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Feds give PPP forgiveness break for loans under $50K

COVID-19 Articles

image of man holding up paperBusinesses with a Paycheck Protection Program loan of $50,000 or less can now fill out an abbreviated forgiveness application (Form 3508S) and no longer have to worry if they used the money to maintain employees’ “full-time equivalent status,’’ or FTE.

While payroll costs still must account for at least 60 percent of the loan’s use, those with loans under $50,000 can still have them forgiven even if workers’ hours/pay were reduced, according to new guidance issued by the federal Small Business Administration.

“[The exemptions are] consistent with the purposes of the CARES Act, including to provide much-needed financial assistance to a broad range of small businesses and provide borrowers appropriate flexibility in the current economic climate,’’ the SBA’s new guidance reads.

According to the SBA, most borrowers with loans of $50,000 or less are either sole proprietors or those with one employee and make up 9 percent of all PPP loans, or around $49 billion.

To receive full PPP forgiveness, the rest of the rules still apply, specifically:

  • Payroll reimbursement for workers cannot exceed a $100,000 annual salary
    • $15,385 per employee for an eight-week loan period
    • $46,154 per employee for a 24-week loan period
  • For the self-employed or general partners, the reimbursement cap is:
    • $20,833 for a 24-week loan period
    • $15,385 for an eight-week loan period
  • Nonpayroll costs eligible for forgiveness include:
    • Mortgage obligations
    • Business rent or lease payments
    • Business utility payments, such as electric, gas, water, phone, transportation, and internet access starting before Feb. 15, 2020.

With this new guidance release, we recommend those who borrowed under $50,000 should file for forgiveness. Up to now, many PPP borrowers were waiting to see if the SBA announced further changes. We do not anticipate additional adjustments regarding businesses with PPP loans of $50,000 or less.

Note that if you received an EIDL advance and did not return it, the SBA will still reduce your forgiveness by the amount of the EIDL advance received.

Our team is keeping track of the latest information and guidance. We are here to work with you and your company to help you get the full benefits of COVID-19 economic relief and any other changes made by federal or state governments during and after the pandemic.

Boyer & Ritter can help you navigate the loan forgiveness program’s compliance requirements, help ensure maximum forgiveness is received, and provide a reliable and trusted source of information for your lender and the government. To learn more about engaging us for PPP Loan Forgiveness Support Services and help determine the level of support you may need, please contact us HERE.

Benjamin R. Bostic, CPA, is a director at Boyer & Ritter with experience providing tax and accounting services for closely-held businesses, individuals, and not-for-profit organizations. Reach Ben at 717-264-7456 or


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