On October 8, 2020, the Small Business Administration (SBA) released a new interim final rule and a forgiveness application form 3508S for all recipients of Paycheck Protection Program (PPP) loans $50,000 and under. The new application does not apply for any borrower that together with its affiliates received loans totaling $2 million or more.
Under the new application, an eligible borrower is exempt from any reductions in the loan forgiveness amount based on reductions in full-time equivalent (FTE) employees or reductions in employee salary or wages that would otherwise apply. SBA determined that this exemption is allowed under joint rulemaking authority to grant de minimis exemptions under section 1106(d)(6) of the CARES Act.
Borrowers will still need to provide supporting documentation for eligible payroll and non-payroll costs but will not be required to complete the FTE or salary reduction calculations. This will provide much-needed relief and flexibility for eligible borrowers. The SBA estimates this will affect approximately 3.57 million outstanding PPP loans. Please contact Anderson ZurMuehlen if we can be of any assistance as you apply for the forgiveness of your PPP loan or if you have questions regarding the interim final rule.
This post was written by the Payroll Protection Program Specialty Team at Anderson ZurMuehlen. These experts regularly seek new information to assist our clients during this rapidly changing climate.