Businesses with PPP Loans under $50,000:

The SBA issued a new IFR on 10-8-20 for PPP borrowers of $50,000 or less, providing for a simplified (not automatic) forgiveness process, stating they are exempted from any reductions in forgiveness based on:

  • Reductions in full-time-equivalent (FTE) employees; and
  • Reductions in employee salary or wages

The new application form, SBA Form 3508S, can be used by PPP borrowers applying for forgiveness on PPP loans with a total loan amount of $50,000 or less, unless those borrowers together with their affiliates received loans totaling $2 million or more.

The IFR streamlines the forgiveness process for PPP borrowers of $50,000 or less because they will not be required to perform potentially complicated FTE or salary reduction calculations. Borrowers of $50,000 or less still will have to make some certifications and provide documentation to the lender for payroll and nonpayroll costs.

See Journal of Accountancy Article for a good summary: Click Here

Businesses with PPP Loans that are changing Ownership:
The SBA issued a Procedural Notice on 10-2-20 to provide information concerning the required procedures for changes of ownership of an entity that has received PPP funds.  See attached document for specifics.

Deferral Period for Borrower Payments:
The SBA issued updated PPP Loan FAQs #52 on 10-7-20 regarding the deferral period for Borrower payments.

The Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) extended the deferral period for borrower payments of principal, interest, and fees on all PPP loans to 10 months. Previously, the deferral period could end after 6 months.

The FAQ clarified that the extension of the deferral period under the Flexibility Act automatically applies to all PPP loans. SBA does not require a formal modification to promissory notes that state a deferral period of less than 10 months.

See link below for full article:
SBA Procedural Notice -PPP Loans and Changes of Ownership

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