On Thursday, October 8, 2020, the Small Business Administration (SBA) released SBA Form 3508S, a streamlined loan forgiveness application, and an accompanying interim final rule (IFR) simplifying the loan forgiveness process for businesses that received a Paycheck Protection Program (PPP) loan of $50,000 or less.
SBA Form 3508S requires fewer calculations and less documentation for eligible borrowers. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness, although the SBA may request information and documents to review those calculations as part of its loan review process.
Eligibility and FTE Reduction Exemption
A PPP borrower who received a loan of $50,000 or less (except borrowers who received $2 million or more when combined with affiliate PPP loans) may now use SBA Form 3508S or a lender’s equivalent form when applying for PPP loan forgiveness. Importantly, borrowers who use the new form will not be subject to the rule that requires a reduction in forgiveness amounts when full-time equivalent employees or employee wages were reduced during the covered period.
Lender Review of SBA Form 3508S and Supporting Documents
The IFR clarifies the extent to which lenders should review the application and supporting documents when they receive a new SBA Form 3508S from a borrower. According to the IFR, lenders should:
- Confirm receipt of the borrower certifications contained in SBA Form 3508S, or the lender’s equivalent form; and
- Confirm receipt of documentation the borrower must submit to aid in verifying payroll and non-payroll costs.
The IFR emphasizes that accurately calculating the loan forgiveness amount is the borrower’s responsibility, and lenders can rely on a borrower’s representations. Lenders do not need to independently verify a borrower’s reported information if the borrower submits forgiveness documentation and attests to its accuracy.
The rules surrounding PPP loans are complex and business specific. If you have concerns about the rules, please contact Ford Turrell, Timothy Hillegonds, Rob Davies, Matthew Crowe, Charlie Goode, Jeffrey Ott or your Warner attorney.