SBA PPP LOAN FORGIVENESS RULES
By Scott Zickefoose, CPA, CM&AA, Tax Partner | Business Turnaround Services Team
SBA Form 3508S Streamlines Forgiveness Process for Paycheck Protection Program Loans Under $50,000
On October 8, 2020, Treasury released its latest Interim Final Rule with the introduction of a streamlined forgiveness processes for Paycheck Protection Program (PPP) loans less than $50,000 in size. While the 50,000 dollar size threshold is smaller than most commentators were expecting, the introduction of a streamlined process for smaller loans is welcomed by borrowers.
This new guidance, and the newly introduced SBA Form 3508S, is intended for borrowers applying for loan forgiveness on PPP loans with a total loan amount of 50,000 dollars or less (except for borrowers that together with their affiliates received loans totaling 2 million dollars or greater).
Borrowers that use the SBA Form 3508S are exempt from any reductions in the borrower’s loan forgiveness amount based on reduction in full-time equivalents (FTE) employees and reductions resulting from employee salary or wage adjustments. There are no changes to the required documentation to substantiate payroll and nonpayroll costs.
According to Treasury, there are approximately 3.57 million outstanding PPP loans of 50,000 dollars or less, totaling approximately 62 billion dollars, with 1.71 million of these loans being made to sole proprietors or businesses with only one non owner-employee.
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.