On October 7, 2020, the U.S. Small Business Administration (the “SBA”), in conjunction with the Department of Treasury, issued a new Interim Final Rule, which makes the loan forgiveness process much simpler for those borrowers receiving loans under the Paycheck Protection Program (“PPP”) less than $50,000.
The SBA introduced a new loan forgiveness application, the Form 3508S. They have clarified that a borrower with a PPP loan of $50,000 or less, that uses Form 3508S to apply for loan forgiveness, is exempt from any reductions of such borrower’s loan forgiveness amount based on reductions in full-time equivalent employees or reductions in employee salary or wages. The SBA points out that this exemption does not apply to a borrower that together with its affiliates received loans totaling $2 million or greater.
Borrowers will still need to complete Form 3508S and submit all requested documentation to their lender in order to obtain loan forgiveness, but the hope is that this process will be streamlined for these borrowers.