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PPP Loans Under $50k Can Qualify for Forgiveness Regardless of Layoffs

Jan 30, 2021 • 4 min read
PPP loan forgiveness memo on a board
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      UPDATE: The PPP loan application period ended May 31, 2021. Learn about financing options available for small businesses today at


      The SBA and the US Treasury have released a new forgiveness application for borrowers with Paycheck Protection Program (PPP) loans less than $50,000. In addition to simplifying the application, a borrower can receive forgiveness for their loan even if they have laid off employees since receiving their PPP loan. 

      How to Apply for Forgiveness With This New Provision

      Borrowers with loans less than $50,000 must complete the SBA’s new, streamlined form, Form 3508S. This form is specifically designated for PPP loans of $50,000 or less.

      Why Was This Change Made?

      The SBA has reported that about half of the 3.6 million loans under this threshold went to sole proprietors or independent contractors. These borrowers didn’t have employees that they could retain. The SBA made the change to apply to all loans less than $50,000, regardless of whether or not the borrower has (or had) employees. 

      How This Differs From Previous Forgiveness Requirements

      Previously, PPP loans less than $50,000 had to meet the employee retention requirements to qualify for full forgiveness. For loans greater than $50,000, the amount forgiven may still be reduced if the borrower has laid off employees or reduced wages. 

      Will This Apply to Second Draw Loans?

      It might. Second Draw loans are still brand new. Specific guidance on how loan forgiveness for Second Draws will be handled has not yet been released. While Second Draws seem to be following similar parameters as First Draws, it’s too soon to say. 

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      Lendio strives to provide you with the most current information as it relates to the Paycheck Protection Program, related SBA programs, and relevant regulations. The rules and regulations governing these programs are being regularly clarified by the SBA, and other agencies. In some cases, the provided guidance may directly conflict with other competing guidance, laws, rules, or regulations. Due to these changes, Lendio cannot guarantee that the information contained in this page reflects new changes or updates.
      Lendio advises you to review the SBA guidelines and regulations on your own and determine your Company’s best approach to receiving SBA loans. Lendio urges you to consult your own attorneys, lawyers, and consultants to make the best decision possible. The information contained herein should not be construed as legal or tax advice, and should not be relied upon as such.
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