What is Paycheck Protection Program (PPP) forgiveness? Simply put, forgiveness is an application process in which a business that received a PPP loan will request the SBA to forgive their loan so the business does not have to pay the loan back.
PPP provides critical funding to many businesses who are impacted by the COVID-19 pandemic. A key component of the program is loan forgiveness for qualifying expenses. If a borrower receives a PPP loan, they must also apply for forgiveness of the loan or they will have to pay the loan back with money out of their own pocket. If the loan recipient applies for forgiveness and full forgiveness is granted, the borrower does not have to pay the loan back.
Borrowers are eligible for forgiveness in an amount equal to the sum of their eligible expenses during their chosen 8-week to 24-week Covered Period. To be considered for full forgiveness, borrowers must use at least 60% of their loan proceeds on payroll costs. Employee and compensation levels must also be maintained. Note, to be considered for forgiveness for a PPP loan, businesses must apply for loan forgiveness through their financial institution.
With a new COVID relief package signed into law in 2021, there are many provisions that impact PPP, including the following:
Currently, FNBO is taking First Draw and Second Draw forgiveness applications. If your business secured a PPP loan through FNBO and will be applying for forgiveness, there are steps you can take now to get ready for the forgiveness application process.
Determine Which Online Forgiveness Application You Should Use
When you apply for forgiveness online using the FNBO Portal, the process will help you pick the applicable forgiveness application for you to use. If your loan was $150,000 or less, you can use the simplified 3508S application during the online application process. Applicants using the 3508S online application for First Draw forgiveness do not need to upload an image of the paper copy of the 3508S form or any other documentation but will need to keep the documentation related to covered costs for their own records, as they may be requested by the SBA.
The 3508EZ form and the 3508 form are for borrowers who received a PPP loan over $150,000 or for borrower’s whose loan is $150,000 or less and fits into a special category. To ensure you’re prepared for the online application process and help you identify any additional information you need to gather prior to applying, we recommend filling out a paper copy of the 3508EZ or 3508 form (whichever is applicable) prior to applying for forgiveness online through FNBO. You will not need to upload an image of the paper copy of the 3508EZ or 3508 but will need to upload other supporting documentation for payroll and non-payroll covered costs as appropriate.
The FNBO customer portal is currently open to First Draw and Second Draw Forgiveness applications. Learn more here.
PPP Loan Forgiveness Resources
3508 Loan Forgiveness Application and Instructions
EZ Loan Forgiveness Application and Instructions
3508S Loan Forgiveness Application and Instructions
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.