Updated Revisions to PPP Loan Forgiveness Interim Final Rule

Please note: This blog is current to the date of its publication, Friday, June 26. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.


On June 22, the Small Business Administration (SBA) issued an updated interim final rule (IFR), making changes to the Paycheck Protection Program (PPP) Flexibility Act. Notable revisions include:

PPP borrowers can apply for loan forgiveness before their covered period expires. If borrowers reduced salaries or wages more than 25% and apply for early forgiveness, they forfeit the safe harbor of restoring workforce/compensation levels by December 31.

An example provided by the Journal of Accountancy and the IFR states:

A borrower is using a 24-week covered period. This borrower reduced a full-time employee’s weekly salary from $1,000 per week during the reference period to $700 per week during the covered period. The employee continued to work on a full-time basis during the covered period, with an FTE of 1.0. In this case, the first $250 (25% of $1,000) is exempted from the loan forgiveness reduction. The borrower seeking forgiveness would list $1,200 as the salary/hourly wage reduction for that employee (the extra $50 weekly reduction multiplied by 24 weeks). If the borrower applies for forgiveness before the end of the covered period, it must account for the salary reduction for the full 24-week covered period (totaling $1,200).

It is the borrower’s responsibility to provide an accurate calculation of the loan forgiveness amount. Lenders do not have to independently verify the accuracy of the borrower’s information if the borrower provides supporting documentation and certifies that it has accurately verified the payments for eligible costs.

Employer retirement contributions for S corporation owners are considered eligible costs, but employer health insurance contributions for S corporation owners are not.

For additional guidance on PPP Loan Forgiveness, visit our full list of PPP-related services and resources, including a recent webinar hosted by SST CEO Bill Sims and Partner Emily Cook on strategies for maximizing loan forgiveness, or contact us today to find solutions specific to your organization.

Thanks to SST Partner Emily Cook for providing the content for this blog post. Click here to learn more about Emily.