Is PPP loan forgiveness automatic? Or do I have to do something?
April 24, 2020
In this 2-minute read:
- Are PPP loans automatically forgiven?
- What do I need to do to have my Paycheck Protection Program loan forgiven?
As business owners start receiving their PPP loans or continue to apply for theirs, there are several pressing questions about PPP loan forgiveness. Will your PPP loans automatically be forgiven if you adhere to all of the requirements for loan forgiveness?
IMPORTANT NOTE: On Wednesday, May 13, 2020, the SBA released revisions to their FAQs regarding PPP loan forgiveness. Read the details here.
Womply is acting as a facilitator to connect American small businesses to SBA-authorized lenders to get emergency loans for COVID-19 relief. Start your free application here, or call us at 855-208-8813 for a free consultation.
Is forgiveness of PPP loans automatic?
In short, Paycheck Protection Program loan forgiveness is not automatic. You must submit a request to for loan forgiveness through the lender through which you applied for your PPP loan.
Remember, in order to have any part of your PPP loans forgiven, at least 75% of those funds must be used to maintain payroll costs and employment. Other eligible expenses for loan forgiveness include commercial rent, interest on your business mortgage, and utilities.
How do I request PPP loan forgiveness?
As mentioned, in order to have your PPP loan forgiven, you need to submit a formal request through the lender that processed your application and serviced your loan. You’ll need to gather and submit documentation to verify the following items:
- Number of full-time employees and their pay rates
- Payments on eligible business mortgage, rent, and/or utility obligations
- The amount of the loan being forgiven that was used to cover the above expenses
You must be able to certify that all of the documentation is true and that your loan forgiveness amount meets the requirements.
You won’t be able to apply for loan forgiveness until the 8-week period of the loan coverage has ended. At that point, your lender will have 60 days to make a decision on your request.
Is it all or nothing? Can I receive partial PPP loan forgiveness?
You can receive partial loan forgiveness if all of your legitimate business expenses or payroll don’t adhere to the requirements for PPP loan forgiveness.
You simply document which portions of your expenses do qualify for PPP loan forgiveness, and submit your request for loan forgiveness via your PPP lender within the time limit for loan forgiveness request submissions.
The portion of your loan that doesn’t qualify for loan forgiveness will need to be repaid under the terms of the PPP loan program, at 1% interest, with payments deferred for 6 months and the loan due after 2 years. (Note, interest still accrues during the 6-month grace period).
It’s not too late to apply for a PPP loan!
Have you applied for a PPP loan for your business yet? Funding is quickly running out, so we suggest you do this quickly if you haven’t already.
Womply is a verified loan facilitator working with SBA 7(a) approved lenders and can help you find an eligible lender near you that can process your application quickly. For a free consultation call us at 855-208-8813 or click here to start your application for free.
Learn more about Womply
Womply Product Overview - Reputation Management, CRM, Email Marketing for Small Business.