The Small Business Administration (SBA) and U.S. Treasury Department recently released a simpler loan forgiveness application (Form 3508S) for Paycheck Protection Program (PPP) loans of $50,000 or less. This streamlines the PPP forgiveness process for many loan recipients and provides relief to many small businesses.
SBA and Treasury have also made it easier for PPP lenders to process forgiveness applications more swiftly. In fact, the SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders for PPP borrowers on October 2, 2020. When a loan forgiveness application is approved it effectively turns the PPP loan into a grant for the approved amount.
Borrowers eligible to use Form 3508S are NOT subject to a reduction in forgiveness based on a reduction in the number of full-time employees or a reduction in employee salaries and wages. However, the borrowers must still make required certifications and document that PPP loan proceeds were spent on appropriate payroll and nonpayroll costs.
[Note: A borrower with a PPP loan of $50,000 or less may NOT use SBA Form 3508S if, together with its affiliates, it received PPP loans totaling $2 million or more.]
Before applying for PPP loan forgiveness, dealers should consult with their PPP lender and CPA.
- Click HERE to view the simpler loan forgiveness application.
- Click HERE to view the instructions for completing the simpler loan forgiveness application.
- Click HERE to view the Interim Final Rule on the forgiveness process for loans < $50,000.
For more information and updates, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program or https://home.treasury.gov/policy-issues/cares.