AT A GLANCE
On January 19, 2021, the Treasury and SBA released updated guidance related to First Draw and Second Draw PPP loan forgiveness. The recent guidance includes:
Updated PPP Loan Forgiveness Guidance
On January 19, 2021, the Treasury and SBA published updated PPP loan forgiveness guidance and forms. The updated forms and the new guidance apply to 1st Draw and 2ndDraw PPP loans. The Interim Final Rules on Loan Forgiveness consolidates previous loan forgiveness rules and incorporates the changes made by the Economic Aid Act (EAA). The guidance is written in a Q/A format and addresses topics including, what amount are eligible, when must payroll and non-payroll costs be incurred, reductions to loan forgiveness amounts, and documentation requirements.
Updated Loan Forgiveness Forms
The agencies also released updated loan forgiveness applications. This new round of forms combines the application and instructions into one document. Form 3508S is for loans amounts $150,000 or under, Form 3508EZ is for borrowers with loans more than $150,000 and who did not reduce wages and did not reduce staffing levels, and Form 3508 is for borrowers who are not eligible for any of the simplified forgiveness processes. Each PPP loan must apply for forgiveness separately. Additionally, for a 2nd Draw PPP Loan in excess of $150,000, borrowers must submit a loan forgiveness application for their 1st Draw PPP Loan before or simultaneously with the loan forgiveness application for their 2nd Draw PPP Loan, even if the calculated amount of forgiveness on the 1st Draw PPP Loan is zero. Lastly and unrelated to forgiveness, the agencies published Form 3508D for specific borrowers to disclose certain controlling interests
Paylocity will be updating its PPP loan forgiveness tools and resources to account for changes made by the new guidance. For more information about Paylocity’s PPP resources contact your Account Representative.
Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.