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.
For further details, click here to read the interim final rule in its entirety or click here for a detailed article from the Journal of Accountancy.