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For Some, PPP Loan Forgiveness Has Been Simplified

BRYAN JOHNSON
OCTOBER 12, 2020


Seeking loan forgiveness just became a bit easier for those that have received loans of $50,000 or less pursuant to the Paycheck Protection Program. That is because the Small Business Administration, in consultation with the U.S. Department of Treasury, released a simplified loan forgiveness application for this category of borrowers.

The revamped application streamlines the procedure for forgiveness for PPP borrowers having loans south of $50,000, as well as their lenders. In fact, those lenders are able to process forgiveness applications much faster.

The timing of the SBA’s announcement could not be better, as PPP borrowers—those beyond or nearing the end of their respective “covered periods”—are preparing to apply for loan forgiveness. Form 3508S, which is to be used only by those that borrowed less than $50,000, now makes doing so a much easier task.

While forgiveness for these borrowers is certainly not automatic, they no longer have to reduce the amount eligible for forgiveness if they have:

  • Reduced the salary or hourly wage of any employee (who earned less than $100,000 in 2019) during the “covered period”; or
  • Reduced full-time equivalent employees (FTEs) during the “covered period”

This is a major—and definitely welcomed—change from the original requirements for PPP loan forgiveness. Also, while small dollar borrowers must still calculate the amount eligible for forgiveness, they no longer have to support their computations on Form 3508S (though the SBA can request such details at any time).

Of course, for PPP borrowers indebted in an amount over $50,000, none of this applies, and for those with loans in excess of $2M, a mandatory SBA audit is in your future. For help preparing for such a review or any other PPP- or COVID-19-related matter, Michelman & Robinson’s COVID-19 Practice Group is at your disposal.


We are working diligently to keep our clients up to date on coronavirus-related developments. Nevertheless, these developments are changing daily and, in some cases even hourly, so it is important that you make sure you are dealing with the most current information. That being said, this alert is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance and counsel regarding any specific concern or situation.