Understanding PPP Loan Forgiveness

Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.

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. Your lender can provide further guidance on how to submit the application.

2. Compile your documentation:

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); and
  • 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
• 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: Copy of lender amortization schedule and receipts verifying payments, or lender account statements
  • Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments
  • Business utility payments: Copies of invoices and receipts, cancelled checks or account statements
  • Covered operations expenditures:  Copy of invoices, orders or purchase orders paid, and receipts, cancelled checks or account statements verifying eligible payments
  • Covered property damage costs:  Copy of invoices, orders or purchase orders paid, and receipts, cancelled checks or account statements verifying eligible payments, and verification that costs were related to uninsured property damage due to public disturbance vandalism or looting that occurred in 2020
  • Covered supplier costs:  Copy of contracts, orders or purchase orders in effect at any time before the Covered Period (except for perishable goods), and copy of invoices, orders or purchase orders paid, and receipts, cancelled checks or account statements verifying eligible payments
  • Covered worker protection expenditures:  Copy of invoices, orders or purchase orders paid, and receipts, cancelled checks or account statements verifying eligible payments, and verification that expenditures were used to comply with COVID-19 guidance

3. Submit the forgiveness form and documentation to your PPP lender:

Complete your loan forgiveness application and submit it to your lender with the re­quired supporting documents and follow up with your lender to submit additional documentation as requested. Consult your lender for additional guidance and provide requested documentation in a timely manner.

4. Continue to communicate with your lender throughout the process:

If SBA undertakes a review of your loan, your lender will notify you of the review and the SBA loan review decision. You have the right to appeal certain SBA loan review decisions. Your lender is responsible for notifying you of the forgiveness amount paid by SBA and the date on which your first payment will be due, if applicable.