The SBA came out with a new set of rules and a new PPP Loan Forgiveness application for loans that are less than $50k. If your loan is more than $50k none of this applies, but for those under $50k we’ve got some good news.
A new PPP Loan Forgiveness application is called Form 3508S and it can be found here – link to https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-3508S.pdf
There are several changes and simplifications on the new Form 3508S. For those loans of less than $50,000 the FTE reduction rules are gone. The SBA will not ask you to track your FTE and they will not reduce your forgiveness if you had a reduction in FTE during the covered period.
Another change is that the wage reduction limitation is gone. The SBA isn’t asking you if any employees had their wages reduced, and even if there was a wage reduction they will not reduce your forgiveness based on any wage reductions during the covered period.
The new Form 3508S consists of one page of certifications and that’s it. The first certification is really the key one that contains all of the changes so let’s examine what that says in full.
- The dollar amount for which forgiveness is requested does not exceed the principal amount of the PPP loan and:
- Was used to pay costs that are eligible for forgiveness (payroll costs to retain employees, business mortgage interest payments, business rent or lease payment, or business utility payments)
- Includes payroll costs equal to at least 60% of the forgiveness amount
- If a 24 week covered period applied, does not exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual / general partner, capped at $20,833 per individual and
- If the borrower has elected an 8-week covered period, does not exceed 8 weeks worth of 2019 compensation for any owner-employee or self-employed individual / general partner, capped at $15,385 per individual
Gone are the schedules, gone are breaking it down in detail on the forgiveness application form. You still need to have documentation of the expenses and you still need to attach that documentation to the forgiveness application, but this will make the whole process much simpler for those loans of less than $50,000. For more information, please contact any member of Our Leadership Team.