U.S. Small Business Administration (SBA) Issues Simplified Paycheck Protection Program (PPP) Loan Forgiveness Application Form
Form Applicable to Qualifying PPP Forgivable Loans of $50,000 or Less, All Borrowers Required to Submit Loan Forgiveness Application
Last week, the U.S. Small Business Administration (SBA) announced and issued a simplified forgiveness application for Paycheck Protection Program (PPP) borrowers who obtained loans of $50,000 or less. The new PPP loan forgiveness application requires borrowers to confirm that funding received from the PPP loan was used for eligible costs (i.e. payments to retain employees, utilities, mortgage, among them) and to provide supporting documentation showing payment of these expenses (i.e. bank statements or copies of cancelled checks). Borrowers will also need to certify that their filing is within SBA guidelines.
The newly issued simplified application cannot be used by small businesses that reduced their full-time employee headcount from pre-pandemic levels, or those that have reduced pay rates by more than 25 percent. In these instances, PPP borrowers will need to determine which of the existing loan forgiveness application forms that they are required to submit, which can be found here.
Regardless of the loan size, all borrowers in the PPP program are required to submit a loan forgiveness application, in order to have the loan forgiven by the federal government. This is true, even if all loan proceeds were spent for permissible expenses. The forms can be submitted directly through the lender servicing the loan, who can also assist information required and documentation required.
The SBA has also issued an updated FAQ section on the revised loan forgiveness process. The SBA guidance advises all applicants to retain documentation connected to the PPP for six years. While there is pending legislation in Congress to simplify the loan forgiveness process and form for all loans under $150,000, that legislation has not passed.
Note - As always, IAM updates should be construed as informational only. The association strongly encourages all member companies to confer with tax and legal counsel as part of their due diligence, prior to submitting financial documents and other material to the SBA.