While the move to streamlined forms is an attempt to simplify the PPP for borrowers, some confusion remains, said Pittsburgh attorney Patrick Dennison, a partner with Fisher Phillips law firm.
The new guideline does not clarify the question of how the potential reduction in hourly wages is to be calculated and whether it should be based on a total hourly wage or an average that includes, for example, overtime.
The SBA also announced this week that it has resumed processing applications for the Economic Injury Disaster Loan, or EIDL, Advance Grants. The $ 10,000 advance is for businesses experiencing a temporary loss of revenue and is non-repayable.
The agency stopped accepting new applications for the grants on April 15th. However, the SBA said it will resume processing these applications on a first-come, first-served basis and began accepting new applications for the advance grant on June 15.
The PPP program was launched as part of the Coronavirus Aid, Relief and Economic Security, or CARES Act, and Congress has approved nearly $ 660 billion for the program in total. To date, the SBA has approved 4.6 million PPP loans totaling $ 513 billion. The deadline for applying for a PPP loan is June 30th.
Contact Lisa Jennings at [email protected]
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