Automatic and Simplified Forgiveness Process Coming?

Currently, there are bi-partisan proposals in Congress which may allow ‘automatic’ forgiveness for small PPP borrowers ($150,000 or less) by signing a simple good-faith attestation.  There appears to be a high probability this legislation will pass.  In addition, borrowers between $150,000 and $2,000,000 will no longer be required to submit supporting documents with their application.  You would still need to retain the supporting documents for three years should you be audited. There are no proposed changes for borrowers of $2 million or more. Unfortunately, we are unlikely to know the outcome to these proposals until mid to late September because Congress is currently on recess. Congress will likely need to decide before the end of September as the 2021 fiscal budget is due September 30th.  

In addition, probably as a direct result of the unknown outcome of the above congressional proposals, the SBA has not issued their final rules and guidance to the PPP forgiveness application. Most experts agree there is still a need for additional FAQ, rules, and guidance.

When is the Forgiveness Application Due?

The SBA opened the PPP submittal portal on August 10th.  This does not mean you need to rush to get the application completed. Borrowers have up to 10 months following the last day of the covered period (up to 24 weeks after the date you received the PPP funds) to apply for forgiveness. After 10 months the loan is no longer deferred and the borrower must begin paying principal and interest. There is no rush to submit the application.

Potential questions you may have:

I have contracted with KT to perform the PPP forgiveness application and have submitted all the requested documents.   Now what?

First and foremost, thank you for allowing us to assist with this process and getting us the documentation needed to complete and/or accompany the application. At this time, we are concentrating on forgiveness applications of amounts greater than $150,000. We are still accepting and receiving documents for all PPP forgiveness applications. This way, if the proposals by Congress do not pass, we are ready to complete the applications. However, because we don’t wish to waste your money, we are not currently completing applications for loans less than $150,001 unless specifically requested.

We would like KT, or have contracted with KT, to complete the PPP application; however, we received a loan for less than $150k. Should we hold off on sending documents to KT?

While there is potential to receive automatic forgiveness with Congress’s proposal, this has not been finalized. We would prefer you to both reach out and upload the documents requested. This way we would then be ready to complete the application if necessary.

The bank has contacted our business regarding completing the new 3508EZ application. Is there anything special I should know before filling it out?

The new EZ application is a simplified version as compared to the full 3508 forgiveness application. If you are self-employed or have no employees, you will be required to submit this form. However, the complex rules, regulations, and calculations needed to complete the application are still applicable. Examples of calculations still required for the EZ application are:

  • FTE calculations during the coverage period and a comparative period.  You also need to consider potential FTE reduction exceptions for terminated employee positions for which you were unable to rehire a similarly qualified employee. Compensation limits depending on whether the 8 or 24 week period is elected
  • Owner limits and restrictions depending on how your company is legally structured
  • Payroll requirements of at least 60%

If you have any questions or are interested in KT assisting with the PPP forgiveness application please contact Austin Eichacker at [email protected].