The Small Business Administration recently issued the EZ Paycheck Protection Program (PPP) Loan Forgiveness Form, which allows some qualified borrowers to fill out a smaller (a two-page rather than a four-page) form.
The EZ form still requires borrowers to do calculations and provide documentation, but not as much as the full form. (Note that borrowers still need to save documentation for proof of certifications.)
Who can use the EZ PPP Forgiveness form?
The EZ form can be used on any size loan if the borrower can affirm one of the following:
- The borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP Loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form (SBA Form 2483).
- The borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during their Covered Period or Alternative Payroll Covered Period compared to the period of January 1, 2020 and March 31, 2020 (“employees” means individuals who did not receive wages or salary at an annualized rate in an amount of more than $100,000 during any period of 2019), and either:
- They did not reduce the number of employees or the average paid hours of those employees from Jan. 1, 2020 to the end of their Covered Period. (The borrower can ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020, if the borrower was unable to hire similarly qualified candidates for unfilled positions on or before December 31, 2020, and reductions in an employee’s hours that the borrower offered to restore but the employee refused), OR
- They were unable to operate during the Covered Period at the same level of business activity as before Feb. 15, 2020, due to compliance with established requirements of or issued guidance on maintaining standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19 called for between March 1, 2020 and Dec. 31, 2020.
A borrower who cannot certify at least one of the above statements does not qualify to use the EZ Form and should complete the full forgiveness form.
How do the EZ form and the Full Forgiveness PPP form differ?
The EZ form has eight lines for calculations compared to the full form’s 11 lines, and requires the borrower to provide the following documentation:
- Payroll costs
- Mortgage interest payments
- Rent or lease payments
- Utility payments
- Potential forgiveness amount (add lines 1-4)
- Loan amount
- Payroll cost 60% requirement (divide line 1 by 0.6)
- Forgiveness amount (the smallest of lines 5, 6, and 7)
The main difference between the forms is the three additional requirements that borrowers must include on the full form from PPP Schedule A to account for full-time equivalency (FTE) and salary/hourly wage reduction adjustments.