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Applying for the PPP Loan Forgiveness
The process of applying for the PPP Loan Forgiveness can seem daunting, but we are here to help. This guide will walk you through the necessary steps in order to apply for the PPP Loan Forgiveness. We will also provide some tips along the way to make the process as smooth as possible.
What You Need to Know
The Paycheck Protection Program (PPP) loan forgiveness application is now available on the Small Business Administration’s (SBA) website.
According to the SBA, PPP loan borrowers may apply for forgiveness when they have used all of the loan proceeds for which they are requesting forgiveness. Loan proceeds must have been used on eligible expenses, which include payroll costs, covered rent obligations, covered utility payments, and interest on any covered mortgage obligation.
At least 60% of the loan proceeds must have been used for payroll costs in order for a borrower to be eligible for loan forgiveness. If a borrower does not meet this 60% threshold, they will not be ineligible for loan forgiveness, but the amount of their forgiveness will be reduced proportionately.
Borrowers can apply for forgiveness through one of two ways:
1) Complete and submit the 3508 EZ form if they meet any one of the following criteria:
-Are self-employed with no employees; OR
-Did not reduce salary or wages of any employee by more than 25%, and did not reduce the number or hours of their employees; OR
-Experienced reductions in business activity due to health directives related to COVID-19 and did not reduce salary or wages of any employee by more than 25%.
2) Complete and submit the 3508 form if they do not qualify to use the 3508 EZ form.
Once a borrower has submitted their loan forgiveness application, the SBA has 90 days to make a decision. If the SBA does not make a decision within 90 days, the borrower’s loan is automatically forgiven.
How to Apply
According to the SBA, PPP loan forgiveness applications will be released “shortly.”
In the meantime, borrowers can get a jump start on preparing their documentation by following these steps:
1. Gather documentation on payroll and non-payroll expenses. This may include bank statements or cancelled checks.
2. Calculate your forgiveness amount using the SBA’s forgiveness calculation form.
3. Submit your forgiveness application to your lender.
Eligibility for the PPP Loan Forgiveness
The Paycheck Protection Program (PPP) loan forgiveness process is designed to be simple and straightforward. Borrowers who use the PPP loan proceeds for eligible payroll costs, loan payments, and other specified expenses may have their loans forgiven in full or in part. Read on to learn more about PPP loan forgiveness and how to apply for it.
What You Need to Know
In order to be eligible for the PPP loan forgiveness, you must meet the following requirements:
-You must have used the loan for payroll costs, mortgage interest, rent, and utilities (utilities can only be included if they were incurred before February 15, 2020).
-You must have used at least 60% of the loan for payroll costs.
-You must have maintained your employee headcount and salary levels.
-You must have resumed paying your employees by the end of the covered period.
If you meet all of the above requirements, you will be automatically eligible for forgiveness of your PPP loan. You do not need to submit any paperwork to your lender.
How to Apply
The PPP loan forgiveness application is available on the SBA’s website. You can apply for forgiveness once you’ve used all of the loan proceeds for which you’re requesting forgiveness.
To apply for forgiveness, you must fill out the Loan Forgiveness Application and submit it to your lender. Your lender then has 60 days to decide whether to approve or deny your application for forgiveness.
If you’re approved, your lender will send the forgiven amount to the SBA. If you’re denied, you have the right to appeal the decision within 30 days.
How the PPP Loan Forgiveness Works
The PPP loan forgiveness process begins when you submit your application to your lender. You will need to include documentation that shows how you used the loan proceeds. Your lender will review your application and supporting documentation and determine if you are eligible for loan forgiveness.
What You Need to Know
To have your Paycheck Protection Program (PPP) loan forgiven, you must use the loan proceeds for eligible payroll and non-payroll expenses, and you must maintain proper documentation. You also must apply for forgiveness within 10 months of the end of your covered period.
Here’s what you need to know about how to apply for forgiveness:
Eligible expenses: To be eligible for forgiveness, at least 60% of your PPP loan must go towards payroll costs. The remaining 40% can go towards eligible non-payroll expenses, like rent, utilities, and mortgage interest.
Covered period: Your covered period is the 24 weeks (8 weeks if you received your loan before June 5th) after you receive your PPP loan. You can choose to begin your covered period on the date your received your PPP loan, or any day thereafter.
Documentation: You’ll need to submit documentation to support your forgiveness application, including payroll records, proof of rent and mortgage payments, and any other documentation required by your lender.
Application deadline: You must apply for forgiveness within 10 months of the end of your covered period. If you don’t apply for forgiveness within that timeframe, you’ll have to start making payments on your loan.
For more information on how to apply for PPP loan forgiveness, please visit the SBA website.
How to Apply
Once you’ve calculated your eligible loan forgiveness amount, you’ll need to submit a request to your lender. The SBA has provided a streamlined application for loans of $50,000 or less, which can be found here. If your loan is more than $50,000, you’ll need to complete this application.
You’ll need to include documentation supporting your loan forgiveness calculation, including:
-Your payroll register or similar document that includes employee information for the relevant covered period
-State or local income, payroll and unemployment insurance filings
-Documentation verifying your mortgage, lease and utility payments
-Any additional documentation required by your lender
Once you’ve submitted your application, your lender has 90 days to review and approve it. If you’re approved for forgiveness, your lender will send the forgiveness amount to the SBA. If you’re not approved for forgiveness, you’ll have to continue making payments on your loan according to the original terms.