How to Fill Out the PPP Loan Forgiveness Application

Get step-by-step instructions for how to fill out the PPP Loan Forgiveness Application, including what supporting documentation you’ll need.

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Overview of the PPP Loan Forgiveness Application

The PPP loan forgiveness application is a lengthy document, but it’s important to take the time to fill it out correctly. This document will outline the information that you need to provide in order to have your PPP loan forgiven. This includes information about your business, your PPP loan, and your expenses.

Lender information

Provide your lender information including your name, address, and PPP loan number. If you have multiple PPP loans from different lenders, you must submit a separate application for each loan.

Borrower information

This section of the PPP Loan Forgiveness Application is where you will input your basic contact and business information. You will need to provide:
-Your legal name
-Your business name
-Your address
-Your email address
-Your phone number
-The date you received your PPP loan
-The amount of your PPP loan

This section also asks for your Federal Tax Identification Number (EIN) or Social Security Number (SSN). If you do not have an EIN, you can apply for one here.

Calculating Your Loan Forgiveness Amount

You can use the PPP Loan Forgiveness Application to calculate your loan forgiveness amount. There are two ways to calculate your loan forgiveness: the Standard Method or the EZ Method. The Standard Method is for borrowers who have completed the required documentation for their PPP loan forgiveness. The EZ method is for borrowers who meet certain criteria that makes them eligible for a simplified forgiveness process.

Eligible non-payroll costs

Non-payroll costs are eligible for forgiveness if they were incurred during the Covered Period or the Alternative Payroll Covered Period and were paid on or before the next regular payroll date. These costs must also be necessary for the operation of your business during the covered period.

The Small Business Administration previously released guidance that allowed borrowers to apply for forgiveness for eligible non-payroll costs incurred prior to February 15, 2020, as long as they were paid on or before December 31, 2020. However, this guidance has been rescinded. Borrowers may only apply for forgiveness of eligible non-payroll costs that were both incurred and paid during their covered period.

Eligible non-payroll costs include:
-Rent payments under a lease agreement that was in effect on February 15, 2020
-Payments for mortgage obligations on real or personal property incurred before February 15, 2020
-Utility payments, such as electricity, gas, water, transportation, telephone, or internet access services that began before February 15, 2020

Eligible payroll costs

Eligible payroll costs include:

-Salaries, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
-Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit
-State and local taxes assessed on compensation
-For a sole proprietor or independent contractor: Wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee

Full-time equivalent employees

The SBA has provided a “Full-time equivalent employees” (FTE) worksheet to help borrowers calculate their FTE employee count for the covered period.

To calculate your full-time equivalent employees, start by counting the number of hours each of your part-time employees worked during the covered period (or the average number of hours they worked per week, if that period was shorter than eight weeks). Then, divide that total number of hours by 40. The resulting number is your part-time FTE count for the covered period.

Next, add together your part-time FTE count and the number of full-time employees you had during the covered period. This total is your FTE employee count for purposes of loan forgiveness.

If you had no part-time employees during the covered period, your FTE employee count is simply equal to the number of full-time employees you had during that time.

Applying for Loan Forgiveness

The PPP loan forgiveness application is a lengthy process, but it is important to follow all the steps correctly in order to maximize your chances of having your loan forgiven. This article will walk you through the process step-by-step so that you can get started on your application today.

SBA Form 3508

The PPP Loan Forgiveness Application consists of four sections:

1. Section 1: Loan forgiveness amount calculation based on payroll and non-payroll expenses
2. Section 2: Full-time equivalent employees (FTE) reduction calculation and safe harbor attestations
3. Section 3: Other required forgiveness calculations and attestations
4. Section 4: Borrower certification of the required statements

SBA Form 3508EZ

This form may be used by any small business concern or 501(c)(3) nonprofit organization that meets any ONE of the following criteria:
-Has not more than the equivalent of 300 full-time employees;
-OR
-Previously received a PPP loan and will not be seeking a Second Draw PPP Loan;
-AND
-You also must select only ONE of the following for Lines 1 – 3 below:
1. Did NOT reduce the number of full-time equivalent (FTE) employees from 01/26/2020 to 04/26/2020. If this is what you are claiming, fill out Part 1A. You will not be required to complete Part 2 on Amounts Spent because it is not relevant for this Certification. Check the box indicated on Part 3 and then sign and date the Certification.
2. Reduced FTE employees between 01/26/2020 and 04/26/2020, but have been able to restored FTE employees by 12/31/2020 to equal or exceed their FTE employment number on 01/26/2020. If this is what you are claiming, fill out Part 1B with your information and supporting documentation. You will also need to complete Part 2 on Amounts Spent because this will be relevant for your claim. Be sure to check all three boxes indicated on Part 3, attach your documentation, sign, date, and submit your Certification.

What to Do If You’re Denied Loan Forgiveness

The PPP loan forgiveness application can be a bit confusing, but we’re here to help. If you’re denied loan forgiveness, don’t worry! There are a few things you can do to appeal the decision.

SBA Form 4562

You may have seen on the SBA forgiveness application form 4562 that there is a section for reporting business assets. The reporting of business assets on Form 4562 is not required for PPP loan forgiveness, but it is still important to understand what this form is and how it can impact your business.

The SBA Form 4562 is used to report the depreciation and amortization of your business assets. This information is used by the SBA to calculate the amount of your PPP loan that can be forgiven.

For example, let’s say you have a business asset that you purchased for $100,000. You depreciate this asset over five years, so your depreciation expense for this year would be $20,000. If you report this information on Form 4562, the SBA will forgive $20,000 of your PPP loan.

However, if you don’t report this information on Form 4562, the SBA will not forgive any of your PPP loan for this asset. Therefore, it’s important to make sure that you include all relevant information on Form 4562 when you’re completing your PPP loan forgiveness application.

If you have any questions about Form 4562 or any other aspect of the PPP loan forgiveness process, please contact our office and we’ll be happy to help you.

SBA Form 7004

If the lender denies your loan forgiveness request, you may appeal the decision to the SBA. You must submit a written request for review within 30 days of the date you receive notification from your lender. Include any relevant documentation, such as bank statements or payroll reports, that will support your case.

The SBA will then have 90 days to issue a decision. If you are still not satisfied with the outcome, you can file a claim in federal court.

If you are denied forgiveness due to an error on your application, you may be able to resubmit the corrected information to your lender. Be sure to include an explanation of why the original information was incorrect and proof of the corrected information, such as updated bank statements or payroll reports.