Great News! A Simplified Forgiveness Process For PPP Loans Of $50,000 Or Less
Dear Clients and Friends,
Great news! In our last article, we noted it was widely anticipated that the forgiveness process for PPP loans under a certain amount would be streamlined. As such, we advised you not to rush your application with a promise to keep you updated. On October 8, 2020, the Treasury and the Small Business Administration (SBA) announced a streamlined process for all loans under $50,000, and published a simplified application form.
Loan amounts of $50,000 or less account for about $62 billion of the total $525 billion paid out in PPP loans. That equates to about 3.57 million out of 5.2 million loans issued. In other words, most of those who benefited from PPP loans only borrowed relatively modest amounts. This is great news for a lot of our clients and millions of business owners.
What does this mean for you?
We should emphasize that this does not amount to automatic forgiveness of these loans. Borrowers will still have to provide documentation for payroll and non-payroll costs, as well as make certain certifications. However, this will be far less complicated and time consuming than the process bigger borrowers will have to go through.
Most importantly, borrowers of $50,000 or less are exempt from any reductions in forgiveness based on:
- Reductions in full-time-equivalent (FTE) employees; and
- Reduction in employee salaries or wages. (1)
As a result, if this applies to you, you will not have to worry about potentially complicated calculations with respect to either of the above. We hope that this new guidance comes as a relief to many of our clients. Regardless of your loan size, we are here to help you initiate, gather required documents, and complete your PPP loan forgiveness application.
Stay safe and healthy,
The CJBS team.