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SBA and Treasury Introduce Simplified PPP Forgiveness Application for Loans of $50,000 or Less

  • Streamlined forgiveness process eliminates most questions and calculations seeking to determine if Paycheck Protection Program loan borrowers used the funds for approved purposes
  • New application open to businesses that took out loans of $50,000 or less
  • Complexities in PPP forgiveness process have caused some borrowers and lenders to call for automatic forgiveness below a certain amount

The U.S. Small Business Administration and Treasury Department have introduced a simplified loan forgiveness application for businesses that took out Paycheck Protection Program loans of $50,000 or less. The move comes amid a sluggish pace on forgiveness applications as both borrowers and lenders await further guidance on the process.

The new application reduces the application from five pages to two and eliminates most of the questions that sought to determine if PPP funds were used for their intended purposes of paying employees or other fixed costs. A three-page set of instructions indicates that businesses that received loans of $50,000 or less are exempt from reductions in loan forgiveness based on reductions in full-time equivalent employees, salaries, or wages. Borrowers also do not need to show calculations on how they came to their loan forgiveness amount, though the SBA may ask for this information as part of its review process.

Approximately 3.57 million of the 5.2 million approved PPP loans were for $50,000 or less. The streamlined application is not open to borrowers who, together with their affiliates, received more than $2 million total in loans.

Some small businesses and lenders have complained that the PPP forgiveness process is too complex, costing business owners valuable time or forcing them to consider hire accountants. The Consumer Bankers Association responded to the streamlined process by saying that it supports efforts to simplify PPP forgiveness, but favors a proposal to automatically forgive loans of $150,000 or less on the borrower’s promise that the funds were used for appropriate expenses.

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