New Rules Simplify Forgiveness for PPP Loans of $50K or Less
Late last week, the U.S. Small Business Administration and the Department of the Treasury issued an interim final rule (IFR) that simplifies loan forgiveness for borrowers that received Paycheck Protection Program (PPP) loans of $50,000 or less. It’s important to note that the IFR did not make forgiveness automatic, but the new loan forgiveness application, Form 3508S, is significantly easier to complete than the standard loan forgiveness application, Form 3508. Here’s an overview of the new IFR and what it means for borrowers.
Who is eligible to use PPP loan forgiveness application Form 3508S?
To be eligible to use the new form, borrowers must have received a PPP loan of $50,000 or less. However, these borrowers, when combined with any affiliates, must not have received loans totaling $2 million or greater.
What is the benefit of the new form?
The new form exempts borrowers from any reductions in the forgiveness amount based on the following:
- Reductions in full-time equivalent (FTE) employees
- Reductions in employee salary or wages
Keep in mind that – other than the FTE and wage reduction exemptions – all other PPP rules and regulations still apply. Although no calculations are required to be reported on Form 3508S, borrowers will still be required to submit documentation (e.g., bank account records, payroll reports, tax filings, etc.) to verify that they spent the loan proceeds on eligible costs.
If you have questions, please reach out to your KSM advisor or complete this form.
Keeping you updated on COVID-19 and its impact on businesses and individuals.