The Paycheck Protection Program (PPP) provided critical funding to many businesses who were impacted by the COVID-19 pandemic. A key component of the program is loan forgiveness for qualifying expenses. Borrowers are eligible for forgiveness in an amount equal to the sum of their eligible costs and payments during the 8-week or 24-week Covered Period. If your business secured a PPP loan and will be applying for forgiveness, there are steps you can take now to get ready for the forgiveness application process.
- Review Your Eligible Costs
The Paycheck Protection Program allows borrowers to be forgiven for certain expenses. This may include payroll incurred or paid during the Covered Period (salary, wages, vacation, parental, family, medical or sick leave, and health benefits), mortgage interest, rent and utilities.
We suggest you familiarize yourself with all of the criteria here before applying. You also need to ensure you’ve spent all of your loan funds prior to applying for forgiveness and have documentation to support the use of proceeds during the Covered Period.
- Get Your Documents in Order
To get ready to apply for forgiveness and ensure a smooth application process, we recommend that you get your documents ready in advance. You may need to provide documents for eligible payroll costs verifying the number of full-time employees on payroll and their pay rates to ensure you meet the staffing and pay requirements for forgiveness. This may include documenting all employee compensation, cash tips, payment for leave and employee benefits. For non-payroll expenses, you may need to provide documentation which shows interest payments on mortgages, rent payments on leases and utility payments. It is recommended that you have all of your documents saved in PDF format. This will make the upload process easier and will save you from having to re-format your documents later. Additionally, all loans $2 million and over will be subject to SBA loan reviews and additional documentation may be required.
- Determine Which Forgiveness Application You Should Use
There are three forgiveness applications—the 3508 standard form, 3508EZ form and the 3508S form for borrowers who received a PPP loan of $50,000 or less. If your PPP loan is over $50,000, you can see if you are eligible for the 3508 standard form or the 3508EZ form by reading the Small Business Administration’s checklist. If your loan was $50,000 or less, use the simplified 3508S form. Once you know which application you should use, we recommend filling it out prior to applying for forgiveness through your financial institution. This will help ensure you’re prepared for the application process and help you identify any additional information you need to gather prior to applying.
- Request Forgiveness
Now that you’ve reviewed your costs, prepped your documents and filled out the appropriate application, you’re ready to apply for forgiveness once your financial institution begins taking applications. Once you submit an application and all of the required documentation, your lender has 60 days to review your application and documentation and submit its forgiveness decision to the SBA. The SBA then has 90 days to review your lender’s decision and make a determination on loan forgiveness. Note, you can’t apply for forgiveness with any bank—you need to apply for forgiveness through the financial institution that gave you the loan. If you do not apply for forgiveness within 10 months of the end of the Covered Period, deferral on the loan ends and you must begin making payments.
If you received a PPP loan through FNBO, we are communicating to all FNBO PPP borrowers via email when the customer portal is open and available to submit forgiveness applications. Learn more here.
PPP Loan Forgiveness Resources
3508S Loan Forgiveness Instructions
3508S Loan Forgiveness Application
Loan Forgiveness Application Form EZ Instructions
Loan Forgiveness Application Form EZ
Loan Forgiveness Application Instructions
Loan Forgiveness Application
PPP Loan Forgiveness FAQs
PPP Loan FAQs