U.S. SBA Approves New Simplified 1-Page Application
If you took out a loan for $50,000 or less from the Paycheck Protection Program (PPP) enacted by the Small Business Administration earlier this year, you may be able to apply for loan forgiveness using the new, simplified Form 3508S. This one-page application, revised on October 8th, 2020, is a welcomed alternative to the much longer and more complicated original application form. Below, we’ll highlight the most important information you need to know about Form 3508S.
What Changes Are Featured on the New Application?
Small businesses applying for loan forgiveness will find it much easier to use Form 3508S. The simpler application no longer requires small businesses to show the calculations used to determine the amount of loan forgiveness they qualify for. Instead, applicants must confirm that the loan funds were used to cover eligible expenses, such as payroll costs, business mortgage interest payments, rent or lease payments, and utility payments, and provide supporting documents to demonstrate the payment of these costs. Small business owners should note that loan forgiveness is subject to auditing by the Small Business Administration. Furthermore, payroll costs should attribute to at least 60 percent of the loan forgiveness amount; all other business expenses applied should be no more than 40 percent of the total forgiveness amount sought.
In addition, PPP loan forgiveness will no longer be reduced if small businesses reduced the total number of full-time equivalent employees on their payroll or reduced employee salaries or wages during the loan’s covered period. Small business owners should be aware, however, that the new simplified form cannot be used if they reduced the number of employees on their payroll from pre-COVID levels or have cut pay rates by more than 25%. In these cases, you would need to apply using the original form.
While these changes do not guarantee full loan forgiveness, the new application makes it a lot easier for borrowers to qualify for PPP loan forgiveness.
Who Can Use the New Application to Request PPP Loan Forgiveness?
If you obtained a PPP loan of $50,000 or less, you are eligible to apply for loan forgiveness using Form 3508S. However, if with your business affiliates you received loans of $2 million or more, you would not be eligible to use the simplified form.
How Does the Loan Forgiveness Process Work?
Once you complete the application form 3508S, you will submit it to the bank or lender who granted your PPP loan. Your bank will have 60 days to review your application and make its decision before submitting the loan to the Small Business Administration. From that point, the SBA has 90 days to review and approve your loan forgiveness application. Once approved, the SBA will remit the forgiveness payment directly to the bank responsible for your loan.
Currently, there are three different PPP loan forgiveness applications: Form 3508S; Form 3508EZ; and the standard form 3508. It can be confusing to know which form you should use to apply for PPP loan forgiveness for your small business. The Honest Buck team of experts is here to help. We can walk you through the application process and help you get the maximum amount of loan forgiveness you qualify for. Contact us today and learn how we can help you get your PPP loan forgiven move forward with your business goals.