The Small Business Administration and the Treasury Department unveiled a simpler loan forgiveness application for the Paycheck Protection Program to reflect changes in the PPP Forgiveness Act, which was signed into law this month and provides more flexibility to small businesses to receive forgiveness on their SBA-backed loans.
The PPP was included as part of the CARES Act, the $2.2 trillion program that included economic impact payments to individuals and aid to businesses in response to the novel coronavirus pandemic. The program initially launched on April 3 with $349 billion in funding to help small businesses keep their doors open and retain their employees. The loans would be forgiven as long as businesses retained their employees for up to eight weeks.
Dominic Frederico is President and Chief Executive Officer of Assured Guaranty Ltd., a position he has held since December 2003. During his tenure, Assured Guaranty became the leading provider of municipal bond insurance and financial guarantees. Assured Guaranty completed its initial public offering in 2004 under his leadership, and, in 2009, acquired the financial guaranty insurance company now named Assured Guaranty Municipal, thereby merging the only two monoline insurers to continue writing policies before, during and after the Great Recession.Mr. Frederico has supervised the operations of Assured Guaranty since its acquisition in 1999 by ACE Limited, where he was Vice Chairman, and also served as Chairman of ACE Financial Services, ACE INA and ACE USA. He worked at ACE for nine years prior to his post at Assured Guaranty, progressing to increasingly senior positions, including: President & CEO, ACE Bermuda; Chairman, President & CEO, ACE INA Holdings; and President & Chief Operating Officer, ACE Limited. He oversaw the successful acquisition and integration of the domestic and international property casualty operations acquired by ACE from CIGNA Corporation in July 1999 and the acquisition of Capital Re Corp., the predecessor company to Assured Guaranty, in December 1999.Prior to joining ACE, Mr. Frederico spent 13 years working for various subsidiaries of the American International Group.Mr. Frederico holds an M.B.A. in Finance and a B.S. from Drexel University, as well as a Certified Public Accountant�s designation in the State of Pennsylvania. In addition to his professional responsibilities, he is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants.�
Christine has significant experience serving as bond counsel, disclosure counsel and underwriter�s counsel on financings, including general obligation bonds and revenue bonds for transportation, water, sewer, power and tax increment projects. Her practice focuses on public finance transactions for state agencies, counties, cities, urban renewal agencies, school and special districts, and tribal governments. Her experience also includes conduit 501(c)(3) financings, full faith and credit or limited tax obligations, private bank placements, and shortterm obligations, including notes and lines of credit.
Robert Feyer is a Senior Counsel in the Public Finance Department of Orrick, Herrington & Sutcliffe LLP�s San Francisco office, with more than 37 years of experience representing issuers and underwriters of municipal bonds.� For most of this time Mr. Feyer has been the senior bond and disclosure counsel for the State of California, the largest issuer of municipal debt in the U.S.� Mr. Feyer is a frequent panelist on municipal finance and disclosure matters, including the Bond Buyer�s recent Webinar on the SEC Municipalities Continuing Disclosure Cooperation initiative.� Mr. Feyer is a member of the National Association of Bond Lawyers (Securities Law Committee) and the American College of Bond Counsel.
However, many small businesses had trouble accessing the loans or applying for them, and the funding quickly ran out as larger companies managed to get the loans with the help of their banks. Congress provided another $320 billion and the program resumed on April 27. But the rules and eligibility and forgiveness criteria have been changing constantly, prompting many businesses to take a wait-and-see attitude. Around $120 billion to $130 billion is still left in the program, and it doesn’t run out until June 30. Lawmakers have expressed frustration that the Treasury and the SBA are not providing more transparency about which businesses have gotten the loans and for how much.
In an effort to encourage more businesses to sign up and to alleviate concerns about being able to get the loans forgiven for businesses like restaurants that haven’t been able to open to customers, Congress provided more flexibility by passing the Paycheck Protection Program Forgiveness Act earlier this month. It extends the covered period from eight weeks to 24 weeks. It also amends the requirement that no more than 25% of the loan forgiveness amount be attributed to non-payroll costs and allows up to 40% to be used for non-payroll costs. The bill also included several other changes, such as extending the deferral of payments of loan principal, interest and fees, from the current six months, until the date when the SBA pays the forgiveness amount to the lender.
The new loan forgiveness application from the SBA reflects these changes. Along with revising the full forgiveness application, the SBA is also introducing a new EZ version of the forgiveness application that applies to borrowers who:
- Are self-employed and have no employees; or
- Did not reduce the salaries or wages of their employees by more than 25%, and didn't reduce the number or hours of their employees; or
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
The EZ application requires fewer calculations to be done and less documentation is needed for eligible borrowers. Details about the applicability of the various provisions are available in the instructions accompanying the new EZ application form.
Both applications give borrowers the option of using the original eight-week covered period (if their loan was made before June 5, 2020) or the extended 24-week covered period provided under the new law. The SBA and Treasury said the changes would result in a more efficient process and make it easier for businesses to realize full forgiveness of their PPP loan.
Click here to view the EZ Forgiveness Application.
Click here to view the Full Forgiveness Application.
Separately, the payroll company Paychex released the PPP Loan Forgiveness Estimator and Forgiveness Report as part of its Paychex Flex set of cloud-based HR software to help small businesses keep track of their PPP loans and loan forgiveness requirements last week. It includes changes from the PPP Forgiveness Act. Accountants can access the Forgiveness Estimator for each of their clients through the Paychex AccountantHQ dashboard to provide more strategic consultation and help clients optimize PPP loan forgiveness.
Another company, Smart Communications, introduced a PPP Loan Forgiveness Application Solution on Wednesday to simplify applications and speed processing for banks and other lenders.
