On May 15, 2020, the SBA published the PPP loan forgiveness application, form 3508. You can review the application here.
The application includes instructions on completing the form, which a borrower must file with its lending bank in order to apply for PPP loan forgiveness. The application contains few surprises, and we could still use the additional guidance/interim final rule promised by the government. In addition, the application contains no provisions on extending the 8-week period in which borrowers must use the PPP loan proceeds in order to obtain forgiveness.
It is worth noting the following in the application:
- Borrowers who use a biweekly or more frequent payroll schedule to calculate payroll costs can elect to use an “alternative payroll covered period” that aligns with borrowers’ regular payroll period.
- Borrowers have flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan. The form instructions state that: “An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period.”
- The application form includes instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness and also lists documentation borrowers will need to submit with the application in order to substantiate the forgiveness calculation.
- The application confirms the CARES Act exemptions from loan forgiveness reduction based on rehiring, by June 30, 2020, employees that were laid off.
- In keeping with a recently released SBA FAQ # 40 published on May 3, 2020, the application confirms the exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers, and the employee’s rejection of that offer has been documented by the borrower.
As always, please don’t hesitate to reach out to your Archstone attorney should you have any questions.