PPP Loan Forgiveness Application and Payment Updates
Under a new interim final rule, recipients of PPP loans of $50,000 or less are not required to perform the salary and wage reduction amount computation or the full-time equivalent (FTE) employee reduction quotient. They will still need to provide documentation for payroll and non-payroll costs as spelled out in the Form 3508S instructions.
The new interim final rule also makes it clear that lenders are only required to substantiate submitted qualifying expenses up to the requested loan forgiveness amount.
On October 7, the SBA also released PPP loan FAQ 52 to provide guidance on the deferral period for PPP loan payments. According to the new FAQ, the extended deferral period set forth in the Paycheck Protection Program Flexibility Act (the Act) preempts any less generous forgiveness period in the promissory note, without a requirement to modify the promissory note.
The Act, signed into effect in June 2020, extended the period of loan deferral to coincide with the date of loan forgiveness and replaced the reference in the CARES Act to a loan deferral period of not less than six months or longer than one year. That made loan deferral available until a borrower’s loan forgiveness application is processed and it is determined that an unforgiven amount is due.
There is an exception: If you do not submit your PPP loan forgiveness application within 10 months after the end of your selected covered period, you will need to begin making payments. However, if your loan is subsequently forgiven, those payments will be refunded.
Learn more about applying for PPP loan forgiveness in this article by Ted R. Batson, Jr., Partner, Tax Counsel, and Professional Practice Leader – Tax and Brent Baumann, Senior Manager.
We also can help you navigate the process of filing for forgiveness with our PPP Loan Forgiveness Application Service.
Please contact us at [email protected] with any questions.