New Paycheck Protection Program (PPP) guidance released Monday, June 22, declares that PPP recipients can apply for loan forgiveness early but doing so could cost them money.
A new interim final rule by the Small Business Administration makes revisions to previous guidance to reflect the Paycheck Protection Program Flexibility Act, which became law on June 5 and made significant changes to the PPP.
The interim final rule says that if a borrower applies for loan forgiveness before the end of the covered period and has reduced any employees’ salaries or wages by more than the 25% allowed for full forgiveness, the borrower must account for the excess salary reduction for the full eight-week or 24-week covered period, whichever one applies to its loan.
Under that guidance, PPP borrowers that apply early for loan forgiveness forfeit a safe-harbor provision allowing them to restore salaries or wages by Dec. 31 and avoid reductions in the loan forgiveness they receive. Learn more.