In October, the federal government simplified the Paycheck Protection Program (PPP) loan forgiveness process for PPP loans of $50,000 or less. Small businesses with loans of $50,000 or less will now qualify for full loan forgiveness, even if they lost employees or reduced employees’ salaries. These businesses are now declared exempt from the statutory reduction in their potential loan forgiveness amount that the CARES Act would have required if the business reduced their total number of full-time equivalent (FTE) employees (section 1106(d)(2) of the CARES Act) or reduced their employee salary or wages (section 1106(d)(3) of the CARES Act) in response to the pandemic.
The government also eased the burden of reviewing PPP loan forgiveness applications on PPP lenders. Under the new Interim Final Rule, the small business loan forgiveness applicant is responsible for providing an accurate calculation of the loan forgiveness amount. The business must attest that it accurately verified the payments for eligible costs and submit all required documentation to the lender. The lender may then rely on these representations and does not need to independently verify the business’s documentation supporting its request for loan forgiveness. These changes should allow lenders to process loan forgiveness applications faster.
Click here to view the simpler loan forgiveness application. Click here to view the instructions for completing it. Unfortunately, the hope that loan forgiveness would be automatic for loans under $150,000 (which many of us had hoped for), is not included in this Interim Final Rule. We will continue to monitor PPP developments and let you know if that changes.
Contact HLG if you’d like to discuss these and other strategies for helping your business recover from the pandemic and accelerate out of the turn.