According to a recent release from the Small Business Administration, borrowers can apply for forgiveness of their PPP loan using new SBA Form 3508S if the total PPP loan amount they received from their lender was $50,000 or less. “SBA Form 3508S requires fewer calculations and less documentation for eligible borrowers. Borrowers that use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages,” says the form instruction.
SBA Form 3508S doesn’t require borrowers to show the calculations used to determine their loan forgiveness amount. However, the SBA still may request information and documents to review those calculations.
According to an article in Forbes, the new rules “remove the need to show that the borrower did not reduce head count or salaries and, therefore, suffer a reduction in loan forgiveness.” The article noted that the SBA has justified the $50,000 threshold by pointing out that companies that borrowed such a small amount often had one employee at most. This made the head count rules largely moot.
Deadlines Later Than Thought
The Journal of Accountancy has also pointed out that loan forgiveness applications are not due on Oct. 31 as many had thought. This was a misunderstanding due to a date on the form. The JofA notes that “borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from the loan’s origination, depending on the borrower’s agreement.”
See the SBA site for more details.
As we have been doing with all coronavirus legislation and SBA guidance during these past several months, we will be sure to update you with any additional insight as soon as possible. Continue to check back here for the most up to date tax information and changes in response to coronavirus. If you have questions about this or related topics contact an MCB Advisor at 703-218-3600 or click here.
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