By: Mark A. Mangano
On October 8, 2020, the Small Business Administration (SBA) moved to simplify the forgiveness process for Paycheck Protection Program (PPP) loans of $50,000 or less. The SBA issued an interim final rule (ITF)1 and a new application, Form 3508S,2 and instructions.3 The relief does not constitute automatic forgiveness of a PPP loan.
The ITF forgiveness relief applies to borrowers with PPP loans of $50,000 or less, other than any borrower that together with its affiliates received loans totaling $2 million or greater. The ITF creates a new and separate forgiveness application form that exempts the qualifying borrower from any reductions in the borrower’s loan forgiveness amount based on reductions in full-time equivalent employees or reductions in employee salaries or wages.
The ITF relieves borrowers and lenders from the complex calculations and certifications associated with forgiveness reductions. Borrowers remain obligated to collect and certify documentation of payroll and non-payroll expenses to support the forgiveness application. Lenders must confirm receipt of borrower certifications and documentation from the borrower.
Forgiveness applications submitted through Form 3508S remain subject to review by the SBA. Borrowers must maintain documents related to the PPP loan and forgiveness application for six years from the date the loan is forgiven or otherwise paid in full as provided in previous rules.
1 Business Loan Program Temporary Changes; Paycheck Protection Program-Additional Revisions to Loan Forgiveness and Loan Review Procedures Interim Final Rules (10/8/2020) https://www.sba.gov/sites/default/files/2020-10/PPP%20-%20IFR%20–%20Additional%20Revisions%20to%20Loan%20Forgiveness%20and%20Loan%20Review%20Procedures%20Interim%20Final%20Rules.pdf?utm_campaign=NEWSBYTES-20201009&utm_medium=email&utm_source=Eloqua
2 SBA Form 3508S. https://www.sba.gov/sites/default/files/2020-10/PPP%20Loan%20Forgiveness%20Application%20Form%203508S.pdf?utm_campaign=NEWSBYTES-20201009&utm_medium=email&utm_source=Eloqua
3 PPP Loan Forgiveness Application Form 3508S Instructions for Borrowers