[10.9.20] PPP Forgiveness Update

Late yesterday, the SBA and Treasury Department released their latest Interim Final Rule (IFR). This IFR comes two months after the opening of the SBA Forgiveness portal.
The IFR issued on October 8th is relevant for borrowers with PPP loans of $50,000 or less. These borrowers may use the newly created loan forgiveness application form 3508S. A borrower that utilizes this form is exempt from any forgiveness reductions related to any headcount or wage reductions.
The rationale for the decision to use $50,000 as the threshold is included in the IFR. It states there are approximately 3.57 million PPP loans of $50,000 or less, which totaled approximately $62 billion of the $525 billion in PPP loans originated. Additionally, approximately 1.71 million PPP loans of $50,000 or less were made to businesses reporting having zero employees or one employee. For businesses with zero or one employee, the PPP penalty provisions would almost certainly not apply anyway.
The $50,000 threshold is a major disappointment for borrowers and financial service providers, but it is safe to assume this is a major win for both lenders and those at the SBA tasked with reviewing forgiveness applications.
Form 3508S has one required page and one optional page (demographics). The required page is a certification page. You are not required to input payroll, rent, utility, or interest expenses on the form. You simply certify what amount of forgiveness you have achieved and those amounts were used properly.
It’s important not to forget two other pieces of information relating to PPP forgiveness:
  • If you have an EIDL Advance/Grant it is not forgivable and will be a loan (same terms as PPP program)
  • Expenses tied to forgiveness amounts are not deductible on your tax return per IRS guidance
For more information about what to do about forgiveness and the tax implications take a look at my last two blog posts.
Below are links to the new 3508S form and the applicable instructions.
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