|PPP Forgiveness Simplified for 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 application (Form 3508S) that was released Thursday by the Treasury and the U.S. Small Business Administration (SBA), which also included the release of a new interim final rule (IFR) that provides new guidance concerning forgiveness and loan review processes for PPP loans of $50,000 or less.
Under this new guidance, PPP borrowers of $50,000 or less are exempted from any reductions in forgiveness based on:
The IFR streamlines the forgiveness process for PPP borrowers of $50,000 or less because they will not be required to perform potentially complicated FTE or salary reduction calculations. However, borrowers of $50,000 or less will have to make some certifications and provide documentation to the lender for payroll and nonpayroll costs.
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. Instructions for Form 3508S also were released.
However, according to the IFR, when a borrower submits Form 3508S or the lender’s equivalent form, the lender will be required to:
The borrower is responsible for providing an accurate calculation of the loan forgiveness amount. The borrower will 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.
In addition, the IFR addresses what a lender should do if a borrower submits documentation of eligible costs that exceed the borrower’s PPP loan amount. According to the IFR, the amount of loan forgiveness that a borrower may receive cannot exceed the principal amount of the PPP loan.
Whether a borrower submits SBA Form 3508, 3508EZ, or 3508S, or a lender’s equivalent form, the lender is required to confirm receipt of the documentation the borrower is required to submit to aid in verifying payroll and nonpayroll costs. If applicable, the lender also is required to confirm the borrower’s calculations on the loan forgiveness application, up to the amount required to reach the requested forgiveness amount.
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