On October 8, the Small Business Administration (SBA) and the Treasury Department released a simplified loan forgiveness application for Paycheck Protection Program (PPP) borrowers of $50,000 or less. According to a new SBA rule on the simplified application, PPP borrowers of $50,000 or less are now exempt from any reductions in forgiveness due to reductions in full-time-equivalent employees and reductions in employee salary or wages. However, borrowers must still certify that at least 60 percent of the forgiveness amount was spent on payroll costs, and an Economic Injury Disaster Loan (EIDL) advance will still reduce a borrower’s forgiveness.
The PPP was established as part of the CARES Act on March 27. The program provided an up to 100 percent forgivable loan to small businesses if certain conditions were met.
The new two-page forgiveness application requires borrowers to fill out basic information such as business address, PPP loan numbers, EIDL application number, and forgiveness amount. It does not require borrowers to show the calculations used to determine their loan forgiveness amount, but notes that the SBA may request this information during the loan review process. The application does require borrowers to make certifications and provide documentation on payroll and non-payroll costs. Additionally, the application includes an optional borrower demographic form.
The new simplified application is only available to borrowers who together with affiliates received PPP loans of less than $2 million.
There are now three different PPP loan forgiveness applications from the SBA (see here for a breakdown of PPP forgiveness information):
- Simple Application (Form 3508S); Instructions
- EZ Application (Form 3508EZ); Instructions
- Application (Form 3508); Instructions
Borrowers have until 10 months after the end of their either eight- or 24-week covered period to submit a forgiveness application. Contact your lender to see if it has a lender’s equivalent forgiveness form.
According to the SBA’s press release, the SBA began approving PPP forgiveness applications on October 2.
Note: The rules on PPP forgiveness are likely to keep changing in an effort to simplify the process and maximum loan forgiveness.