Small Business Administration Makes Updates to Paycheck Protection Program

Starting Wednesday, June 17, the Small Business Administration (SBA) and U.S. Treasury Department will begin offering automatic forgiveness for certain independent contractors and create a broader application form for the Paycheck Protection Program (PPP). The updated forms clarify that the “owner compensation” amount automatically forgiven for borrowers who use a 24-week covered period, as opposed to the original eight-week period, is equal to 2.5 times their average monthly net income. Based on this, independent contractors with a 24-week loan can have the full amount automatically forgiven under the new guidelines. The amount of forgiveness for borrowers who choose an eight-week period remains unchanged. Borrowers who received their PPP loans before June 5 can opt for either an eight- or 24-week period in which to use their loan; borrowers who received their loans after that date must use a 24-week period. The new forgiveness forms reflect a 60% requirement for payroll expenses, down from the original 75%. PPP still has funding available, and the deadline to apply is Tuesday, June 30 unless it is extended by Congress.