The latest update from the Treasury Department and Small Business Administration brings good news for recipients of Paycheck Protection Program (PPP) loans of $50,000 or less. In early October, the two organizations announced a simplified application for forgiveness that includes a self-certification process.

The new two-page, simplified application for forgiveness of PPP loans of $50,000 or less is Form 3508S. While documentation is still required, the application is streamlined to a list of boxes to check. 

In the interim final rule introducing the simplified form, SBA and Treasury noted that employers receiving these smaller loans no longer face a reduction in loan forgiveness for:

  • Declines in the number of full-time equivalent (FTE) employees.
  • Decreases in employee salaries and wages over 25%.

According to the SBA,”There are 3.57 million outstanding PPP loans of $50,000 or less out of the 5.2 million issued, totaling approximately $62 billion of the $525 billion in PPP loans. Approximately 1.7 million PPP loans of $50,000 or less were made to businesses reporting zero employees other than the owner, or one employee.” The SBA has received around 100,000 forgiveness applications, but as far as we know it has not reviewed any. 

Our accountants and clients were hoping for automatic forgiveness of smaller loans, and check-the-box forgiveness for loans as high as $1 million. At this point, particularly given the release of the simplified form and other updates, automatic forgiveness seems far less likely. One such update, part of the PPP Flexibility Act, extended the time period for borrowers to use funds from 8 to 24 weeks. We recommend employers take advantage of the extended period.

How Can We Help?

This is an ever-evolving program, so we will continue so send updates as additional announcements and changes are made. We are currently working with some clients to complete their forgiveness applications, and will let you know how that experience goes. We are also waiting for more guidance on expense deductions associated with PPP money. 

If you have any questions or need assistance with a forgiveness application, please contact us.