On Wednesday, June 17, 2020, the Small Business Administration (SBA), in conjunction with the Department of Treasury, announced a new form 3508EZ for certain PPP Loan recipients to use to apply for forgiveness. The new EZ application, which can be used if you are eligible, requires less documentation and fewer calculations than the full forgiveness application form.
Eligibility for Form EZ
To be eligible to use Form EZ, a borrower must meet one of the three following criteria:
- Is self-employed and has no employees; OR
- Did not reduce the salaries or wages of employees by more than 25% during the covered period as compared to the period between January 1, 2020, and March 31, 2020, AND did not reduce the number of employees or the average paid hours of employees between January 1, 2020, and the end of the covered period. Note, however, that a borrower can ignore reductions in hours if the borrower was unable to hire employees that were employees on February 15 for unfilled positions on or before December 31; OR
- Did not reduce the salaries or wages of its employees by more than 25% during the covered period as compared to the period between January 1, 2020, and March 31, 2020, AND was unable to operate at the same level of business activity during the covered period as before February 15 due to compliance with requirements or guidance related to COVID-19 safety issued between March 1 and December 31 by Health and Human Services, the Center for Disease Control, or the Occupational Safety and Health Administration.
If one of these scenarios applies to you and your business, you can use Form EZ. If these scenarios do not apply to you or your business, you must use the full forgiveness application form.
Key Differences Between Form EZ and the FFA
The EZ Application asks for the following information:
- Amount spent on payroll costs
- Amount spent on business mortgage interest payments
- Amount spent on business rent or lease payments
- Amount spent on business utility payments
- Loan amount
- Whether 60% of proceeds were used on payroll costs
The full forgiveness application form asks for the same information as 1 through 4. However, the full forgiveness application form adds lines that pull information from PPP Schedule A to the form to account for adjustments for Full-Time Equivalency and Salary/Hourly Wage Reductions.
Both applications and their instructions can be found here: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses.