SBA Simplifies Forgiveness of PPP Loans of $50,000 or Less
Recipients of Paycheck Protection Program (PPP) loans of $50,000 or less will be able to apply for forgiveness using a simplified one-page application that was released Thursday by Treasury and the U.S. Small Business Administration (SBA). The vast majority of PPP loans were below this threshold. In addition, these borrowers can ignore some of the calculations required of other borrowers.
A new interim final rule (IFR) provides new guidance concerning forgiveness and loan review processes for PPP loans of $50,000 or less. PPP borrowers of $50,000 or less are exempted from any reductions in forgiveness based on:
- Reductions in full-time-equivalent (FTE) employees; and
- Reductions in employee salary or wages.
The new application form, SBA Form 3508S, can be used by PPP borrowers applying for forgiveness on PPP loans with a total loan amount of $50,000 or less, unless those borrowers together with their affiliates received loans totaling $2 million or more. There are several forms with 3508 (Form 3508, 3508EZ and 3508S). Make sure you’re using the one that applies to your loan and business.
Click here to view the simpler loan forgiveness application.
Click here to view the instructions for completing the simpler loan forgiveness application.
Borrowers will have to make some certifications and provide documentation to the lender for payroll and nonpayroll costs.
The borrower is responsible for providing an accurate calculation of the loan forgiveness amount. Borrowers will have to make some certifications and provide documentation to the lender for payroll and nonpayroll costs. Businesses must attest to the accuracy of the reported information and calculations on the loan forgiveness application. Lenders are permitted to rely on borrower representations, according to the IFR.
There remains significant uncertainty concerning many aspects of the PPP Loan program and forgiveness rules. The SBA continues to issue additional and new guidance. As a result, we are suggesting that borrowers wait until early 2021 to apply for loan forgiveness.
Click here for a free PPP loan forgiveness estimator. FLG Attorneys provide assistance to small business owners, including help with Paycheck Protection Plan loans. Call 412.391.1014 or click here for assistance.