On October 8, the U.S. Small Business Administration (SBA) and the Treasury announced the release of a simplified forgiveness process for Paycheck Protection Program (PPP) participants that received loans of $50,000 or less.
The agencies published a new interim final rule offering guidance for recipients of PPP loans equal to or less than $50,000 (“eligible borrowers”). Details of the rule include:
- Eligible borrowers are exempt from reductions in forgiveness based on reductions in full-time-equivalent (FTE) employees and reductions in employee salaries or wages.
- SBA Form 3508S is now available for eligible borrowers. Click here to view the instructions for the form.
- PPP borrowers should note that if a borrower and his or her affiliates received loans totaling $2 million or more, individual borrowers who received less than $50,000 lose their eligibility for the simplified forgiveness process.
The new interim final rule also includes additional guidance for PPP lenders. Details include the following:
- Upon submission of Form 3508S by a borrower, the lender must confirm receipt of the borrower certifications and any supplementary documentation (e.g., verification of payroll and nonpayroll costs).
- The borrower is responsible for accurately calculating their PPP loan forgiveness amount; lenders may rely upon the borrowers’ calculations.
- In the event that a lender receives documentation of eligible costs that exceed a borrower’s total PPP loan amount, the forgiveness amount may not exceed the total principal amount of the PPP loan.