The Small Business Administration (SBA) and U.S. Treasury Department recently released a new, streamlined form for applying for forgiveness under the Paycheck Protection Program (PPP) for borrowers with loans of $50,000 or less. While not quite the automatic forgiveness that most borrowers have been hoping for, Form 3508S has several advantages over the previous forms.
A borrower who received a PPP loan of $50,000 or less is eligible to use Form 3508S. However, a borrower that, together with its affiliates, received PPP loans totaling $2 million or greater cannot use Form 3508S. The affiliation rules may be found here.
No FTE/Wage Reduction
One major advantage of Form 3508S is that it exempts the borrower from the burdensome employee requirements of the PPP. A borrower who uses Form 3508S is exempt from any reductions to forgiveness based on reductions in full-time employees or reductions in employee salaries/wages. The SBA and Treasury have stated that this is a de minimis exemption for small borrowers.
Form 3508S does not require the borrower to calculate payroll and non-payroll costs. Instead, the borrower must certify the PPP funds were used for eligible costs, that the 60% payroll requirement has been met, and that the owner-employee did not receive compensation in excess of the applicable limit.
The borrower is still required to submit relevant documentation to the SBA/lender for verification of loan expenses.
For more information on PPP forgiveness and other COVID-19 resources, visit nfib.com/coronavirus.
October 15, 2020