In this 5-minute read:
- NEW UPDATE! SBA PPP Direct Forgiveness Portal announced
- PPP forgiveness under 150k
- PPP forgiveness terms you must meet before applying
- How and when should you apply for PPP loan forgiveness?
- Notes on PPP loan forgiveness under 50k
- Walkthrough/instructions for filling out the PPP loan forgiveness application: Form 3508S
- What happens next?
URGENT PPP FORGIVENESS UPDATE: On July 28, 2021, the SBA announced big news (for most PPP borrowers). The SBA has established an online PPP forgiveness platform called the SBA PPP Direct Forgiveness Portal. If your PPP loan was for $150,000 or less, AND if your lender has opted-in to the use of the platform, you will be able to submit your PPP loan forgiveness application online directly to the SBA, using the electronic equivalent of SBA Form 3508S. For full details, read our post about the new SBA PPP Direct Forgiveness Portal and other recent rule changes.
IMPORTANT NOTE: Womply is not involved with PPP forgiveness. Please contact your PPP lender for information on their forgiveness process. If your lender has opted-in you can apply via the SBA’s direct forgiveness portal.
After you’ve received and spent your PPP funds according to the rules, the next step in the process is to apply for loan forgiveness so you don’t have to pay your loan back. With multiple forgiveness application forms available and little information on how or when to apply, we want to help make this process as easy for you as possible.
Follow this guide if you took out a loan of $150,000 or less, regardless of if you are an independent contractor, sole proprietor, gig worker, or business owner with employees.
If your lender uses an online or internal process for completing and submitting forgiveness applications, this guide will still be useful in preparing you for that process.
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PPP forgiveness under 150k: terms you must meet before applying
In order to receive loan forgiveness, you must meet certain requirements and spend your funds on specific authorized expenses.
For first draw and second draw PPP loans, those requirements are as follows:
- You must maintain your employees’ compensation levels (if you have employees),
- At least 60% of the loan is spent on payroll costs, and
- Any other funds after payroll are spent on other eligible expenses
IMPORTANT INFO FOR 2021: Loans under $50,000 are exempt from the requirement to maintain employee and compensation levels in order to receive forgiveness (see this article for other exceptions).
How and when should you apply for PPP loan forgiveness?
You can apply for PPP loan forgiveness as soon as your loan proceeds have been used (generally at the end of your 8 to 24-week covered loan period). At that time you’ll want to reach out to your lender for the application form. They’ll make sure you get the right one based on the specific requirements of each form.
IMPORTANT UPDATE as of August 4, 2021, If your PPP loan was for $150,000 or less, AND if your lender has opted-in to the use of the platform, you will be able to submit your PPP loan forgiveness application online directly to the SBA, using the electronic equivalent of SBA Form 3508S, via the SBA’s new online PPP forgiveness platform called the SBA PPP Direct Forgiveness Portal. For full details, read our post about the new SBA PPP Direct Forgiveness Portal and other recent rule changes.
For those of you who received a PPP loan of $150,000 or less, you should be filling out Form 3508S (or your lender’s equivalent) since this is the most simplified version of the PPP loan forgiveness application. It requires fewer calculations and less documentation than Form 3508 and 3508 EZ.
PLEASE NOTE: Different SBA lenders may have different processes and even forms for PPP forgiveness. Be sure to consult with your lender and follow their instructions.
PPP loan forgiveness under 50k=use form 3508S
For part of 2020, loans under $50K used a simplified application form. However, that directive has now been expanded to include all PPP loans of $150,000 or less. So if you received a loan of under $50K, you should use form 3508S to apply for your PPP loan forgiveness.
Also, if you have employees, as noted above, for 2021, loans under $50,000 are exempt from the requirement to maintain employee and compensation levels in order to receive forgiveness (see this article for other exceptions).
For PPP loans over $150,000, check out our instruction guide: PPP forgiveness application instructions for forms 3508 and 3508EZ.
Instructions for filling out the PPP loan forgiveness application: Form 3508S
Once you’re ready to fill out your PPP forgiveness application, follow these steps.
Step 1: Basic business information
First, you’ll need to fill out the basic information for your business, similarly to the PPP loan application. In fact, you’ll want to make sure this information matches what you entered on your PPP loan application. This basic information includes:
- Business Legal Name (“Borrower”) — for self-employed individuals without an official business name this will just be your name that you applied for the PPP loan under
- DBA or Tradename, if applicable
- Business Address (street address on the top line and city, state, zip on the second line)
- NAICS code (you can find your NAICS code here)
- Business TIN (EIN, SSN)
- Business Phone
- Primary Contact (your name or the business owner’s name)
- Email address
Step 2: PPP loan information
Next, you’ll have specific information to enter in about your PPP loan and the forgiveness amount for which you are applying.
- Check if this forgiveness application is for a first or second draw PPP loan
- Enter your SBA PPP Loan Number
- Enter your Lender PPP Loan Number
- Enter the PPP Loan Amount
- Enter your PPP Loan Disbursement Date
- Enter the number of Employees at Time of Loan Application
- Enter the number of Employees at Time of Forgiveness Application (if you took out a loan of $50,000 or less, then this number won’t factor into your forgiveness acceptance)
- Enter your Covered Period
- Check if your business along with any affiliates received a PPP loan of $2 million or more
- Enter the Amount of Loan Spent on Payroll Costs
- Enter the Requested Forgiveness Amount
Step 3: Signatures
Next you’ll need to initial, sign, and date your PPP forgiveness application in the indicated positions on the form. The first initial is to indicate that you have followed the requirements of the PPP loan, including spending the proceeds as authorized and calculated your forgiveness amount accurately. The second initial is to indicate that you have filled out your application truthfully and correctly. Then you just sign and print your name and fill out the date at the bottom of that first page.
Step 4: Demographic information (optional)
On page 2 of the PPP forgiveness application (much like the PPP loan application), you have the optional step of including demographic information. This information helps the SBA and US Treasury Department understand better how the PPP loan funds were disbursed and forgiven across America’s small businesses.
If you wish to fill this out, enter your name (Principal Name), your position, and enter your veteran status, gender, race, and ethnicity as instructed on the form.
Step 5: Gather documentation and turn in to your lender
This isn’t an official part of the application form, but you will want to gather any documentation that can help verify how your funds were spent. This might include bank statements, invoices, lease agreements, cancelled checks, etc. If you’re unsure what you should provide, ask your lender.
When that is all gathered and your application is filled out, turn that back into your lender in the method that they’ve requested. Most lenders have an online portal or will accept the forms via email.
What happens next?
Once you’ve turned your application into your lender, they will process it with the SBA. The SBA then has up to 90 days to make a final decision. Most borrowers have received their forgiveness decision within that 90-day window. If you have questions about the status of your application, don’t be afraid to reach out to your lender—but be aware that they might only know just as much as you until a decision has been made. Most lenders will notify you right away when a status change has been made on your application.
Here are some additional resources that can help after you’ve submitted your PPP loan forgiveness application:
- Do PPP loans affect business taxes and deductions?
- What happens if my PPP loan isn’t forgiven? Repayment and next steps
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