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Paycheck Protection Program Update: 1/21/2021

January 21, 2021

Updated PPP loan forgiveness applications and rules

The US Small Business Administration (SBA) and Treasury published updated Paycheck Protection Program (PPP) loan forgiveness guidance and forms, including a one-page application for borrowers that received a PPP loan of $150,000 or less.

That form, called the PPP Loan Forgiveness Application Form 3508S, seeks information about the borrower’s loan amount, disbursement date, employee totals, covered period dates, amount of the loan spent on payroll, and the amount of the loan for which forgiveness is being sought. Borrowers are not required to submit any supporting documentation with the application but are mandated to maintain payroll, nonpayroll, and other documents that could be requested during an SBA loan review or audit.

The SBA and Treasury has previously released two other PPP loan forgiveness applications:

  1. Form 3508 and Form 3508EZ. Borrowers must submit payroll and nonpayroll documentation when applying for loan forgiveness with those forms, which provide lists of the required documents. In addition, the SBA and Treasury released
  2. Form 3508D, which certain individuals must use to disclose controlling interest in an entity applying for a PPP loans.

Also released was an interim final rule (IFR) consolidating prior PPP loan forgiveness rules and incorporating changes made by The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which revived the PPP with $284 billion in fresh funding. It also created second-draw loans, which allow borrowers that received PPP loans during the first program last year to seek a second loan of up to $2 million, provided they meet tightened size requirements and can document a year-over-year revenue decrease of at least 25% for one reporting period in 2020.

The relaunched PPP began accepting applications January 11 from community financial institutions that loan primarily to underserved businesses. The application window opened January 14 for lenders with $1 billion or less in assets and for all lenders on January 19.

*Resources:
The Journal of Accountancy, Jeff Drew, 1/19/2021.

We will continue to keep you informed as more information is released.