Here Are Some Things You Need to Know About PPP Forgiveness

By Dana Cruz Oct 22 2020, 05:58 AM EDT

Applications for the Paycheck Protection Program (PPP) forgiveness were received by the Small Business Administration in August.

There were about five million loans issued under this program, some of which will get forgiveness approval this month.

PPP is the federal government's coronavirus aid initiative for small business that grants forgivable loans.

Here are some things that you should know about PPP forgiveness, as said by Washington Post:

How Can I Apply for PPP Forgiveness?

Borrowers have to apply for PPP forgiveness through the lender who issued the loan.

From there, the lender will submit their application to the SBA, which determines how much the borrower should receive.

Procedures may vary depending on the lender. Some just begun accepting applications or have opened up applications for select borrowers. Others are working towards getting the technology and personnel needed to start accepting applications.

Forgiveness can be applied for any time before the loan's maturity date. Loans that were issued before June 5 will mature after two years.

Meanwhile, those issued after June 5 will mature after five years. But it is best to apply for it within 10 months of the end of their covered period.

The covered period is either the subsequent 24 weeks of the loan disbursement date or, for others, eight weeks.

What is Required?

To get the full amount of forgiveness on PPP loans, borrowers should have spent at least 60 percent of their loan on payroll and other eligible costs.

According to the SBA, 60 percent has to be used due to high subscription.

Forgiveness is based on how the employer maintains or rehires employees, along with salary levels. So the amount of forgiveness could go lower if the business has lost part of its employee headcount.

The same will also happen if the business cut salaries and wages.

Borrowers will need to gather documents for their application. It's also best to take stock of how much of the loan was spent on the expenses enumerated by the SBA.

Documentation for utility and lease agreements may also be needed by borrowers.

Where Do I Get The Application Form?

The Treasury Department and SBA have three different application forms, which can all be found on the SBA website.

Forms vary depending on the nature of their business, loan size, and whether they reduced worker headcount or salaries.

There is a full forgiveness application and the EZ application, which both require the borrower to calculate their forgiveness amount. A Spanish version of the forms is also available on the site.

The EZ form is shorter and less complex than the full one, but it only applies to those who are self-employed. It also works for those who maintained salary and wage levels along with worker headcount.

The most recent release application form is Form 3508S. It is an application for PPP loans worth $50,000 or less.

The Treasury Department said in a press release that this action "streamlines the PPP forgiveness process."

SBA division manager Greg Clarkson told Fox Business the third form is reliant less on calculations and more on certifications.

In their press release, the Treasury and SBA also assured PPP lenders they would ease their burden by processing forgiveness more swiftly.

"SBA will continue to process all PPP forgiveness applications in an expeditious manner," they said in the release.