Notice: the Paycheck Protection Program (PPP) ended on May 31, 2021. Existing borrowers may be eligible for PPP loan forgiveness.
PPP Loan Forgiveness
Borrowers may be eligible for Paycheck Protection Program (PPP) loan forgiveness.
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
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. 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.
To apply for loan forgiveness:
1. Determine if your lender is participating in direct forgiveness through SBA and complete the correct form:
Review the list of lenders participating in direct forgiveness to determine whether you must apply via SBA.
For borrowers whose lender is participating in direct forgiveness, you can APPLY HERE using the SBA’s portal. Direct forgiveness borrowers must use the SBA forgiveness portal. The questions you will be asked in the portal correspond to those asked on SBA form 3508S.
For borrowers whose lender is not participating, you must apply through your lender. Your lender can provide you with either the SBA Form 3508, SBA Form 3508EZ, SBA Form 3508S, or a lender equivalent. Your lender can provide further guidance on how to submit the application.
2. Compile your documentation:
SBA Form 3508S does not require borrowers to provide additional documentation to show the calculations used to determine their loan forgiveness amount. However, SBA may request information and documents to review those calculations as part of the loan review or audit processes.
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
- 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 into account for purposes of claiming:
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- the Employee Retention Credit under section 2301 of the CARES Act, as amended by sections 206 and 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (additional Guidance on the Employee Retention Credit under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act (PDF) and Guidance on the Employee Retention Credit under the CARES Act for the First and Second Calendar Quarters of 2021 (PDF) are both available from the IRS), and the Employee Retention Credit under section 3134 of the Internal Revenue Code of 1986, as enacted by the American Rescue Plan of 2021. (Note that reporting these qualified wages in the payroll costs entered on your loan forgiveness application will affect the amount of qualified wages that can be used to claim 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: 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
This list of documents is not all-inclusive.
3. Submit the forgiveness form and documentation to SBA or your PPP lender:
Depending on whether your lender is participating in direct forgiveness, complete your loan forgiveness application and submit it via the SBA DIRECT FORGIVENESS PORTAL or via your lender with the required supporting documents. Your lender may follow up to request additional documentation.
4. Continue to monitor your application for forgiveness:
If SBA undertakes a review of your loan, SBA or 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.
Borrowers who need assistance with direct forgiveness can contact SBA at our dedicated forgiveness call center: 877-552-2692. The call center is open Monday – Friday, 8 a.m. – 8 p.m. ET. The call center can only assist direct forgiveness applicants. All other borrowers should contact their PPP lender. Direct forgiveness borrowers can also consult our direct forgiveness knowledge base for frequently asked questions.