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EZ Loan Forgiveness Application for PPP Loans

06/17/2020
Chris Wittich

The SBA just published a Form 3508EZ which is the PPP Loan Forgiveness Application, in a simpler, easier to use format.  It’s much shorter and it can be used for people in the simpler situations who are probably on track for 100% loan forgiveness.

There are 3 tests and a taxpayer needs to meet one of the 3 tests in order to use the EZ instead of the long loan forgiveness application form.

1 – borrower is self employed who had no employees at the time of the PPP application and won’t be including any employees in the payroll cost calculations

2 – borrower did not reduce wages of any employee by more than 25% during the covered period AND the borrower did not reduce the number of FTE during the covered period

3 – borrower did not reduce wages of any employee by more than 25% during the covered period AND the borrower was not able to maintain the same level of business activity due to CDC guidelines and restrictions so they are exempt from the FTE reduction limitation

If you meet one of those 3 tests then you get to use the EZ form to get the forgiveness.  If you meet one of those 3 tests it also means that you will not be limited by the wage reduction limitation or the FTE reduction limitation so the only limitation that even appears on the EZ form is for the 60% payroll cost.  At least 60% of the forgiveness must be based on payroll costs.

I’ve got a separate post for the Schedule C business with no employees, but this EZ application applies more broadly to any business regardless of size that is going to not be limited by the wage reduction or the FTE reduction rules.

Even a large business with a loan of more than $2M can use this EZ loan forgiveness application, there is a checkbox for those large loans.  If you remember the loans over $2M are said to be scrutinized and audited by the SBA so I would expect those loan forgiveness applications to take much longer to process.

You can see the new Form 3508EZ here

For more guidance and information, please contact any our Leadership Team.

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