Good News for PPP Borrowers: A Simplified Loan Forgiveness Application and a More Streamlined Application Process
The COVID-19 virus may be here to stay, but 2021 is a new year that provides new opportunities to confront the pandemic from a public health perspective as well as an economic one. So far, there are reasons to be optimistic, as several vaccines have been approved and, across the DC area, many people whose work places them at the highest risk of COVID-19 exposure have received at least one dose of a vaccine. Meanwhile, the Small Business Administration (SBA), which has been in charge of the Paycheck Protection Program (PPP) during the pandemic, has introduced several measures aimed at improving the health of small businesses. Although the SBA has made it easier for struggling small businesses to access funds, business owners will still face many challenging decisions in the coming months. A Washington DC small business lawyer can help you navigate the bumpy road to recovery in the pandemic economy.
Changes to the Approval Process for Second-Draw Loans
PPP loan recipients hoping to receive a second-draw loan have encountered a number of glitches, but the SBA has made changes to its website in order to fix these. Specifically, the SBA’s website has not allowed borrowers to submit applications for second-draw loans if their loan forgiveness application for the first-draw loan was still under review. Now borrowers who are still waiting for a decision about first-draw loan forgiveness can simply specify this on the application for the second-draw loan. In other words, they can receive a second-draw loan if they have already spent the first-draw loan amount or will have spent it by the time they receive the second-draw loan.
In order to be eligible to receive a second-draw loan, businesses must provide evidence that they have experienced a 25 percent decrease in revenue, compared to pre-pandemic levels. The SBA has received new guidance about how to determine whether a borrower meets this eligibility requirement.
A Simplified Loan Forgiveness Application for Borrowers of Small Loans
PPP loan recipients whose loan amounts were less than $150,000 are now eligible to apply for loan forgiveness by submitting form 3508S. The one-page form asks for the following information:
- The loan amount
- The date the loan was received
- The amount spent on payroll
- The timeframe in which the money was spent
- The amount the borrower is asking to have forgiven
Applicants do not need to provide supporting documentation with the application. They must, however, keep accurate records, because they must furnish documentation if and when the SBA requests it during the application review process. The purpose of this new procedure is to make it easier for the smallest businesses to receive loan forgiveness quickly and to reduce paperwork, freeing up personnel to concentrate on larger loan applications that require greater scrutiny.
Let Us Help You Today
Our Washington DC small business lawyers can help you put your second-draw PPP loan to the best possible use and keep your small business operating smoothly in 2021. Contact Tobin, O’Connor & Ewing for help today.