Simplified PPP Loan Forgiveness AnnouncedOctober 15, 2020 Alert
Learn about the recent changes released on October 8th, 2020.
At a Glance
- Form 3508S application and instructions released
- Provides for a simplified loan forgiveness process for PPP loans of $50,000 or less
- These loans are exempt from loan reductions for reducing FTE counts or employee compensation during the Covered Period
Simplified Loan Forgiveness for Smaller Loans
On October 8, 2020, the Treasury and SBA released the new Form 3508S, related instructions, supporting interim final rule and updated loan forgiveness FAQs. Under the new interim final rule, PPP loans of $50,000 or less are exempted from any reductions in forgiveness based on reductions in full-time equivalent (FTE) employees and reductions in employee salary or wages. The simplified loan process cannot be used by borrowers who together with their affiliates received loans totaling $2 million or more. Borrowers using the new simplified process will still have to make some certifications and provide documentation to their lenders for payroll and nonpayroll costs.
The Treasury and SBA also updated the general PPP FAQs to address the deferral period extension provided by the PPP Flexibility Act. FAQ #52 confirms that the extension of the deferral period automatically applies to all PPP loans, and said that lenders should immediately notify borrowers of the change in the deferral period.
The SBA started approving PPP forgiveness application on Oct. 2, 2020. Employers unsure which PPP loan application to use should contact their tax advisor.