Businesses with Paycheck Protection Program (PPP) loans of $50,000 or less can now utilize a simpler forgiveness application. The new application, released by the SBA and U.S. Treasury, is meant to streamline the PPP loan forgiveness process for borrowers and lenders.
Details of the New Application
The new application comes out of a new interim final rule (IFR) providing guidance on forgiveness and loan review processes for PPP loans of $50,000 or less. Borrowers with affiliates that received loans totaling $2 million or more are not eligible to use the new application. Under the IFR, eligible loan borrowers are exempted from any reductions in forgiveness based on:
- Reductions in full-time equivalent (FTE) employees
- Reductions in employee salary or wages, and
According to the IFR, of the 5.2 million PPP loans approved by the SBA, about 3.57 million, or $62 billion of the $525 billion, were for $50,000 or less.
Good News for Businesses with Smaller PPP Loans
For borrowers with PPP loans less than $50,000, this is good news as they are not required to perform complicated FTE or salary reduction calculations. Borrowers of $50,000 or less still will have to make some certifications and provide documentation to the lender for payroll and nonpayroll costs.
Before deciding to move forward with the new application, make sure to check with your bank on if and when they are starting to accept applications. View the instructions for completing Form 3508S or the Form 3508S application.
Legislation is continuing to evolve and it’s important to keep up with the latest rules and regulations to make sure you’re making decisions based on accurate data. Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed about potential impacts and benefits. Visit our COVID-19 Resource Center for more resources. To discuss your situation and recovery options, contact an Anders advisor below.
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