On October 8, 2020 the SBA and Treasury Department released updated rules and a new forgiveness application Form SBA 3508S and related instructions for PPP loans less than $50,000.

If my loan is less than $50,000 do I still have to apply for forgiveness?

Yes, many entities with loans less than $50,000 will still have to apply for forgiveness but they will not be subject to the requirements that could reduce forgiveness.

What requirements were eliminated for PPP loans less than $50,000?

If a borrower is eligible to use Form 3508S to apply for forgiveness, that borrower is exempt from the requirements related to:

  • Reduction of full time equivalent employees (FTEs)
  • Reduction in salary and wages of any employees

My business is part of an affiliated group, may I use the SBA Form 3508S?

If affiliated businesses received total PPP loans of $2 million or greater, they cannot use the SBA Form 3508S. Therefore they may still be subject to the reductions in forgiveness related to reductions in salaries or FTEs.

Why did the SBA make these changes?

Of the total $525 billion in PPP loans, approximately $62 billion of loans have individual loans amounts of less than $50,000. Based on analysis of the PPP loans, the SBA has enacted its authority to make de minimis exceptions to the CARES Act.   The SBA believes that the changes will grant substantial relief to small businesses. Treasury Secretary Steven Mnuchin stated “We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds. We continue to favor additional legislation to further simplify the forgiveness process.”

Does this change provide for automatic forgiveness for PPP loans?

No, these new rules do not provide automatic forgiveness. The Treasury and SBA do not have authority to provide automatic forgiveness. Under these rules applicants will have to file a forgiveness application. There is currently legislation to provide for automatic forgiveness of loans under $150,000. But given the current political climate, it is uncertain if the bill will be voted on prior to the elections.

How can Mitchell Wiggins help?

Our PPP Task Force is actively working on PPP forgiveness applications. If you are interested in assistance with your PPP forgiveness application, complete our inquiry form to have a Mitchell Wiggins team member reach out to you.