The Paycheck Protection Program (PPP) ended on May 31, 2021. Existing borrowers may be eligible for PPP loan forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. However, see further details below if loan forgiveness is not applied within 10 months after the last day of the covered period.
First Draw PPP Loan forgiveness terms
First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Similarly, Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
How and when to apply for loan forgiveness
A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan, which is either two or five years from loan origination. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then the PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender. Please note, if you received your PPP loan funds in late March or early April, your loan deferment will be ending soon, so please reach out to your accountant to confirm you have timely filed for forgiveness. If you do not timely file for forgiveness, you can still apply, but you will need to start making loan payments.
To apply for loan forgiveness:
1. Contact your PPP lender and complete the correct form:
Your lender can provide you with either the SBA Form 3508, SBA Form
3508EZ, SBA Form 3508S, or a lender equivalent.
The 3508EZ and the 3508S are shortened versions of the application for
borrowers who meet specific requirements. If your loan amount is
$150,000 or less, please use SBA Form 3808S. Your lender can provide
further guidance on how to submit the application.
2. Compile your documentation: Click here for list of payroll and non-payroll documentation that may be required. Your lender can provide further guidance on what documentation is required. The required documents may include:
Payroll (provide documentation for all payroll periods that overlapped with the Covered Period):
- Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
- Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the covered period.
- Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941).
- State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
- Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the borrower included in the forgiveness amount.
- Do NOT include the following when calculating eligible payroll costs for loan forgiveness:
- Qualified wages paid during April 1, 2020 through December 31, 2021 that are taken for purposes of claiming the Employee Retention Credit
Non-payroll (for expenses that were incurred or paid during the Covered Period and showing that obligations or services existed prior to February 15, 2020 for the first three listed obligations/services):
- Business mortgage interest payments. (Provide a copy of lender amortization schedule and receipts verifying payments, or lender account statements.)
- Business rent or lease payments. (Provide a copy of current lease agreement and receipts or cancelled checks verifying eligible payments.)
- Utility payments (Provide copies of invoices and receipts, cancelled checks or account statements.)
- Operation expenditures related to business software or cloud computing service
- Property damage costs related to vandalism or looting
- Payments made to a supplier of goods
-
Worker protection expenditures (masks, sanitizer, etc.)
Please note that the covered items have expanded from the first iteration of PPP loan forgiveness, which included payroll costs and rent. Now, the non-payroll covered items include certain property damage costs, software, supplier costs and worker protection expenditures.
3. Submit the forgiveness form and documentation to your PPP lender.
4. Continue to communicate with your lender throughout the process.
Other Resources
SBA PPP Loan Forgiveness:
SBA Forgiveness Forms and Instructions:
FAQ About PPP Loan Forgiveness:
