Simplified PPP Forgiveness Procedure for Loans of $50,000 or Less


NOTE:  This article updates the information in the following Articles previously published:

On Friday, October 9, 2020, the Small Business Administration ("SBA") released guidelines for a simpler loan forgiveness process for Borrowers with Paycheck Protection Program loans of $50,000 or less[1], and a new and much streamlined PPP Loan Forgiveness Application (SBA FORM 3508S (10/20)).   The new SBA Form 3508S can be downloaded here, and instructions for SBA Form 3508S are located here

A Borrower with a PPP loan of $50,000 or less is now exempt from any reductions in the amount of the loan forgiven based on reductions in full-time equivalent employees and reductions in employee salaries and wages.  With this change, the new SBA Form 3508S has eliminated all worksheets and calculations, and thus is much simpler.  SBA Form 3508S requires only information identifying the Borrower, the amount of loan forgiveness requested and includes the same Borrower representations and certifications confirming the conditions for PPP Loan forgiveness required by the CARES Act, as on other variants of SBA Form 3508.  Even though the Borrower is still required to submit supporting documentation, such as documentation verifying the Payroll Costs paid during the Covered Period, less documentation is required.  The instructions for SBA Form 3508S list the supporting documentation that must be submitted with the completed application. 

Further the lender's review of the application is also streamlined.  The lender need only confirm that the Loan Forgiveness Application is complete and is accompanied with the documentation the Borrower is required to submit verifying Payroll Costs and non-payroll costs.  The lender is authorized to rely on the borrower representations in the completed form and need not independently verify any of the reported information.

This simplified PPP Loan forgiveness procedure and exemption from the potential reductions in the amount of the loan forgiven are being implemented by the SBA recognizing that approximately 1.7 million PPP Loan Borrowers were to businesses with no employees or only an owner and one employee.  The SBA estimates that as many as 3.5 million PPP Loan Borrowers may be eligible to use SBA Form 3508S.

[1] Provided the total of all PPP loans to the Borrower and all of its affiliates is less than $2,000,000.


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