SBA, Treasury Announce New Forgiveness Rules For Small PPP Loans
The U.S. Department of the Treasury and U.S. Small Business Administration (SBA) unveiled on October 8 a new loan forgiveness application for Paycheck Protection Program (PPP) loans worth $50,000 or less. The two agencies also announced businesses who took loans totaling less than $50,000 would not have to reduce their forgiven loan amount if they had to make layoffs or pay reductions due to the fallout from the coronavirus pandemic.
According to the Treasury and the SBA, there are nearly 3.6 million outstanding PPP loans of $50,000 or less, totaling about $62 billion. (The program has delivered $525 billion to more than 5.2 million borrowers due in large part to the promise that the loans would be forgiven if firms agreed to maintain payroll.)
In a statement, Treasury Secretary Mnuchin said, “We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds.” Secretary Mnuchin also asked Congress to pass “additional legislation to further simplify the forgiveness process.”
According to application instructions, the new form requires fewer calculations and less documentation for eligible borrowers. Readers should be aware that the changes are not available to businesses that took out multiple loans totaling $2 million or greater.
Also last week: the SBA update its Frequently Asked Questions for the PPP. Click here to read the latest version.