Businesses that received a Paycheck Protection Program (PPP) loan of $50,000 or less can now take advantage of a simpler loan forgiveness application according to the U.S. Small Business Administration and the Treasury Department. PPP lenders are also provided additional guidance on confirming information from the loan applicant.
Under this new ruling, PPP borrowers of $50,000 or less are exempted from any reductions in forgiveness based on:
- Reductions in full-time-equivalent (FTE) employees; and
- Reductions in employee salary or wages.
The new application form, SBA Form 3508S, can be used by PPP borrowers applying for forgiveness on PPP loans with a total loan amount of $50,000 or less, unless those borrowers together with their affiliates received loans totaling $2 million or more.
However, borrowers of $50,000 or less still will have to make some certifications and provide documentation to the lender for payroll and nonpayroll costs.
PPP lenders are also addressed in the ruling which states that when a borrower submits Form 3508S or the lender’s equivalent form, the lender will be required to:
- Confirm receipt of the borrower certifications contained in the form; and
- Confirm receipt of the documentation the borrower is required to submit to aid in verifying payroll and nonpayroll costs
In addition, the ruling also addresses what a lender should do if a borrower submits documentation of eligible costs that exceed the borrower’s PPP loan amount. The ruling states that the amount of loan forgiveness that a borrower may receive cannot exceed the principal amount of the PPP loan.
You can find the new forgiveness application for loans under $50,000 here and view instructions for completing the application here If you have questions about PPP loans, please contact your Mize CPAs tax professional.