On 10/07/2020, the US Treasury and Small Business Administration (SBA) released an even simpler PPP (Payroll Protection Program) Loan Forgiveness Application Form 3508S that can be used by some borrowers.
This is NOT automatic forgiveness because the borrower still has to:
- understand the definitions, rules, inclusions, and limitations;
- make certain calculations;
- provide documentation verifying eligible costs;
- certify the applicability of 7 statements; and
- submit the application.
Additionally, the bank needs to review the application and provide their recommendation to the SBA, and the SBA still needs to approve the forgiveness application and fund the payment.
But, the “S” application is easier than the EZ Application and the full application.
The purpose of this even shorter S application is to reduce the burden on borrowers, lender banks, and the SBA in processing the forgiveness applications for loan amounts of $50,000 or less.
Also announced was that the 6-month payment deferral for borrowers to make payments to lenders has been automatically extended to 10-month. The US Treasury FAQ guidance states that while bank are required to notify, there is no need to re-sign or update the promissory notes for this to be in effect for a borrower.
The buzz in the professional community is that there is still anticipated that Congress will pass a law allowing automatic forgiveness for loans of $150,000 or less. Given the additional time of deferred payments, it may be beneficial for some to wait for a while longer to see if this automatic forgiveness becomes reality, rather than bother with the complexity, ambiguity, and flux of the PPP rules.
Sources:
https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-3508S.pdf
https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses
