Finances and Taxes

PPP Loan Forgiveness Updates: Application Simplified, Forgiveness Expanded, and Deadline Clarified

Gusto Editors  
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The U.S. Small Business Administration (SBA) has announced big changes to the PPP loan forgiveness process

PPP loan forgiveness application 

A new, simplified version of the application form has been released and can be used for PPP borrowers who received a loan of $50,000 or less. The form, known as SBA Form 350S, is a page and a half and makes the process of applying for forgiveness quicker and more streamlined. 

Get help with your PPP forgiveness needs.

The lender will be required to confirm that they have received:

  • The certifications that you (the borrower) have submit along with your application, and
  • the documentation that you’ve created detailing payroll vs. non-payroll costs

Clarification was also released around the PPP loan forgiveness application deadline: you can breathe a sigh of relief because loans are not due on October 31, 2020 as many feared. Borrowers can apply for forgiveness anytime before the loan matures (this is either two or five years from when the loan was disbursed, depending on your specific agreement). 

PPP loan forgiveness eligibility 

A new interim final rule has updated the guidance around forgiveness eligibility. The rule stipulates that any borrower who has received a loan that is $50,000 will remain eligible for full forgiveness even if the borrower:

  • Has reduced the number of FTE employees, and/or 
  • Has reduced employee wages or salaries

This means that the rules have been relaxed and you may be eligible for full forgiveness (if you meet the other forgiveness criteria). Also, you’re now free from doing complex calculations around FTE and payroll reductions in order to have your loan forgiven. 

Keep in mind that you will still be required to provide documentation on payroll vs. non-payroll expenses that were paid with loan proceeds. 

PPP loan payments schedule 

When the PPP Flex Act was released on June 5, 2020, the SBA stated that borrowers would not have to start repaying their loans until the either:

  • The SBA remit the loan forgiveness amount to the lender, or 
  • 10 months after the end of the covered period

However, those who borrowed and received their PPP loans before the PPP Flex Act was released were unsure about the repayment schedule. Turns out the repayment schedule detailed in the PPP Flex Act is relevant to all PPP loans—even those paid out before June 5, 2020. 

Even if the promissory note on the PPP loan  indicates a six-month deferral period, the borrower can defer payments for 10 months after the day of the covered period. 


Over 5 million PPP loans were distributed and of those, about 3.5 million were under $50,000, so if you received one of these loans, be sure to apply for forgiveness. 

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