Applying for PPP loan forgiveness can be a daunting task. But we’re here to help. This blog will show you how to apply for PPP loan forgiveness and what you need to do to get started.
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The Paycheck Protection Program (PPP) loan forgiveness application is now available on the Small Business Administration (SBA) website.
This forgiveness application is for PPP loans made to small businesses and sole proprietorships. If you have a PPP loan, you may be eligible for loan forgiveness if you use the loan proceeds for eligible payroll costs, payments on covered mortgage obligations, rent, and utilities.
To apply for forgiveness of your PPP loan, you will need to complete and submit the Loan Forgiveness Application to your lender or servicing agent. You will also need to submit certain supporting documentation with your application.
This guide provides an overview of the information you will need to complete your Loan Forgiveness Application and supporting documentation. It also includes links to additional resources that may be helpful as you prepare your application.
What You Need to Know Before Applying for PPP Loan Forgiveness
If you’re one of the millions of small business owners who took out a Paycheck Protection Program (PPP) loan to help you get through the coronavirus pandemic, you may be wondering if and how you can get that loan forgiven.
The PPP was created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act with the intention of providing much-needed relief to small businesses struggling to keep their doors open during the pandemic. The SBA has since released several rounds of guidance on the program, including information on loan forgiveness.
But even with all that guidance, there are still a lot of unanswered questions—like how exactly do you apply for forgiveness?
Here’s what you need to know before you start the forgiveness process:
1. You can’t apply for forgiveness until at least 8 weeks have passed since you received your loan.
2. You’ll need to submit documentation verifying your payroll and other eligible expenses to your lender.
3. You may be required to submit additional information if your application is selected for review.
4. You may be eligible for partial forgiveness if you didn’t spend all of your loan on eligible expenses.
5. The SBA will make a decision on your loan forgiveness within 90 days of receiving your complete application.
6. If your loan is forgiven, you will not be responsible for any payments on the forgiven amount.
7. If your loan is not forgiven, you will be responsible for repaying the remaining balance—with interest—over a 10-year period
Applying for PPP Loan Forgiveness
SBA Form 3508
The process for applying for PPP loan forgiveness has been streamlined by the SBA with the introduction of Form 3508. This form is used by all borrowers seeking forgiveness for their PPP loan, regardless of the size of the loan or the number of employees.
Form 3508 must be submitted to your lender, along with supporting documentation, no later than 10 months after the end of your covered period. Your lender will then have 90 days to review and approve your application for forgiveness.
There are three versions of Form 3508, depending on the size of your loan and the number of employees you have:
-Form 3508: For loans of $50,000 or less and borrowers who did not reduce salaries or wages by more than 25%
-Form 3508EZ: For loans of $50,000 or less and borrowers who did not reduce salaries or wages by more than 25% AND who also meet ONE of the following criteria: self-employed with no employees, didn’t reduce employee hours, or didn’t reduce employee wages by more than 25%
-Form 3508S: For loans of $50,000 or less and borrowers who did not have any employees at the time of loan origination
SBA Form 3508EZ
The SBA Form 3508EZ is used for PPP Loan Forgiveness for loans of $50,000 or less. This form simplifies the forgiveness process for certain PPP borrowers.
To use this form, you must meet all of the following criteria:
-You are a self-employed individual, sole proprietor, or an independent contractor
-You did not have any employees when you received your PPP loan
-You did not reduce your salary or wages by more than 25% during the covered period
-You did not reduce the number of hours you worked during the covered period
What Happens After You Apply for PPP Loan Forgiveness?
Once you have submitted your loan forgiveness application, the SBA will review it and make a determination on how much of your loan will be forgiven. If you are approved for partial loan forgiveness, you will be responsible for repaying the remaining balance of your loan. You will have up to 10 years to repay any unforgiven portion of your loan, with a minimum payment of $50 per month.
If you are not approved for forgiveness, you will still be required to repay your loan in full. However, you may be eligible for a deferment or modification of your repayment terms. Please contact your lender for more information about these options.
If you received a Paycheck Protection Program (PPP) loan, you may be eligible for loan forgiveness. The PPP loan forgiveness application is available on the Small Business Administration (SBA) website.
Before you begin your application, make sure to review the SBA’s Loan Forgiveness Application Instructions. These instructions will help you complete your application accurately and efficiently.
Once you’re ready to begin your application, follow these steps:
1. Download and print the PPP Loan Forgiveness Application Form.
2. Fill out the form completely and sign it. Make sure to include all required documentation.
3. Send your completed form and documentation to your lender or servicing agent. You should keep a copy of everything for your records.
4. Your lender or servicing agent will review your application and supporting documentation and make a decision on your loan forgiveness request.