Simplified PPP Forgiveness Application for $50,000 Loans (And other SBA Guidance)

By Stanley Rose October 9, 2020

Public accountants are busy this time of year, finalizing financial reports and trying to outrun a formidable October 15 tax filing deadline. But the SBA has been busy too, creating a new application form and issuing some guidance yesterday that we discuss briefly below.

Simplified PPP Forgiveness Application for $50,000 Loans

An abbreviated form is now available for borrowers of PPP loans amounting to $50,000 or less. Form 3508S allows the provision of dramatically less information than the alternative applications. Significantly, qualifying applicants are not required to provide the often complex computations of the forgiveness amount. Those computations should be undertaken, though, and maintained with the supporting documentation, because the SBA can request that information as part of its review process.

Note that borrowers of $50,000 or less whose collective loans reach $2,000,000 when combined with their affiliates’ loan amounts are not eligible to use this new Form 3508S.

Form 3508S joins two other existing forms as potential options for applying for forgiveness of PPP loans. The stable now includes:

1. Form 3508S – for loans of $50,000 or less.
2. Form 3508EZ – for certain borrowers who had no employees, or who met specific thresholds involving minimal or nonexistent wage and headcount reductions.
3. Form 3508 – for all others.

The SBA provided the following documents related to this new alternative.

1. Form 3508S – the application itself
2. Form 3508S instructions
3. A new IFR (interim final rule) introducing this new option

FAQ – Deferral Period Extended

On Wednesday the SBA & Treasury Department also produced what appears to be another round of Frequently Asked Questions dated October 7  to address borrower and lender questions as the frequency of forgiveness applications accelerates. However, at closer look, most of the FAQs (as well as the mix of helpful and artfully-dodged answers) were published in previous iterations of FAQs.

Question 52 is new. It is paired (refreshingly) with a meaningful answer, and notes that the period in which PPP loan payments may be deferred (for borrowers who do not receive forgiveness) is extended to 10 months after the end of the covered period instead of 6 months from the loan disbursement date for non-forgiven loans, and to the date of SBA remittance to lenders for forgiven loans. This applies regardless of the terms of any promissory note that seems to contradict it, and lenders are required to inform affected borrowers of this extension.

For more information or a discussion on how this may impact you, please contact your BNN advisor at 800.244.7444.