New Exemption From Forgiveness Reductions for PPP Loans Under $50,000
On October 8, 2020, the Treasury Department and Small Business Administration (SBA) released a simplified Payroll Protection Program (PPP) forgiveness application (Form 3508S) and instructions for loans of $50,000 or less, as well as an Interim Final Rule (IFR) which explains the changes.
Generally, the IFR explains the adoption of a de minimis exemption from reductions in loan forgiveness (i.e., penalties) for failure to maintain the number of full-time-equivalent employees (FTEs), as well as wage level maintenance requirements, for PPP loans of $50,000 or less.
一般而言，IFR解釋說，對於無法維持的全職員工（FTE）人數以及達到正常工資水平維持要求，採用了最低免除減免貸款（即罰款）的措施， PPP貸款可借貸$ 50,000或以下。
Borrowers with affiliates that collectively received PPP loans of $2 million or more cannot use the new form or new exemptions.
Forgiveness Reduction Waived for Loans of $50,000 or Less
In accordance with the IFR, qualifying PPP borrowers will not need to document compliance with the targeted FTE and wage level maintenance requirements.
Loan forgiveness amounts will not be reduced, even if FTE or wage levels decreased during or after the covered period, as long as the loan was $50,000 or less, and the borrower, when combined with any affiliates, collectively received less than $2 million.
There are several legislative proposals in Congress to further expand, simplify, and extend the PPP program, including proposals that could authorize a second PPP loan for qualifying businesses.
What to Do Now
Many borrowers who received PPP loans have already completed their specified "covered period" and spent the PPP loan proceeds and may be ready to submit the related forgiveness applications.
The SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders for PPP borrowers on October 2, 2020.
It is not urgent that forgiveness applications be submitted soon. As a reminder, under the PPPFA, loan repayments for any amounts not forgiven are not required until ten months after the expiration of a borrower's covered period. Borrowers should check with their lenders directly to determine if they are prepared to accept forgiveness applications.