COVID-19 "EZ" Loan Forgiveness

The SBA has released a revised version of the previously issued Paycheck Protection Program Loan Forgiveness Application, updated to reflect changes effected by the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”), enacted into law on June 5, 2020. In addition, the SBA has also released a new “EZ” form, which offers a simplified form for borrowers with no employees and borrowers who undertook no workforce or salary/wage reductions or were otherwise subject to a specific safe harbor, as more particularly described below and in the EZ Application Form Instructions.

Specifically, the EZ Form is a three-page form, that requires the entry of forgiveness-eligible payroll and nonpayroll costs, and confirms mathematically that employers expended not less than 60% of the PPP loan amount on payroll costs. The certifications in the EZ Form remain largely constant (unchanged from the previously issued form) – including certifications regarding use of the loan funds for eligible payroll and nonpayroll costs, but also includes in this form, additional certifications: (i) that the borrower did not reduce salaries or hourly wages by more than 25% during the applicable covered period (now 24 weeks, except for borrowers who received their loans prior to June 5, 2020 and elected to use the 8-week covered period), and (ii) either of (A) that the borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the ‘covered period’ (other than those reductions that arose from an inability to rehire individuals who were employees on February 15, 2020, if the borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020, and reductions in an employee’s hours that a borrower offered to restore and were refused); or (B) that the borrower was unable to operate between February 15, 2020 and the end of the ‘covered period’ at the same level of business activity as before February 15, 2020 due to compliance with the requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to sanitation, social distancing, or any worker or customer safety requirement related to COVID-19.

The previously issued (and more comprehensive) loan forgiveness application has also been updated, to incorporate the changes to the Paycheck Protection Program effected by the Flexibility Act, including specifically the extension of the loan forgiveness ‘covered period’ (as well as the availability to borrowers who received their loans prior to June 5, 2020 to elect to use the 8-week covered period) and the reduction of the percentage of payroll costs requirement. Page 2 of the form includes one additional certification to be made by the borrower, for borrowers who ‘checked the box for FTE Reduction Safe Harbor 1 on PPP Schedule A’, i.e. that such borrower was unable to operate between February 15, 2020 and the end of the ‘covered period’ at the same level of business activity as before February 15, 2020 due to compliance with the requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to sanitation, social distancing, or any worker or customer safety requirement related to COVID-19. This additional certification incorporates the additional exemption for workforce reductions contained in the Flexibility Act.

Please be reminded that borrowers who, with its affiliates, received PPP loans with an original principal amount in excess of $2 million must indicate so on their loan forgiveness application and will be subject to review by the SBA.

For application materials, please visit:

• SBA Website: or
• Treasury Website

In other related news, the SBA continues to issue interim final rules, revising previously issued interim final rules to reflect the changes made by the Flexibility Act. Notably, interim final rules were released on June 5, 2020 and this morning, June 17, 2020, to revise the first, third, and sixth interim rules, which pertain to the maturity date of the PPP loans (if not otherwise subject to full forgiveness), the 60% payroll costs requirement, and the implications of the extension of the loan forgiveness ‘covered period’. We anticipate that the SBA will continue to issue guidance as borrowers gear up to submit their applications for loan forgiveness.

For assistance anywhere in the PPP process, please contact Keith Krauss via email or phone at 973.535.4441 or Young-Ji Park via email or 973.646.3284.