PPP loan forgiveness application

Streamlined forgiveness application for PPP loans up to $50,000

Authored by Michael Wronsky

Late last week, the Department of Treasury (Treasury) and Small Business Administration (SBA) jointly announced that borrowers of Paycheck Protection Program (PPP) loans of $50,000 or less (to include self-employed borrowers) are eligible for a streamlined loan forgiveness application process. Pursuant to an interim final rule, such borrowers can apply using a new pared-down SBA Form 3508S and will not need to reduce their forgiveness amount for any reductions in employee headcounts or salaries.

The application still requires the borrower make certain certifications to the accuracy of the information reported and submit documentation to support the use of the loan proceeds was for eligible costs. Borrowers who together with their affiliates (as determined under SBA rules) received loans of $2 million or more are ineligible to use the streamlined application. For example, if an entity has a loan of $50,000 and its parent corporation has a loan of $1.95 million, the former would not be able to use Form 3508S to apply for loan forgiveness.

Treasury and the SBA cited the need to relieve the compliance burden on both borrowers and lenders by affording them the use of this comparatively straightforward process for determining forgiveness of “de minimis” loans.

Form 3508S and its accompanying instructions are posted on the SBA’s website.

Please contact your Baker Tilly advisor regarding how the above may affect your situation.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

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