October 9, 2020

SBA Releases Simpler Loan Forgiveness Application for PPP Loans of $50,000 or Less

Last night, the Small Business Administration (SBA) announced a simpler, two-page forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less - SBA Form 3508S. The industry has been requesting simplification of forgiveness for loans of $150,000 or less, but as legislation to make that happen has stalled in Congress, this announcement is great news.  Two-thirds of all PPP loans should qualify for this simpler process.  According to the SBA, there are approximately 3.57 million outstanding PPP loans of $50,000 or less, totaling approximately $62 billion of the $525 billion in PPP loans.   Borrowers that together with their affiliates received loans totaling $2 million or greater do not qualify for the simpler process.

While the two-page application requires a certification from the borrower along with documentation verifying forgivable payroll and non-payroll expenses, it doesn’t require calculations to be submitted with the application.  Borrowers will need to retain the documentation backing-up their certification for six years.  Lenders need only confirm that they received the borrower’s certifications and documentation - there is no requirement to independently verify the borrower’s reported information.

The interim final rule, which is effective immediately, specifically states:

When a borrower submits SBA Form 3508S or lender’s equivalent form, the lender shall:

i.              Confirm receipt of the borrower certifications contained in the SBA Form 3508S or lender’s equivalent form.

ii.            Confirm receipt of the documentation the borrower must submit to aid in verifying payroll and nonpayroll costs, as specified in the instructions to the SBA Form 3508S or lender’s equivalent form.

Providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower, and the borrower attests to the accuracy of its reported information and calculations on the Loan Forgiveness Application. The borrower shall not receive forgiveness without submitting all required documentation to the lender.

 

The interim final rule also addresses lenders’ duties when borrowers apply for forgiveness of costs that exceed the PPP Loan amount:

Q: What should a lender do if a borrower submits documentation of eligible costs that exceed a borrower’s PPP Loan Amount?

A: The amount of loan forgiveness that a borrower may receive cannot exceed the principal amount of the PPP loan. Whether a borrower submits SBA Form 3508, 3508EZ, 3508S, or lender’s equivalent form, a lender should confirm receipt of the documentation the borrower is required to submit to aid in verifying payroll and nonpayroll costs, and, if applicable (for SBA Form 3508, 3508EZ, or lender’s equivalent form), confirm the borrower’s calculations on the borrower’s Loan Forgiveness Application, up to the amount required to reach the requested Forgiveness Amount.

View the simpler loan forgiveness application.

View the instructions for completing the simpler loan forgiveness application.

View the Interim Final Rule on the simpler forgiveness process for loans of $50,000 or less.