Small Business Administration (SBA) Streamlines PPP Loan Forgiveness Application Process for Loans of $50,000 or Less

On October 8, 2020, the U.S. Small Business Administration, in consultation with the Treasury Department issued Interim Final Bill (ITF) that simplifies the forgiveness process for Paycheck Protection Program (PPP) for loans in the amount of $50,000 or less. The ITF contains a new application, Form 3508S or lender’s equivalent form, and associated instructions.  

The relief is not automatic forgiveness of a PPP loan. The modified forgiveness application applies to borrowers with PPP loans of $50,000 or less, except for borrowers that together with its affiliates received loans totaling $2 million or greater. The newly created forgiveness application Form 3508S exempts the borrower from loan forgiveness reductions based on reductions in full-time equivalent employees or reductions in employee salaries or wages.

The revised application reduces the complex calculations and certifications for borrowers and lenders when applying for loan forgiveness. However, the borrowers remain obligated to collect and certify documentation of payroll and nonpayroll expenses to support the forgiveness application. Lenders must confirm receipt of the borrower’s certifications and documentation.

Although the loan application process and form have been greatly simplified for qualified loans of $50,000 or less, Form 3508S and documentation remain subject to review by the SBA. Borrowers must maintain documents related to the PPP loan and forgiveness application for six (6) years from the date the loan is forgiven or otherwise paid in full as provided in previous rules.

Please contact us if you have any questions or would like to discuss further.