PPP Loan Update: SBA Issues New Form and Guidance

Robert HobermanManaging Partner, Hoberman & Lesser CPAs, LLP

Today, the U.S. Small Business Administration released a simpler loan forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less. The new form, 3508S, streamlines the PPP forgiveness process and is designed to provide administrative relief to businesses with less than $50,000 of PPP loans.

The PPP has provided 5.2 million loans worth $525 billion to American small businesses. There are approximately 3.57 million outstanding PPP loans of $50,000 or less, totaling approximately $62 billion. Approximately 1.71 million of the PPP loans were made to businesses that reported having zero employees. 

The SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP Lenders for PPP Borrowers on October 2, 2020. The SBA has indicated that it will continue to process PPP forgiveness applications using the old and new forgiveness forms. 

The new application and instructions provide the following guidance to Borrowers as to what documents they will need to submit to their Lender:

1.PPP Loan Forgiveness Application Form 3508S

2.Documentation verifying:

a. Eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period
b. Employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount
c. Existence of the obligations/services prior to February 15, 2020, and eligible payments from the Covered Period
d. Business mortgage interest payments
e. Business rent or lease payments
f. Business utility payments

3.Documents that each Borrower must maintain but is not required to submit:

a. All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application
b. Documentation supporting the Borrower’s certifications as to its eligibility for a PPP loan
c. Documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements

The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.

This is not the “check the box” application that we were hoping for. The new guidance and Form provides some help to the Borrowers, but it is not the comprehensive relief that we anticipated. It appears that for Borrowers to get that type of relief, Congress must pass new legislation. We will continue to monitor the situation in the hopes that they will simplify the forgiveness process.