Frequently Asked Questions Regarding the PPP Loan Forgiveness Application

On Friday, May 15, 2020 the Small Business Administration (SBA) issued the long-awaited Loan Forgiveness Application and Instructions (LFA) under the Paycheck Protection Program (PPP).

HoganTaylor has issued a detailed FAQ document covering the key questions addressed in the LFA.

Additionally, HoganTaylor will host a series of webinars to address five key areas of the LFA. Times are not yet confirmed but we expect to conclude the series the week of June 1.

About the LFA

The the LFA document is 11 pages organized as follows:

• A two-page set of instructions
• A two-page application
• A two-page schedule and instructions to assist in computing forgivable Payroll Costs (Schedule A)
• A three-page set of instructions and a worksheet to assist in completing Schedule A
• A two-page document describing the documents which must be submitted and/or maintained by the PPP borrower

Background

On March 27, 2020 President Trump signed the Coronavirus Aid, Relief and Economic Stimulus (CARES) Act.  Under the CARES Act, the SBA offered loans under the PPP program to small businesses, certain nonprofit organizations, veteran organizations, and Tribal concerns (together “small businesses”).  The PPP loans were designed to enable small businesses to continue to employ and pay workers for 8 weeks with the promise of up to 100% of the loan amount being forgiven.

The PPP program has been immensely popular with small business.  The initial $350 billion tranche of funding was consumed in the first two weeks after loans became available.  A second tranche of $310 was made available on April 27, 2020 and according to a May 18^th Wall Street Journal article, approximately $195 billion of the second tranche of PPP funding has been loaned to small businesses.

The PPP program has also become controversial as the SBA and Treasury Department have issued rules, procedures, and frequently asked questions all seeking to provide clarity to the program.  There is more guidance still yet to come. In its May 15, 2020 press release announcing the release of the LFA, the SBA stated “SBA will also soon issue regulations and guidance to further assist borrowers as they complete their [forgiveness] applications, and to provide lenders with guidance on their responsibilities.”

Frequently Asked Questions on Loan Forgiveness

PPP borrowers, lenders, and advisors have been anxiously awaiting the LFA to help resolve many questions and controversies over how to calculate the amount of the PPP loan which will be forgiven. For borrowers who received funding of their PPP loans in the initial week of the program, the 8-week period for which the program is intended ends at end of May and presumably they will be making application immediately thereafter.

We believe the LFA does resolve many of the outstanding questions about loan forgiveness. Our FAQ document lists the most significant of these questions and how the LFA addresses them.  Where there are still questions or where the LFA creates new uncertainties and questions, we note that in our response.

Upcoming Webinars to Address Key PPP Loan Forgiveness Issues

We are preparing a series of webinars to address each of the major areas of the PPP Loan Forgiveness process.  By dividing the subject matter into separate sessions, we will be able cover each area in appropriate detail, allow attendees to attend those sessions of most interest to them, and limit the content of each session to a digestible amount of information.