In our update two weeks ago we let you know about the SBA’s new, easier one-page PPP forgiveness application for loans under $150k; the PPP Loan Forgiveness Application Form 3508S. Since then we have continued working with clients to get their forgiveness applications completed and submitted to their banks. We wanted to share with you that most of the banks our clients worked with to get their PPP loans are not yet accepting this new application form, and we understand the SBA is also not yet processing these applications. Through our conversations with bankers, we’ve learned it could be anywhere from a week to early March before they will begin accepting these new applications and the SBA might begin processing them.
The benefit of using this new 3508S application is that no backup documentation is required to be submitted to the bank; although the borrower must still retain all required backup documentation supporting the loan forgiveness. Employment records and payroll documentation must be kept by the borrower for four years and all other documentation must be kept for three years after the date the forgiveness application is submitted. The decision for borrowers now eligible to use the new 3508S forgiveness application is whether to continue to wait for their bank to begin taking the new easier applications so no other documentation is required, or move forward with applying for forgiveness now using one of the other applications and submitting the required backup documents.
Important Note: While the new rules allow borrowers with loans under $150k to use the new one-page 3508S application, borrowers with PPP loans over $50k are still subject to loan forgiveness reductions based on Salary/Wage reductions and/or FTE reductions. Make sure if you plan to use the new application but have a loan over $50k, you have made the necessary salary/wage and FTE calculations to determine you receive full forgiveness, and maintain those records.
We are here to help you through this process and are happy to discuss your specific situation to help you decide your best path forward. Reach out to your WR Partner or your relationship manager. You can also email our COVID-19 task force for assistance.