We appreciate our business owners and understand their impact in our communities. As such, it is our goal to assist you in applying to have your Paycheck Protection Program loan forgiven. On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (PPPFA) was enacted. This legislation substantially modified prior SBA guidance regarding the use of funds and applications for forgiveness.
You do not need to complete a Loan Forgiveness Application at this time. This new legislation allows for up to 10 months after the end of your 24-week covered period to submit your Loan Forgiveness Application. All loan payments will be deferred during this timeframe and the SBA will pay all accrued interest on the forgivable portion of your loan. Nusenda will notify you when we are ready to process your Loan Forgiveness Applications.
Important PPP Updates Regarding Loan Forgiveness
The SBA provided new applications and issued revisions to the interim rules on June 16 and June 17, respectively. Nusenda continues to finalize our forgiveness application process, and will contact you when we are ready to accept your forgiveness application. In the meantime, we wanted to communicate some important changes in the rules and forgiveness eligibility:
For Independent Contractors, Sole Proprietors, and Partners: The SBA increased the owner compensation limit for forgiveness from 8-weeks of self-employment earnings (up to $15,385) to 2.5 months of self-employment earnings (up to $20,833). Remember, these are the upper limits. Your forgiveness eligibility is based on your 2019 net income or self-employment earnings used in the calculation of your eligible loan amount.
- For independent contractors and businesses without employees, this means that your entire loan amount may be used for owner compensation replacement and be eligible for forgiveness.
- For businesses with employees, the increased limits apply to all owners and partners. These amounts may not be increased for any company-paid benefits, such as health insurance premiums or retirement contributions.
Employee Compensation Limits: The SBA increased limits on payments to employees proportionally with the increase to a 24-week covered period. Any cash compensation to employees must remain within the annualized compensation limits of $100,000.
EZ Application: SBA published a streamlined application (Form 3508EZ) for qualifying businesses. Borrowers that can meet any of the criteria below are eligible to use this form.
- The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form (SBA Form 2483).
- The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, "employees" means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);
The Borrower 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. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. Also ignore reductions in an employee's hours that the Borrower offered to restore and the employee refused. See 85 FR 33004, 33007 (June 1, 2020) for more details.
- The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, "employee" means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);
The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.
Paycheck Protection Program Flexibility Act of 2020 — Summary of Changes
The PPPFA extends both the timeframe to use your PPP funds (the ‘Covered Period’) and provides greater flexibility in both the use of funds and repayment terms.
||Prior SBA Guidance
||PPP Flexibility Act of 2020
|Minimum Payroll Cost Allocation:
||75% of Loan Amount
||60% of Loan Amount
|Maximum Non-Payroll Cost Allocation:
||25% of Loan Amount
||40% of Loan Amount
||Up to 20 months**
|Safe Harbor Deadline to Rehire or Reinstate Wages:
* For Existing Borrowers, a signed modification of your promissory note will be required to extend terms. These modifications will be available after your Loan Forgiveness Application has been received and in the event there is a residual balance.
** All payments are deferred until the SBA has remitted your loan forgiveness payment to Nusenda provided that your forgiveness application is submitted within 10 months of the end of your covered period. Existing borrowers will receive notice from Nusenda of the modification to their payment terms.
The PPPFA also provides additional exemptions to businesses for reductions in forgiveness based on a reduction in FTEs.
While we wait on final guidance from the SBA, we encourage Borrowers to review and familiarize themselves with the current resources regarding Loan Forgiveness Applications. This page will be updated as new guidance is issued.
Please note, all content is based on Nusenda’s review and interpretation of current guidance, which is subject to change based on forthcoming guidance from the SBA. Nusenda makes no warranty regarding the accuracy or completeness of this information. This information does not constitute legal or financial advice, and borrowers should consult with their attorney or tax advisor for additional guidance.
Please email us with any questions.
Review these SBA Resources
While the most recent SBA guidance will be modified to incorporate the legislative changes enacted under the PPPFA, the Loan Forgiveness Application and Interim Rule provide insight to the application process and required documents.
You do not need to complete the Loan Forgiveness Application at this time. Nusenda will notify you when we are accepting Loan Forgiveness Applications.