Banking and Financial Services e-Alert

Bowles Rice Banking and Financial Services e-Alert
SBA Simplifies Forgiveness Process
for PPP Loans of $50,000 or Under

Paycheck Protection Program (PPP) borrowers with loans for $50,000 or less should now have an easier time applying for loan forgiveness. On October 8, 2020, the Small Business Administration released a streamlined loan forgiveness application for loans totaling $50,000 or less. The smaller dollar loans comprise about two-thirds of all PPP loans.

The new two-page loan forgiveness application, 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. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, the SBA may request information and documents to review those calculations as part of its loan review process, and borrowers are required to maintain the documentation supporting their certifications for six years.

Once the application is received, the lender must confirm that it received the borrower's certifications and documentation. The SBA emphasized that providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower, and the lender does not need to independently verify the borrower's reported information if the borrower submits documentation supporting its request for loan forgiveness and attests that it accurately verified the payments for eligible costs.

SBA also provided guidance on lender responsibilities when borrowers apply for forgiveness of costs – regardless of which form they use – exceeding the PPP loan amount. In these cases, the lender should confirm that it received the borrower's documentation and, if applicable, confirm the borrower's calculations "up to the amount required to reach the requested Forgiveness Amount."

The Interim Final Rule can be found here.

For more information
If you have questions about Paycheck Protection Program loan forgiveness options or would like more information, please contact one of the following Bowles Rice attorneys:

Sandy Murphy
contact by email

Julia Chincheck
contact by email

Elizabeth Frame
contact by email

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