On October 8, 2020, the United States Small Business Administration (SBA) released additional guidelines for Paycheck Protection Program (PPP) loan forgiveness for loans totaling $50,000 or less. These businesses will no longer need to maintain the same number of full-time employees or maintain their pay rate to qualify for loan forgiveness.
Simplified forgiveness for ppp loans totaling $50,000 or less
Under general PPP loan forgiveness rules a business can qualify for complete loan forgiveness if they maintain the same number of full-time employees at the same pay rate during the covered period.
Any reduction in the number of employees or their salary or wages during that period leads to a reduced loan forgiveness amount for businesses.
SBA has relaxed these loan forgiveness requirements for small businesses receiving PPP loans of $50,000 or less, unless they and their affiliates received loans totaling $2 million or more. The agency also simplified the process of applying for loan forgiveness for these businesses. New rules for these borrowers include:
- Borrowers are eligible for full PPP loan forgiveness even if they reduce their number of full-time employees, or the salaries and wages of their employees. This rule will make more businesses eligible for loan forgiveness.
- A new simplified Loan Forgiveness Application Form 3508S is available. Borrowers still need to fill out Form 3508S and fulfil other requirements, as applicable, to qualify for PPP loan forgiveness.