By Nicholas Grether, Esq., The Maloney Firm, APC

Note: This article was posted on August 7, 2020 at 12:21pm PDT. Because the COVID-19 situation is rapidly changing as the federal government and State of California continue to fight this pandemic, individuals and businesses should consult with counsel for the latest developments and updated guidance on this topic.  Specifically, the federal government continues to update the regulations related to PPP Loans.  The federal government may create additional exemptions and procedures that affect forgiveness.

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If your business was fortunate enough to receive a Paycheck Protection Program (“PPP”) loan, you likely have questions about what to do next.  We’ve provided several resources to assist you in applying for forgiveness and some updates on the process of applying for PPP loan forgiveness.  

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Pending Legislation May Ease Forgiveness

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Currently pending in the U.S. Senate, is Senate Bill 4321 , which provides that loans made to eligible recipients for under $150,000, will be forgiven if the borrower submits a one-page form attesting that the borrower complied with the PPP requirements.  The Senate also proposes easing forgiveness requirements on for loans between $150,000 and $2,000.  The bill would also establish provisions to protect lenders that rely on the documentation and certifications provided by the borrower.  It also proposes limiting enforcement actions to borrowers who commit fraud or spend the loan proceeds improperly.  If and until the bill is passed and signed, we will not know the exact details, but the bill has bipartisan support and it is expected to pass in some form.

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Resources to Help Apply for PPP Loan Forgiveness

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The Association of International Certified Professional Accountants (AICPA) had created a downloadable tool to estimate loan forgiveness. 

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If using one of the forms created by the Small Business Administration (“SBA”), the SBA has provided instructions on filling out the Form 3508 or 3508 EZ.  If the borrower did not reduce any employee’s pay more than 25% and did not reduce the number of employees, they will likely be able to use the EZ version.  Review the instructions for the Form 3508 EZ to find out if you are eligible.

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Link to the SBA Form 3508 here and instructions here.

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Link to the SBA Form 3508EZ here and instructions here.

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Some Borrowers May Choose an 8-week or 24-week Period for PPP Loan Forgiveness

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The amount of the loan forgiven depends on how the funds have been spent during a certain time period after receiving them.  If the borrower received their PPP loan funds prior to June 5th, 2020, the borrower can choose between an 8-week period or 24-week period.  The borrower should calculate potential forgiveness amounts for both periods and select the period that is more beneficial.  Use a tool like the AICPA calculator to assist in that process.  Please note that if the borrower received the PPP loan funds after June 5th, 2020, they must use a 24-week period.

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 If you have questions regarding your PPP loan or this article, contact The Maloney Firm at 310.540.1505.

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