Paycheck Protection Program Loan Forgiveness Relief for Small Loans

The SBA and Treasury Department have issued an additional interim final rule (IFR) on PPP loan forgiveness which provides:

  1. Additional guidance regarding the forgiveness and loan review processes for PPP loan of $50,000 or less; and
  2. For all PPP loans, lender responsibilities with respect to the review of borrower’s documentation of eligible costs for forgiveness when those costs exceed the PPP loan.

A borrower of a PPP loan of $50,000 or less will be able to apply for forgiveness using SBA Form 3508S, unless the borrower together with its affiliates received loans totaling $2 million or more.  If this is the case the borrower will still have to calculate FTE and wage reductions and use either the SBA Form 3508 or the SBA Form 3508EZ as their forgiveness application form.

Borrowers able to use SBA Form 3508S to apply for forgiveness will be able to ignore the full time equivalent (FTE) and wage reduction calculations required of other loan forgiveness applicants.

The SBA Form 3508S and its instructions make clear that fewer calculations and less documentation will be required for eligible borrowers.  SBA Form 3508S 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.

If using the SBA Form 3508S the borrower is still required to sign off on various representations and certifications.  The borrower will also still be required to submit to their lender documentation that will aid in verifying payroll and nonpayroll costs.

In circumstances where a borrower submits documentation of eligible costs that exceed their PPP loan amount, the IFR clarifies that:

  1. Borrowers are eligible to submit a forgiveness application with eligible costs that exceed their loan amount; and
  2. Lenders should confirm the borrower’s calculations from their loan forgiveness application up to the amount required to reach the requested forgiveness amount.

SBA Clarifies Deferral Period of PPP Loan Payments

The SBA has released guidance to clarify how the extension of the deferral period in the Paycheck Protection Flexibility Act of 2020 impacts loans that were already in place when it was enacted.

Before the Flexibility Act became law, the deferral period expired after six months from the date the loan proceeds were received by the borrower.  The Flexibility Act extended that period through the date that forgiveness is granted on the PPP loan as long as an application for forgiveness is made within ten months following the end of the covered period.

The new guidance clarifies that the deferral period extension applies to all loans and that there is not a requirement from the SBA of a formal modification of the promissory note.


Your trusted advisors at BerganKDV will continue to monitor the legislation and will keep you informed on the provisions impacting businesses and individuals in addition to the PPP.  Please reach out to discuss strategies to ensure your business is making the right decisions as changes continue to be made to this program. Contact Our Team.

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