SBA Introduces Streamlined PPP Loan Forgiveness Application | Bennett Thrasher Skip to main content

On October 8, 2020 the SBA and Treasury Department released a streamlined loan forgiveness application for PPP loans not exceeding $50,000. SBA Form 3508S may be used by any borrower with a total loan amount of $50,000 or less, except for those borrowers that together with their affiliates received loans totaling $2 million or greater. The new form is good news for those who borrowed less than $50,000, as it is much simpler than the lengthier Form 3508 and does not contain any calculations or a Schedule A to report employee hour and salary information. Instead, borrowers can self-certify their loan forgiveness amount. Most significant about the new application, a borrower eligible to use Form 3508S is exempt from any decrease in the borrower’s loan forgiveness amount based on reductions in full-time employees or employee salary/wages.

Borrowers filing Form 3508S will not need to report any employee information or make any calculations of their loan forgiveness amount on the simplified application itself. However, they will still need to do the math and compute the amount eligible for forgiveness, although they will not be required to show their calculations. Loan forgiveness will not be automatic for borrowers filing Form 3058S as they still must submit documentation verifying payroll and nonpayroll costs with the new application and will be responsible for providing their calculations upon the SBA’s request. However, we would not expect that the SBA will request information from these borrowers if they are exempt from having their loan forgiveness amount reduced.

While the new form is welcome news for borrowers with PPP loans not exceeding $50,000, Form 3508S is still not as simple as the automatic loan forgiveness for loans under $150,000 included in the Continuing Small Business Recovery and Paycheck Protection Program Act, a proposed bill released by Senators Marco Rubio and Susan Collins in July. Under this proposed legislation, borrowers with loans under $150,000 would not be required to submit a loan forgiveness application and could simply “attest” to a good faith effort to comply with PPP loan requirements. Further, borrowers with loans between $150,000 and $2,000,000 would not be required to submit formerly required “lender documentation” but would need to certify the existence of the documentation. It remains to be seen whether the SBA or Congress will act to help businesses with PPP loans exceeding $50,000.

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We will continue to monitor developments with the Paycheck Protection Program and communicate any significant changes that will impact our clients. For further questions or guidance regarding the loan forgiveness process please contact your BT advisor by calling 770.396.2200.