Hoping the federal government will reduce required paperwork is usually more divorced from reality than Willy Wonka & The Chocolate Factory. But wait! It’s actually happening —at least for those businesses that are participating in the Paycheck Protection Program.
The Administration has announced it is slashing the amount of paperwork to avoid eventually being stuck with debt from the government-backed loan.
The improvements are apparently the result of an outcry from business groups and many lawmakers that the original forgiveness process was simply too complicated. In fact, the forgiveness process really wasn’t even spelled out when the PPP launched.
But now, it has been reported that the Small Business Administration and the Treasury Department have released a “three-page ‘EZ’ loan forgiveness form” that certain PPP borrowers will be able to use. The initial version of the forgiveness form was 11 pages.
Dealers that have PPP loans will still need to work with their banks to accomplish the forgiveness process, but there’s still more good news.
The new forms now include a “safe harbor” option. According to The New York Times, this new option will allow borrowers to simply affirm they were unable to operate “at the same level of business activity” they had before the pandemic crisis began because of government requirements or safety guidance, including social distancing rules.
“Self-employed business owners and other borrowers with fairly straightforward cases will be able to use the new, shorter ‘EZ’ form to seek loan forgiveness,” said the Times.
These borrowers can still have their loans fully forgiven if they meet the program’s other parameters. Key rules include the requirement that the business has spent at least 60 percent of their PPP aid money on payroll.
This new form doesn’t call for detailed employee information and more that supports a claim.
For businesses that have received PPP funds, the program has likely proven to be valuable, perhaps even a lifeline. And regardless of how straightforward the new EZ forms are touted to be, there are still compelling reasons to seek good counsel when beginning to navigate the forgiveness process.
Case in point — there could be a partial reduction in the amount that’s actually granted forgiveness if workers were brought back, but their pay was reduced by more than 25 percent from the level just before covid-19 hit.
In addition, there are several other ways a business could be penalized if they’ve been unable to bring back some staff. Remember, in this matter, we’re talking about dealing with government details. Knowledgeable help is in order!