On October 8, 2020, the Small Business Administration (SBA) announced that the loan forgiveness application process has been simplified for roughly 60% of its Paycheck Protection Program (“PPP”) borrowers. PPP borrowers who have borrowed $50,000 or less may now use the new SBA Form 3508S to apply for loan forgiveness. If the business combined with its affiliated subsidiaries borrowed more than $2million, they cannot use this form. Despite being a short form, its contents are to be reviewed with much less scrutiny. As an added bonus, borrowers who use the new form are not subject to reductions in their loan forgiveness amount due to reductions in their number of full-time employees or reductions in employee wages.
The application approval process also benefits the lender side of things, allowing for faster forgiveness approvals. Lenders no longer need to independently verify loan forgiveness amounts reported by borrowers, so long as the borrower submits documentation in support of its request for loan forgiveness. The new loan review process applies to PPP loans of all sizes.
In support of the changes to the loan forgiveness process, the Administrator of the SBA and the Secretary of the Treasury reported that the new SBA Form 3508S “strikes an appropriate balance between the need for simplification in the forgiveness process with the responsibility to protect the integrity of the program and safeguard taxpayer funds.”
For more information on obtaining PPP loans or changes to the loan forgiveness process, call us at (916) 822-8700 or visit https://www.sba.gov/article/2020/oct/08/sba-treasury-announce-simpler-ppp-forgiveness-loans-50000-or-less.