The U.S. Small Business Administration (“SBA”) released an updated Loan Forgiveness Application, as well as an Alternative Loan Forgiveness Application for certain borrowers.

The Loan Forgiveness Application includes the following changes:

• Alternative Payroll Covered Period applies to the 24-week covered period. The Alternative Payroll Covered Period may not extend beyond December 31, 2020.

• Clarifies one of the new FTE reduction exceptions: A position will not be included in the calculation if the Borrower made a good-faith, written offer to rehire an employee who was employee on February 15, 2020 and the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020.

• Changes the documentation required for FTEs from the average number of FTEs per month to the average number of FTEs per week.

• Specifies that employer health insurance contributions on behalf of a self-employed individual, general partners, or owner-employees of an S-corporation should not be included in the health insurance expenditures calculation.

• Specifies that employer retirement contributions on behalf of a self-employed individual, general partners, or owner-employees of an S-corporation should not be included in the retirement expenditures calculation.

The Alternative Loan Forgiveness Application is a shortened forgiveness application for the following borrowers:

• Self-employed, independent contractors, or sole proprietors with no employees;

• Borrowers who did not reduce salaries by more than 25% during the covered period and did not reduce the number of employees or the average paid hours of employees from January 1, 2020 to the end of the Covered Period (ignoring reductions from the safe harbor related to an inability to hire qualified employees, and reductions due to an employee refusing to accept a restoration of hours); and

• Borrowers who did not reduce salaries by more than 25% during the covered period and was unable to operate during the covered period at the same level of business activity due to COVID-19 related safety requirements promulgated by the CDC, HHS, or OSHA.

The Loan Forgiveness Application is available HERE, and the instructions are available HERE.

The Alternative Loan Forgiveness Application is available HERE, and the instructions are available HERE.

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The SBA also released a revised interim final rule (the “Rule”) this morning, implementing changes from the Paycheck Protection Program Flexibility Act (the “Act”).

The Rule:

• Increases the cap on individual employees’ salaries from $15,385 during the 8-week covered period to $46,154 during the 24-week covered period.

• Increases the cap on owner compensation from $15,835 during the 8-week covered period, to $20,833 for a 24-week covered period.

• For sole proprietors: business mortgage payments, business rent payments, and business utility payments, as listed on Form 1040 Schedule C, are now included as amounts eligible for forgiveness.

• The amount of loan forgiveness is capped by the full principal amount of the loan plus accrued interest.

Read the Rule HERE.