SBA Updates PPP Borrower Application Based on Flexibility Act

  • The fourth and fifth of the form’s certifications requiring initials by an authorized representative were updated
  • In addition to incorporating changes from the PPPFA, the form incorporated changes from Treasury Interim Final Rule RIN 1505-AC67

The form that employers use to apply for a Paycheck Protection Program loan was revised June 11 by the Small Business Administration to conform with provisions of the Paycheck Protection Program Flexibility Act (PPPFA).

The fourth certification that an authorized representative of an employer would initial on SBA Form 2483, Paycheck Protection Program Borrower Application Form, was updated to reflect the PPPFA provision that Paycheck Protection Program loans can cover eligible costs incurred over a period of up to 24 weeks, which is a revision from the original covered period of eight weeks established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPPFA, enacted June 5, also established that an employer that acquired a Paycheck Protection Program loan before the PPPFA was enacted can choose for its loan to retain the originally established covered period of eight weeks starting with the origination date of the loan.

Another preexisting component of the Paycheck Protection Program that the PPPFA modified was the percentage of costs covered by a PPP loan that must be payroll costs for the loan to be fully forgivable, and this change was incorporated into the fifth certification on SBA Form 2483 that an employer’s authorized representative would initial. The fifth certification now, in accordance with the PPPFA, indicates that at least 60% of the covered costs must be payroll costs, down from 75%, for the loan principal to be fully forgivable, and that not more than 40% of the covered costs may be eligible nonpayroll costs for full forgiveness to be available, up from 25%.

The function of the percentage thresholds pertaining to payroll costs and nonpayroll costs covered by a Paycheck Protection Program loan was clarified by the SBA in an interim final rule released concomitantly June 11 with the revised SBA Form 2483.

The provisions of SBA Interim Final Rule RIN 3245-AH49 provided for regulatory implementation of the provisions of the PPPFA, and among the interim final rule’s implementation provisions was a clarification that if less than 60% of the costs an employer incurs during the covered period of up to 24 weeks are payroll costs, this would not prevent the employer from receiving any forgiveness of the principal of its Paycheck Protection Program loan. Instead, the 60% threshold limits the portion of the forgiven costs that can be nonpayroll costs, such that up to 40% of the amount of costs during the covered period for which the employer acquires forgiveness can be nonpayroll costs.

Details on the third page of SBA Form 2483 with regard to how seasonal employers would calculate the maximum amount of the Paycheck Protection Program loan for which they would be eligible also were revised June 11 to conform with Treasury Interim Final Rule RIN 1505-AC67.

While the previous version of SBA Form 2483 identified that seasonal employers may use their average monthly payroll over the period from Feb. 15 to June 30, 2019, for the purpose of calculating their maximum Paycheck Protection Program loan eligibility, the revised version of the form accords with the interim final rule by identifying that a seasonal employer may use its average monthly payroll over either the period from Feb. 15 to June 30, 2019, or any 12-week period from May 1 to Sept. 15, 2019, for calculating its maximum loan eligibility.

SBA Form 3508, Paycheck Protection Program Loan Forgiveness Application, also is to be updated to accord with changes to the Paycheck Protection Program that were established by the PPPFA. Multiple components of SBA Form 3508, which was released in May, need to be updated to reflect the PPPFA’s changes to the maximum covered period for a Paycheck Protection Program loan and the percentage of covered costs that must be payroll costs for the principal of a Paycheck Protection Program loan to be fully forgivable.

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