SBA Streamlines PPP Forgiveness for Loans of Less Than $50,000!

SBA Streamlines PPP Forgiveness for Loans of Less Than $50,000!

A new interim final rule (IFR) provides new guidance concerning forgiveness and loan review processes for PPP loans of $50,000 or less.

On Thursday, the SBA released a streamlined application, Form 3508S, designed specifically for those who borrowed less than $50,000. The forgiveness is not automatic, but it does remove some of the more complicated and time consuming aspects of the application. A borrower of a PPP loan of less than $50,000 is no longer required to reduce the amount eligible for forgiveness if the borrower:

  • Reduces the salary or hourly wage of an employee (who earned less than $100,000 in 2019) during the “covered period” following the borrowing relative to the first quarter of 2020, or
  • Reduces full-time equivalent employees (FTEs) during the covered period relative to a base period.

The two-page forgiveness application, Form 3508S, includes certifications from the borrower but does not require calculations to be submitted with the application. Applicants must submit documentation verifying forgivable payroll and non-payroll expenses. Borrowers are required to retain the documentation supporting their certifications for six years, but do not need to submit it.

Once the application is received, the lender must confirm that it received the borrower’s certifications and documentation. “Providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower,” SBA said in an interim final rule, reiterating previous guidance that “lenders may rely on borrower representations. . . . [T]he lender does not need to independently verify the borrower’s reported information if the borrower submits documentation supporting its request for loan forgiveness and attests that it accurately verified the payments for eligible costs.”

SBA also provided guidance on lender responsibilities when borrowers apply for forgiveness of costs—regardless of which form they use—exceeding the PPP loan amount. In these cases, the lender should confirm that it received the borrower’s documentation and, if applicable, confirm the borrower’s calculations “up to the amount required to reach the requested Forgiveness Amount.”

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