SBA issues interim final rule providing for simplified forgiveness application for recipients of PPP loans of $50k or less.
On October 8, 2020, the Small Business Administration (“SBA”) issued an interim final rule in conjunction with the U.S. Department of Treasury (“Treasury”), providing for a simplified forgiveness application for recipients of Paycheck Protection Program (“PPP”) loans of $50,000 or less. The Interim Rule provides for a new forgiveness application form, SBA PPP Loan Forgiveness Application Form 3508S. Form 3508S is different than the so-called “EZ” forgiveness form, in that it allows recipients of PPP loans of $50,000 or less to apply for forgiveness without having to make calculations based on reductions of full time employees (FTEs) or decreases in salaries/wages of employees. As outlined in the Interim Rule, this is because the SBA and Treasury concluded that allowing for the exemptions and simplified form “strikes an appropriate balance between the need for simplification in the forgiveness process with the responsibility to protect the integrity of the [PPP] program and safeguard taxpayer funds.”
Note that for borrowers of PPP loans of $50,000 or less who have affiliates that also borrowed PPP loans, and such amounts in the aggregate (with such borrower’s loan included) total $2,000,000 or more, Form 3508S is not available for use.
The guidance in the Interim Rule also clarifies that if a borrower of any size PPP loan submits eligible payroll and nonpayroll costs exceeding the amount of its PPP loan, the total amount forgiven cannot exceed the original principal amount of the loan.