On October 8, 2020, the U.S. Treasury and the Small Business Administration released a new simplified Paycheck Protection Program (PPP) loan forgiveness application. This streamlined application, Form 3508S, is for borrowers who received funds of less than $50,000. Designed to help small businesses, the application – which has been reduced from 12 pages to two — will make the forgiveness process simpler both for borrowers and lenders. It offers a new, “check the box” process for forgiveness. This provides financial and administrative relief to America’s smallest businesses, while also ensuring reasonable use of taxpayer dollars.
Applicants will still need to be approved to receive forgiveness, but those who received $50,000 or less, will now provide fewer calculations and less paperwork in order to receive approval. PPP borrowers will have to submit documentation for payroll, mortgage interest, rent and lease payments, and utilities to their lender along with their forgiveness application. The new rules do remove the need to show that the borrower did not reduce their full-time equivalent (FTE) employee count or salaries. Under previous guidelines, failure to maintain FTEs or salary and wage levels would have resulted in a reduction of loan forgiveness amounts.
Eligible borrowers can use new SBA Form 3508S for their application or wait for their lender to update their online application portals. Streamlining efforts by the SBA and Treasury have also eased the burden on PPP lenders, allowing lenders to process forgiveness applications more swiftly.
The new streamlined application process does not solve the issue of small businesses being on the hook to pay taxes on expenses incurred from their forgiven loans. Various lawmakers and organizations have urged Congress to allow business expenses related to PPP loan proceeds to be deductible. Currently, these efforts have not yet translated into congressional action.
Our staff at TRP Sumner is here to help with guidance and advice regarding your PPP loan forgiveness process with the goal of giving you the best possible outcome. As things change or are updated, we are committed to keeping you informed. If you would like to discuss this or other matters in more detail, give us a call at one of our three locations in Fayetteville and Dunn, NC. Assisting you beyond the tax return is our primary focus every day! Visit us at our website at www.trpsumner.com.