14 Oct PPP Loan Forgiveness Update for Smaller Loans (Less Than $50K)
We at Reconciled Solutions want to give you an update on the PPP Loan Forgiveness Process. The latest news is that the SBA released the 3508S form on Thursday, October 8, 2020, which is intended for borrowers with loans under $50k. This form offers a blanket SAFE HARBOR from reductions in forgiveness. But beware – it is NOT blanket forgiveness!
The borrower will need to sign-off on seven certifications (such as that their payroll spending met at least 60% of PPP loan proceeds) and provide verification of payroll costs and non-payroll costs to their lender. Be sure to check with your particular lender for the documents they will need to satisfy the verification process.
One big area of simplification for these smaller borrowers – those with loans under $50K – won’t have to perform FTE or salary reduction calculations. Borrowers do not have to worry about if you have reduced FTE / Salary wage reduction during the covered period. You will still need to provide documentation for eligible Payroll costs and Non-Payroll costs. 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 the SBA, including representatives of its Office of Inspector General, to access such files upon request.
What Does This Mean To You?
If your PPP loan was $50,000 or less, you now have the “green light” to apply for forgiveness. However, there is no need to rush into the forgiveness application process. Reconciled Solutions recommends that you schedule a convenient time in the next 4-8 weeks. And once your forgiveness application has been submitted, don’t anticipate hearing back quickly. We have been advised that lenders may not process the forgiveness applications until 8-12 weeks after receipt. After they submit the forgiveness application to the SBA, it may be up to 5 months before you hear back from them.
For those of our clients for whom we are providing services regarding PPP loan forgiveness, we will be gathering the required documents for your lender to verify your payroll and eligible non-payroll costs (rent, utilities and mortgage interest). We will start preparing applications in approximately 4 to 5 weeks.
And finally, for those of you with PPP loans greater than $50,000, our recommendation is to sit tight for further guidance and broader forgiveness opportunities. You have up to 10 months after the 24-week Covered Period to apply for forgiveness, so time really is on your side. We remain hopeful for blanket forgiveness from Congress for loans up to $150,000