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Paycheck Protection Program Loans
In consultation with the Department of the Treasury the Small Business Administration (SBA) We will provide timely guidance to answer borrower and lender queries Concerning the Paycheck Protection Program’s (PPP) implementation, including both First Drawing PPP Loans and Second-Draw Paycheck Protection Program Loans.
Forgiveness terms for the first draw of Paycheck Protection Program Loans
For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This is if the loan disbursement occurs within an 8- to 24 week period.
- The same goes for the compensation and employees.
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- Minimum 60% of proceeds go to payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans to eligible borrowers are eligible for loan forgiveness if the loan is paid within an 8- to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exact same way.
- The loan proceeds can be used to pay for payroll costs or other eligible expenses.
- Minimum 60% of proceeds go to payroll costs
How to apply for loan forgiveness and when
Once all of the loan proceeds have been used, a borrower can apply to be forgiven. Borrowers may apply for forgiveness at any time until the loan’s maturity date. Borrowers who do not request forgiveness within 10 month of the end date of the loan are eligible to receive loan payments from their PPP lender.
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Apply for Paycheck Protection Program Loans Forgiveness
1. Complete the form and contact your Paycheck Protection Program Loans lender.
You can get the SBA form 3508, SBA form 3508EZ, SBA forms 3508S or equivalent from your lender.
For borrowers who have specific requirements, the 3508EZ or the 3508S versions are shorter versions of the application. You can get additional guidance from your lender on how to submit the application.
2. 2.
Payroll Provide documentation for any payroll periods that overlap with the Covered Period
- Statements from banks or reports from third-party payroll services providers documenting cash compensation received by employees
- For periods that overlap with the Covered period, you can use tax forms or equivalent reports from third-party payroll service providers.
- Filings of payroll tax to the IRS, or that will, be reported (typically Form 941);
- Reporting of quarterly state business and individual wage reporting, and filings for unemployment insurance tax to the relevant state
- Receipts, cancelled checks, and account statements proving the amount of employer contributions to employee retirement plans or health insurance that were included in the forgiveness amount are required.
- These are not eligible payroll costs that can be used to forgive a loan.
- Qualified wages that were paid between April 1, 2020 and December 31, 2021 are considered for claims.
- The Employee Retention Credit is under section 2301 of CARES Act, as amended to sections 206 and 207 of Taxpayer Certainty and Disaster Tax Relief Act of 2019. (Additional Guidance and guidance on the Employee Retention Credit (PDF) under Section 2301 of Coronavirus Aid, Relief and Economic Security Act and Guidance under the CARES Act For the First and Second Quarters of 2021 are available from the IRS). Also, the Employee Retention Credit as per section 3134 of Internal Revenue Code of 1986, Note that the amount of qualified wage that can be claimed the employee retention credit will depend on whether these wages are reported in the payroll costs that you enter into your loan forgiveness application.
- Qualified wages that were paid between April 1, 2020 and December 31, 2021 are considered for claims.
Non-payroll (for expenses incurred or paid during Covered Period, and showing that obligations/services existed prior to February 15, 2020.
- Payments of business mortgage interest: Copy of the lender amortization schedule, receipts verifying payments or statements from lender accounts
- Lease payments or rent for business: A copy of the current lease agreement, receipts, or cancelled checks to verify eligible payments
- Payments for business utility services: Copies of invoices, receipts, cancelled cheques or statements
- Copies of orders, purchase orders, invoices and receipts paid. Account statements, cancelled checks, or receipts verifying eligibility for eligible payments.
- Costs of property damage coverage: Copy of all invoices, orders, or purchase orders, as well as receipts, cancelled cheques, or account statements, verifying that eligible payments were made. Also, confirm that the costs were uninsured property damages due to looting or public disturbance that took place in 2020
- Covered supplier costs
- Copies of orders, purchase orders, invoices and payment receipts. Account statements, cancellation checks, or receipts are required to verify that eligible payments were made.
The list of documents that must be submitted to your lender does not include all the required documents.
3. Send the documentation and forgiveness form to your PPP lender.
Send your loan forgiveness application to your lender. Follow up with your lender to request additional documentation. For additional assistance, consult your lender and submit the requested documentation promptly.
4. Throughout the entire process, keep in touch with your lender.
Your lender will inform you if SBA conducts a loan review. Certain SBA loan review decisions can be appealed. If applicable, your lender will notify you of the amount forgiven by SBA and the date when your first payment is due.
