Last Thursday, October 8, the Small Business Administration (“SBA”) released a simplified application form (Form 3508S) and instructions for Paycheck Protection Program (“PPP”) loans of $50,000 or less. Any qualifying PPP borrower that uses the new two-page application is exempt from any reductions in the borrower’s loan forgiveness amount based on reductions in full-time equivalent employees or reductions in employee salary or wages that would otherwise apply. Accordingly, the new Form 3508S application “does not require borrowers to show the calculations” supporting the requested loan forgiveness amount, though the SBA reserves the right to request information to review the borrower’s calculations.
Borrowers using the Form 3508S application must still submit documentation to verify employee cash compensation and non-cash benefit payments and nonpayroll expenses. The instructions include examples of appropriate documentation. Borrowers must also retain all documents supporting their PPP loan application, their forgiveness application, and their compliance with PPP requirements for six years after the date their loan is forgiven or repaid in full.
A borrower with affiliates (defined by the SBA here) may not use Form 3508S if the borrower, together with its affiliates, received PPP loans totaling $2 million or more.