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The U.S. Small Business Administration has released a simpler loan forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less that allows borrowers to self-certify they used the money appropriately and receive complete forgiveness.
According to attorney Scott Borsack, a partner at Szaferman Lakind in Lawrenceville, the new loan forgiveness application form (3508S), essentially exempts eligible borrowers from any potential reductions in the amount of spending eligible for forgiveness.
Borrowers using this new form do not have to demonstrate compliance with the Full Time Equivalent (FTE) test or the Salary Reduction test, Borsack said. So an employer with fewer FTEs in the covered period who had faced a reduction in spending eligible for forgiveness no longer has to be concerned about that if the loan in question was under $50,000.
Likewise, where salaries during the covered period were reduced by more than 25% of the rate employees were paid in the first quarter of 2020, there will be no reduction in the forgiveness amount, Borsack said. Borrowers still need to provide the SBA with proof that they spent the proceeds on eligible expenses such as payroll, rent, mortgage interest, utility charges, etc.
U.S. Treasury Secretary Steven T. Mnuchin said in an Oct. 8 news release that simpler form would “streamline the forgiveness process for PPP borrowers with loans of $50,000 or less and the thousands of PPP lenders who worked around the clock to process loans quickly.”
SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders for PPP borrowers on Oct. 2
The PPP has provided 5.2 million loans worth $525 billion to American small businesses that support more than 51 million jobs.
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