In this 4-minute read:
- Basic requirements for PPP loan forgiveness
- What is the PPP loan forgiveness application deadline?
- How long does the SBA have to make a PPP loan forgiveness decision?
- How can you apply for PPP loan forgiveness?
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.
Many businesses that received the PPP loan are now reaching the point where they can start to apply for PPP loan forgiveness. While there is a PPP forgiveness deadline for submitting your application, you do have a fair amount of time to complete and turn in your application and corresponding documents.
Read on to learn more about the PPP loan forgiveness deadline and how to make sure you are prepared to apply.
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When is the PPP loan forgiveness application deadline?
The PPP loan forgiveness application due date varies from business to business, depending on when you received your loan and your “covered period.” You can submit your PPP forgiveness application as soon as all of your loan proceeds have been used, which at the earliest is the first day after your selected “covered period” ends (the 8-24 week period after your PPP loan is funded, depending on when you received your loan and your selected covered period).
All PPP loan forgiveness applications have a deadline of 10 months from the last day of your covered loan period–although we highly recommend starting before then because that is also the point at which you’ll have to start paying back your loan if it hasn’t been forgiven yet.
NOTE: Interest accrues during the time between the disbursement of the loan and SBA remittance of the forgiveness amount. If your loan is forgiven, you will not be responsible for that interest. However, you are responsible for paying the accrued interest on any amount of the loan that is not forgiven. Your lender is responsible for notifying you when the SBA remits the loan forgiveness amount (or when the SBA determines that no amount of the loan is eligible for forgiveness) and the date on which your first payment is due, if applicable.
Basic requirements for PPP loan forgiveness
If you’ve received the PPP loan, you’re likely familiar with the steps that you have to take to get your loan forgiven. Just as a refresher, here are the basic requirements you must meet in order to receive full forgiveness on your PPP loan:
- You must maintain your employee counts and compensation levels (certain exceptions do apply:
- For 2021, loans under $50,000 are exempt from the requirement to maintain employee and compensation levels in order to receive forgiveness.)
- Loans received after December 27th, 2020 are not required to “rehire” or restore any employees in order to receive forgiveness. You will, however, need to maintain current payroll levels during the forgiveness period. (Exceptions to this would include employees who resign or are terminated with cause).
- You must spend your loan proceeds on authorized payroll costs and other eligible PPP business expenses
- At least 60% of your loan must be spent on authorized payroll costs
You may still be able to get partial loan forgiveness if you don’t meet all of these requirements. Your forgiveness application will help you determine this.
You might also like:
- Which PPP forgiveness application should I use? Breakdown of Form 3508, 3508EZ, & 3508S
- Is PPP loan forgiveness taxable income?
How long does the SBA have to make a PPP loan forgiveness decision?
Once you’ve completed your application with your lender using all relevant documents to verify your expenditures, they will review it and submit it to the SBA. The SBA will have up to 90 days to make a final decision on your loan forgiveness. Within that time you’ll find out whether your loan has been fully forgiven and if you’ll have to pay any portion of it back.
If you don’t receive the answer that you are hoping for, you may be able to appeal the SBA’s decision. But you need to meet specific requirements in order to do so. Learn more in our PPP forgiveness appeal guide.
How do I apply for PPP loan forgiveness?
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.
To apply for PPP loan forgiveness, you’ll need to work closely with your lender. Each lender has their own process for filing forgiveness applications so make sure you get your lender’s instructions directly from them. But the basic process looks something like this:
- You ask your lender for the PPP forgiveness application that you need (there are three different forms for this so they’ll make sure you get the right one)
- You fill out your forgiveness application and gather any PPP forgiveness documentation that you need to verify your expenses (bank statements, invoices, cancelled checks, lease agreements, etc.)
- You turn everything back into your lender and they will process it with the SBA if they’ve determined that you are eligible for loan forgiveness
Your lender should provide communication around any decisions for your PPP loan forgiveness. Once your PPP loan has been forgiven, your lender will notify you and you won’t have to worry about paying the loan back.
Resources for those who have spent their PPP loans
- What does the PPP loan forgiveness process look like?
- What happens if my PPP loan is not forgiven? Repayment terms and next steps
- Do PPP loans affect business taxes and deductions?
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