New Guidance On PPP Forgiveness + Important Bill In Congress

Date: May 29, 2020

The Treasury Department and Small Business Administration have released new guidance on loan forgiveness under the Paycheck Protection Program (PPP). This guidance came one week after SBA released the PPP loan application and instructions.

The guidance comes on the heels of NFIB requests for clarification and flexibility for small businesses participating in the PPP. It addresses some of our NFIB member concerns and answers certain outstanding questions, although several issues remain.

This guidance is timely, as many small businesses are reaching the end of the eight-week covered window and will soon be applying for loan forgiveness.

The biggest items addressed in the guidance, many of which were requested by NFIB, are:

  • Alternative Payroll Covered Period. Small businesses now have the flexibility to tailor the loan’s eight weeks to cover payroll dates, rather than starting on the date the loan was issued. 
  • Bonuses and Hazard Pay. The loans can also cover hazard and bonus pay as payroll. 
  • Rehire Exemption. Small businesses will not be penalized or have their loan reduced when previous employees decline to be re-hired. Please note that avoiding a penalty requires following a five-step process, outlined here.
  • FTEE Calculations. The guidance provides two options to calculate full-time equivalent employees. 
  • Employee Reduction Event. Employees that are fired for cause, resign, or voluntarily request schedule reduction will not cause a reduction in loan forgiveness.
  • Documentation. Treasury has now provided a list of documents that must be submitted with a loan forgiveness application, materials that must be maintained long-term, and other documentation that can be voluntarily submitted. 

Beyond these developments, the guidance failed to provide satisfactory answers on several issues. Most notably, guidance did not provide additional flexibility on the requirement that small businesses spend 75% of the loan on payroll. There is also a continued lack of clarity on what constitutes certain utilities such as gas or transportation or lease payments. NFIB will continue to advocate for the answers small businesses need.

Congress must now address these urgent concerns.

To that end, NFIB strongly supports the Paycheck Protection Program Flexibility Act, which passed the House of Representatives by a vote of 417-1. The bill also passed the United States Senate this week. It was signed into law by President Trump on June 5th. 

And, please continue to visit NFIB’s coronavirus resource page for frequent updates on programs and policies that affect small business.


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