The Small Business Administration and the Treasury Department have introduced new guidance and changes to assist both lenders and PPP borrowers of $50,000 or less with the forgiveness process. The changes include a new simplified application and:
- reductions in the information that lenders must receive, and
- an exemption from the reductions in the forgiveness amount that were tied to the reductions in the number of employees and their wages or salaries.
If You Borrowed $50,000 or Less
Effective October 14, 2020, a new loan application, Form 3508s, has made it easier for business owners to apply for loan forgiveness by removing some of the loan application elements that were proving to be confusing to both borrowers and their lenders. Now, borrowers of less than $50,000 can enjoy full loan forgiveness, even if they reduced FTEs or reduced wages in order to survive the downturn (this eliminates the need to perform complex calculations related to reductions in force or payroll in order to receive forgiveness). One key eligibility consideration for this simplified process and relief is whether the borrower, together with any affiliates, received $2 million or more in PPP funds.
Other eligibility requirements include certain specific certifications. These include:
- certifying you used the funds to pay for costs eligible for forgiveness,
- certifying that payroll costs are at least 60 percent of the forgiveness amount,
- certifying that the amount for which you are requesting forgiveness does not exceed the principal of your PPP loan,
- certifying that you have complied with the covered period requirements of your loan, and
- demonstrating use of the proceeds money as required under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent amendments.
Lenders are allowed to request additional documentation from borrowers, as needed, and will be required to receive the above certifications.
Will There Be More Changes?
Change is for sure possible with this program after the election. Remember, if you borrowed more than $50,000, your process is unchanged, and noneligible PPP borrowers are still required to use the former loan applications, Form 3408EZ or Form 3408.
We are Ranked Among the Leading Law firms in Arizona for Help with PPP
Since COVID-19 began, we have helped dozens of businesses apply for, modify, or otherwise strategize their PPP loan process. Call us at (480) 733-6800 to see how we can help you.