On October 8, 2020, the U.S. Small Business Administration (SBA), in consultation with the U.S. Department of the Treasury, released an Interim Final Rule on the simpler loan forgiveness process for Paycheck Protection Program (PPP) loans. In a press release issued by the SBA and Treasury Department, Secretary of the Treasury Steven Mnuchin stated, “Today’s action streamlines the forgiveness process for PPP borrowers with loans of $50,000 or less and thousands of PPP lenders who worked around the clock to process loans quickly.”
As part of the simpler forgiveness process, borrowers with PPP loans of $50,000 or less, other than those that together with their affiliates received loans totaling $2 million or greater, can use SBA Form 3508S, or their lender’s equivalent, to apply for loan forgiveness. A borrower that opts to do so is exempt from any:
- reductions in the borrower’s loan forgiveness amount based on reductions in full-time equivalent (FTE) employees, or,
- reductions in employee salary or wages that would otherwise apply.
Instructions for completing SBA Form 3508S can be found HERE. It is the borrower’s responsibility to provide a calculation of the loan forgiveness amount and attest to the accuracy of its reported information and calculations on the application. The borrower must provide all required documentation to the lender in order to receive forgiveness. In addition, borrowers should be aware that Interim Rule states that “the amount of loan forgiveness that a borrower may receive cannot exceed the principal amount of the PPP loan.”
The Interim Final Rule also helps lenders process forgiveness applications more quickly. When a borrower submits SBA Form 3508S (or the lender’s equivalent) to apply for forgiveness, the lender does not need to independently verify the borrower’s reported information if supporting documentation is included with the request for loan forgiveness and the borrower attests that the information and calculations provided are accurate. The lender need only confirm receipt of the borrower certifications and required documentation verifying payroll and eligible non-payroll expenses.
Price Kong is here to help you navigate the maze of SBA regulations for forgiveness and assist with the application process.
We are also available to consult on other areas related to the CARES ACT, as well as tax and audit issues you may be facing. You can also access our COVID-19 Resource Center, which includes as-they-happen updates and links to important information on the SBA, Department of the Treasury, Department of Human and Health Services, Internal Revenue Service, and other sources.
We look forward to helping you with any issues you may be facing. Please contact us if you have questions or concerns at 602.776.6300.