PPP Forgiveness Application Simplified

October 9, 2020

On Thursday, Oct. 8, the Treasury Department and the U.S. Small Business Administration (SBA) unveiled a new, simplified Paycheck Protection Program (PPP) loan forgiveness application for loans worth $50,000 or less. They also announced a new exemption for the same group of borrowers so they wouldn’t have to reduce their forgiven loan amount because of layoffs or wage cuts.

Click here to view the the announcement from Treasury which includes links to:  1) the simpler loan forgiveness application, 2) the instructions for completing the simpler loan forgiveness application, and 3) the Interim Final Rule on the simpler forgiveness process.

The Treasury and the SBA said there were nearly 3.6 million outstanding PPP loans of $50,000 or less, totaling about $62 billion. Overall, the program has delivered $525 billion to more than 5.2 million borrowers, thanks in large part to the promise that the loans would be forgiven if firms agreed to maintain payroll.

Administration officials and banks had been urging Congress to simplify the process for a bigger universe of loans — those up to $150,000 — but the issue has become mired in broader economic relief talks that are stalled.

“We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds,” Treasury Secretary Steven Mnuchin said in a statement. “We continue to favor additional legislation to further simplify the forgiveness process.”

According to new application instructions by Treasury and SBA, the new form requires fewer calculations and less documentation for eligible borrowers. The changes are not available to businesses that took out multiple loans totaling $2 million or greater.

The administration justified giving small businesses more flexibility in firing workers or cutting pay without reducing their forgiven loan amount by saying it would have a “de minimis” impact. The agencies said that about 1.7 million of the small PPP loans at issue — about 48 percent — were made to businesses that reported having zero or one employee and so would generally not be affected by the change.

They estimated that the set of potentially affected borrowers – those with at least one employee other than the owner – account for $49 billion or 9 percent of the overall program. The SBA said it believes that most of those firms did not reduce full-time employees or reduce wages or that they would qualify for another existing exemption from loan forgiveness amount reductions.

SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders for PPP borrowers on October 2, 2020.  SBA will continue to process all PPP forgiveness applications in an expeditious manner.

Click here to view the simpler loan forgiveness application.

Click here to view the instructions for completing the simpler loan forgiveness application.

Click here to view the Interim Final Rule on the simpler forgiveness process for loans of $50,000 or less.

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