September 8, 2020
By Caity Roach
Contributing Editor, Hot Topic Tuesday
Hot Topic Tuesday — The 3508S is a Step in the Right Direction
On October 8, 2020, the SBA, in consultation with the Treasury Department, released a simpler loan forgiveness application for PPP loans of $50,000 or less. The new form is intended to streamline the PPP forgiveness process and provide financial and administrative relief to small businesses. It requires just one page of information, fewer calculations, and less documentation than the original 3508 and 3508EZ. However, it remains unclear whether the new form, 3508S, will significantly improve the forgiveness process.
According to the SBA and Treasury, there are about 3.57 million PPP loans of $50,000 or less. Meaning 69% of all PPP borrowers will be eligible to use the new application. However, many trade associations are continuing to push for regulators to pass a simplified loan forgiveness application for loans up to $150,000, claiming that the $50,000 threshold is too low to ease the burden on lenders.
According to a September GAO report, complex forgiveness situations in which the borrower must use a standard 3508 application may take the lender up to 75 hours to review. As a result, lenders are concerned that their infrastructure is not prepared to handle the number of borrowers who will require a more thorough review. A recent poll conducted during a Coleman Report Live Daily Show suggests 69% of lenders feel that their institution will have a difficult time processing the number of loans they have above the simplified forgiveness threshold.
If the threshold for simplified forgiveness was raised to $150,000, approximately 86% of PPP loans would become eligible for the new forms. As a result, more small business owners would be able to focus their time, energy, and resources back into their business and communities instead of allocating significant time and resources into completing complex forgiveness forms. In addition, lenders would have more time to focus on complex forgiveness applications.
To learn more about processing the new simplified form, please join Coleman’s 75-minute webinar on Thursday, October 15 at 2:00 PM Eastern.