Simplified Forgiveness Process for PPP Loans Under $50,000

On Oct. 8, 2020, the U.S. Small Business Administration (SBA) and the Treasury Department (Treasury) released a new Interim Final Rule (IFR) providing a simplified forgiveness application for about 3.57 million Paycheck Protection Program (PPP) borrowers with loan amounts under $50,000. The IFR provides for a simplified forgiveness application lender review process for PPP loans under $50,000.

For Borrowers with a PPP loan under $50,000

The SBA and Treasury released a new version of the PPP forgiveness application (Form 3508S); coupled with this new form is the Form 3508S Instructions. This new application may be used by borrowers that received a PPP loan under $50,000.  Borrowers that have a PPP loan under $50,000 alone, but greater than $2 million when combined with its affiliates, are not eligible for the simplified process.

For borrowers eligible to use the simplified forgiveness form, the new IFR provides for an exemption  from determining a reduction in the amount of forgiveness, whether through reductions in full-time equivalent employees or reductions in salaries or wages.

The simplified application still requires borrowers to certify their eligibility for the PPP loan and to the accuracy of the related forgiveness calculation; however, the data  requested is limited in comparison to the other versions of the forgiveness application.

For Lenders

In conjunction with the release of Form 3508S, the SBA and Treasury also updated guidance relating to lender responsibilities for reviews of PPP loan forgiveness applications under $50,000. If a borrower submits a Form 3508S loan forgiveness application, lenders should confirm receipt of the following:

  • Borrower certifications within the 3508S loan forgiveness application
  • Supporting documentation for payroll and non-payroll costs, as required by the Form 3508S instructions

The IFR further states that “the lender does not need to independently verify the borrower’s reported information” if the required documentation and certification is provided by the borrower, as stated within the Form 3508S instructions.

The SBA acknowledges that instances may arise where the supporting payroll and non-payroll documentation provided by the borrower may exceed the amount of the borrower’s PPP loan. In such cases, lenders are to “confirm the borrower’s calculations on the borrower’s loan forgiveness application, up to the amount required to reach the requested forgiveness amount.”

DHG is prepared to answer your questions regarding PPP loans and guidance from the SBA. Reach out to us for more information at CARESActQuestions@dhg.com.

ABOUT THE AUTHORS

Denny Ard
Managing Partner, DHG Solutions Lab
Denny.Ard@dhg.com
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