SBA, Treasury Announce Simpler PPP Forgiveness for Loans of $50K or Less

NEW ORLEANS – The U.S. Small Business Administration and the Treasury Department have released a simpler loan forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less. The agencies say the action streamlines the PPP forgiveness process to provide financial and administrative relief to America’s smallest businesses.

“The PPP has provided 5.2 million loans worth $525 billion to American small businesses, providing critical economic relief and supporting more than 51 million jobs,” said Secretary of the Treasury Steven T. Mnuchin. “Today’s action streamlines the forgiveness process for PPP borrowers with loans of $50,000 or less and thousands of PPP lenders who worked around the clock to process loans quickly,” he continued.  “We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds.  We continue to favor additional legislation to further simplify the forgiveness process.”

For New Orleans banks, the rule changes will make it easier for them to complete the forgiveness process for many of the loans they made. At Fidelity Bank, for instance, 1650 of 2200 loans were for less than $50,000 so the vast majority will qualify for streamlined forgiveness.

“For the small business owners, it means that if they received less than $50,000 PPP loan and are not a part of an affiliate that received loans totaling $2M, they can complete the 3508-S form, which is shorter than the 3508EZ and not have to submit the FTE salary reduction worksheet, if applicable,” said Chris Ferris, president and CEO of Fidelity Bank in New Orleans. “The FTE salary reduction worksheet was required for any PPP loan recipient who had one or more employee, and reduced their employee count or their employees salary or wages. The small business owner will still be required to submit all documentation as it relates to payroll expense and qualified business expenses they want covered as long as they do not exceed the total PPP loan amount.”

Ferris said that now banks will not have to review and validate the “FTE salary reduction worksheet” since small businesses that have one or more employees won’t be required to reduce their PPP forgiveness or pay the penalty if they reduced their full time employee count or their employees salary’s or wages. The bank will still be required to confirm receipt of the borrowers documentation to aid in verifying payroll and non-payroll expenses. Providing an accurate calculation of the loan forgiveness amounts for those using the new 3508-S form is the responsibility of the borrower. For those with loans more than $50,000, the bank is required to confirm the borrower’s calculation that is submitted.

Ferris said he’s hopeful that blanket forgiveness will be provided for all loans less than $150,000.

“The business owner would still need to fill out a simple forgiveness application attesting to the information they submitted,” he said. “The small business owner would also need to keep records of their payroll and qualified business expenses for a period of time, similar to the retention period for keeping one’s tax returns.”