The US Small Business Administration & US Treasury Department released guidance this week clarifying that recipients of Paycheck Protection Program (PPP) loans of $50,000 or less will be able to apply for forgiveness using a simplified application form. Under the new Interim Final Rule , this streamlined application takes away most of the confusion and time-consuming calculations that the original forgiveness application contained. While forgiveness is still not automatic, it certainly makes the task of seeking forgiveness a bit easier for those who received these smaller loans. Most importantly, these borrowers are no longer required to reduce the amount eligible for forgiveness if the borrower; reduced the hourly wage of an employee during the covered period or reduced the full time equivalent (FTE) during the covered period. This change in requirement eliminated a very worrisome part of the application for these small borrowers who may not have been able to get back to the staffing levels they had been used too prior to this pandemic.
This new process, while shorter, makes clear that the SBA will still require all corresponding payroll documentation, tax forms, business mortgage interest payments, business lease/rent payments, business utility payments among other items, be submitted with the simplified application form. While we are thrilled to hear that the process has been streamlined we wouldn’t be surprised to have the rules change again as forgiveness for larger loans are discussed in Congress.