According to a recent release from the Small Business Administration (SBA), borrowers can apply for forgiveness of their PPP loan using new SBA Form 3508S if the total PPP loan amount they received from their lender was $50,000 or less. According to the form’s instructions, “SBA Form 3508S requires fewer calculations and less documentation for eligible borrowers. Borrowers that use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full- time equivalent (FTE) employees or in salaries or wages.”
SBA Form 3508S does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, it is a good idea to include that information in case the SBA needs documents to review those calculations.
According to an article in Forbes, the new rules “remove the need to show that the borrower did not reduce head count or salaries and, therefore, suffer a reduction in loan forgiveness.” The article noted that the SBA has justified the $50,000 threshold by pointing out that companies that borrowed such a small amount often had one employee at most. This made the head count rules moot.
Deadlines Later Than Thought
As originally thought, the loan forgiveness applications are not due on October 31. This was a misunderstanding due to a date on the form. It is recommended borrowers submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from the loan’s origination, depending on the borrower’s agreement.
Our PPP task force is familiar with the loan forgiveness forms and can answer questions. Contact Mark Dreher, Randy Brammer, Barry Graham, and Brandon Temple about your situation.