Forgiveness Reduction Waived for Loans of $50,000 or Less.
Thank you to our Past President and Chamber member – Susan Martin, CPA – for forwarding this information courtesy of Johanna Hearns, District Manager of ADP Small Business Services.
“As you may or may not know, as of October 8th the Treasury Department and SBA released a simplified PPP forgiveness application (Form 3508S). In accordance with this Interim Final Rule (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.
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 (SBA Form 3508, 3508EZ or 3508S). 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. [You should] obtain the appropriate reports [from your business solutions company]and should gather other documentation demonstrating how PPP loan proceeds were used, including mortgage interest, rent payments and utilities. ADP will continue to closely monitor federal legislation and guidance affecting PPP loans.”
Question: The PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of 10/31/2020 in the upper-right corner. Is October 31, 2020 the deadline for borrowers to apply for forgiveness?
Answer: No. Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred and the borrower must begin making payments on the loan. For example, a borrower whose covered period ends on October 30, 2020 has until August 30, 2021 to apply for forgiveness before loan repayment begins. The expiration date in the upper-right corner of the posted PPP loan forgiveness application forms is displayed for purposes of SBA’s compliance with the Paperwork Reduction Act, and reflects the temporary expiration date for approved use of the forms. This date will be extended, and when approved, the same forms with the new expiration date will be posted.
Information courtesy of Johanna Hearns, District Manager of ADP Small Business Services.