SBA Relaxes Paycheck Protection Program (PPP) Loan Forgiveness Rules for Businesses Receiving Loans of $50,000 or Less

Practice Areas

By: Shuchita Lotlikar

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.


To apply for PPP loan forgiveness, or for additional questions related to financing your business, please contact your Chugh CPAs, LLP tax professional or email us at