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You Can Apply Early For PPP Forgiveness

June 30th, 2020 | Written by

Apply Early For PPP ForgivenessA common question we get is whether PPP loan recipients can apply for forgiveness before the end of their covered period. The SBA released a new interim rule to provide clarity on this issue.

Borrowers can apply for loan forgiveness before the end of their covered period. However, if the borrower has reduced any employee’s wages by more than 25%, the borrower must account for the reduction for the full 8 or 24-week covered period.

If you apply early, note that you forfeit the right to safe harbor provisions allowing you to restore wages by Dec. 31st to avoid reductions in your forgiveness amount.

Safe Harbors

The safe harbor states that the borrower is excempt from reduction in loan forgiveness based on a reduction in FTE levels if:

  • The borrower was unable to operate between Feb. 15, 2020 and the end of their covered period at the same level of business activity as before Feb. 15th 2020 due to being compliant with COVID-19 guidance
  • The borrower reduced their FTE employee levels beginning Feb. 15, 2020 and ending April 26, 2020 and they restored their FTE levels no later than Dec. 31, 2020


  Borrower’s Covered Period Length (Weeks)  24
  FTE Weekly Salary in Reference Period   $1,500
  FTE Weekly Hours in Reference Period  40
  FTE Weekly Salary in Covered Period  $1,050
  FTE Weekly Hours in Covered Period  40
  Amount exempt from forgiveness reduction (25%)  $375
  Amount not exempt from forgiveness reduction   $75
  Non exempt amount X 24 weeks  $1,800

In the example above, a borrower has a 24-week covered period. His employee makes $1,500 a week in their chosen reference period. However, during their covered period, they saw a 30% reduction in their employee’s wages, even though the employee continues to work full-time. Since the borrower is allowed to reduce wages by 25%, $375 of that weekly wage reduction is exempt, leaving $75 not exempt. If the borrower applied for forgiveness early, they must still account for that reduction for the full length of their covered period. In this example that would total $1,800.

Application and Instructions 

The newest application forms along with their corresponding instructions are linked below:

PPP Loan Forgiveness Application and instructions

EZ PPP Loan Forgiveness Application  and instructions (This requires less documentation and fewer calculations. Please review the requirements for use).

Keep an eye on our COVID-19 page  and your email inbox for more PPP Loan information as it comes.

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    This information is not intended to be used as the only bases for investment decisions, nor should it be constructed as advice designed to meet your particular needs. You are advised to seek the advice of your financial advisor prior to making any decision based on any specific information contained herein.
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