Jun 19, 2020 | COVID-19, MBE CPAs

Last Updated: September 23, 2020

Do I Qualify for the EZ?

Do I qualify for the SBA PPP EZ loan forgiveness application?

In order to qualify for the Form 3508EZ loan forgiveness application, you must be able to confirm at least one of the three conditions below:

Condition 1: The borrower is self-employed and had no employees at the time of the PPP loan application.

Condition 2: A.) The borrower did not reduce the rate of pay for any employee by more than 25% during the covered period compared to their rate of pay from January 1 – March 31, 2020. AND B.) The borrower did not reduce the number of FTE’s between January 1, 2020, and the end of the covered period.  Please note that this is not tested throughout the period, it is a beginning and end test. In addition, ignore properly documented employees unwilling to return, and the inability to rehire unfilled positions.

Condition 3: A.) The borrower did not reduce the rate of pay for any employee by more than 25% during the covered period compared to their rate of pay from January 1 – March 31, 2020. AND B.) The borrower was unable to operate during the covered period at the same level of activity as before February 15, 2020, due to requirements or guidance from HHS, CDC, or OSHA.

If you qualify for the EZ forgiveness form, please read through the Form 3508EZ application instruction for complete guidelines, instructions, and documentation required for forgiveness. Follow the links for a copy of the EZ Loan Forgiveness Application and the Application Instructions.

Although this application is available today, business owners with employees are asked to submit a copy of their quarterly payroll reports (941) with the forgiveness application, as such, most applications with the original 8-week covered period will not be ready until early July. If the 24-week covered period applies, you will not be able to file for forgiveness until the end of the quarter in which your covered period ends. Remember, your covered period starts when your PPP dollars were first funded to you.

If you do NOT qualify for the 3508EZ form, you will need to file the normal Form 3508 for PPP forgiveness. In brief, this forgiveness application is reasonably unchanged from its original format. The main changes are to the covered period changing from 8 to 24 weeks, the payroll amount changing from 75% to 60%, and the unforgiven loan amount term has changed from 2 years to 5 years. For full details of the Form 3508 Loan Forgiveness Application instructions click Here.