The Small Business Administration last night released a much-anticipated, streamlined loan forgiveness application for Paycheck Protection Program loans totaling $50,000 or less. While eligible loans account for just 9% of overall PPP loan dollars, they amount to about two-thirds of all PPP loans.
The two-page forgiveness application, Form 3508S, includes certifications from the borrower but does not require calculations to be submitted with the application. Applicants must submit documentation verifying forgivable payroll and non-payroll expenses. Borrowers are required to retain the documentation supporting their certifications for six years, but do not need to submit it.
Once the application is received, the lender must confirm that it received the borrower’s certifications and documentation. “Providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower,” SBA said in an interim final rule, reiterating previous guidance that “lenders may rely on borrower representations. . . . [T]he lender does not need to independently verify the borrower’s reported information if the borrower submits documentation supporting its request for loan forgiveness and attests that it accurately verified the payments for eligible costs.”
"It appears that our collective, relentless efforts to push both Congress and the administration toward simplified PPP loan forgiveness have paid off," said SDBA President Curt Everson. "While all of us would have preferred to see the threshold for simplified forgiveness set at a level higher than $50,000, this move by SBA and Treasury will make the loan forgiveness application process much less of a headache for the vast majority of borrowers and for you as their banker."
Everson said highlights regarding the new form and instructions include:
- Forgiveness application form is only one substantive page, plus an optional borrower demographic information disclosure page.
- Borrowers alone are required to attest to expenditure of loan proceeds for forgiveness-eligible purposes and amounts
- Lenders need not independently verify borrower’s reported information if the borrower submits documentation supporting its request for loan forgiveness and that the borrower attests that they accurately verified the payments for eligible costs.
- Per the accompanying instructions, borrowers eligible to use the new form “are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages”.
SBA also provided guidance on lender responsibilities when borrowers apply for forgiveness of costs—regardless of which form they use—exceeding the PPP loan amount. In these cases, the lender should confirm that it received the borrower’s documentation and, if applicable, confirm the borrower’s calculations “up to the amount required to reach the requested Forgiveness Amount.”