PPP Loan Forgiveness FAQs and Resources
Paycheck Protection Program (PPP)These step-by-step guides and frequently asked questions can help you prepare for completing your PPP loan forgiveness application.
- Simplified (Form 3508S) Forgiveness Application Resource Guide
- EZ (Form 3508EZ) Forgiveness Application Resource Guide
- Standard (Form 3508) Forgiveness Application Resource Guide
The Schedule A Worksheet can help you calculate information about employees’ hours and wages, which will assist in filling out the application. Instructions for how to use the worksheet are included in the Standard Forgiveness Application (Form3508) Guide.
The U.S. Treasury and the SBA have continually modified the PPP Forgiveness program. We recommend that you continue to watch for updates. You can find detailed information on the SBA and U.S Treasury page websites.
What You Need to Know About PPP Loan Forgiveness
- Simplified Form 3508S
- Standard Form 3508
- Form 3508EZ
However, if the borrower does not apply for loan forgiveness within 10 months after the last day of the maximum covered period of 24 weeks, the PPP loan is no longer deferred, and the borrower must begin paying principal and interest. Payments will be based on the remaining portion of your 24- or 60-month term at a 1% interest rate, and the loan must be paid in full by the maturity date stated in your Note. Interest accrues during the deferment period, and the borrower is responsible for paying the accrued interest on any amount of the loan that is not forgiven. PPP loans authorized by SBA before June 5, 2020, have a term of 24 months (two years), but these borrowers have the option of requesting an extension of the term to 60 months (five years).
What You Need to Know Prior to Applying for Loan Forgiveness
Payroll costs include gross compensation to employees (whose principal place of residence is the United States) in the form of:
- Salary, wages, commissions, or similar compensation
- Cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips
- Payment for vacation, parental, family, medical or sick leave
- Allowance for separation or dismissal
- Payment for the provision of employee benefits consisting of group healthcare coverage (including insurance premiums) and retirement
- Payment of state and local taxes assessed on compensation of employees
- For an independent contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or similar compensation
The following is expressly excluded from the definition of payroll costs:
- Any compensation of an employee whose principal place of residence is outside of the United States
- Compensation of an individual employee in excess of an annual salary of $100,000, prorated as necessary
- Federal employment taxes imposed or withheld during the applicable period, including the employee's and employer's share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees
- Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Pub. L. 116–127)
- Qualified for the Employee Retention Credit if the employer elects to claim the credit for those amounts
- Interest payments on any business mortgage obligation on real or personal property incurred before February 15, 2020 (but not any prepayment or payment of principal)
- Rent payments on business rent obligations on real or personal property under a lease agreement in force before February 15, 2020
- Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020
- Covered worker protection modification expenditures, including but not limited to personal protective equipment
- Covered property damage costs related to property damage and vandalism or looting due to public disturbances in 2020 that were not covered by insurance or other compensation
- Covered supplied costs, which refer to expenditures to suppliers of goods that are essential at the time of purchase to your current operations and made pursuant to an eligible contract order or purchase order
- Covered operations expenditures, which refer to:
- payments for any business software or cloud computing service that facilitates business operations;
- product or service delivery; the processing, payment, or tracking of payroll expenses;
- human resources;
- sales and billing functions; or
- accounting or tracking of supplies, inventory, records, and expenses.
You can reference the revised SBA Form 3508 Instructions published within the application.
What You Need to Know After Applying for Loan Forgiveness
Yes. The amount of loan forgiveness can be as much as the full principal amount of the loan and any accrued interest only if the loan proceeds were used for forgivable purposes and employee and compensation levels were maintained. The CARES Act, as amended by the PPP Flexibility Act and maintained by the Economic Aid Act, specifically requires certain reductions in a borrower's loan forgiveness amount. Several factors which might reduce your loan forgiveness include:
- Use of loan proceeds for unforgivable purposes
- Nonpayroll costs which exceed 40% of the total forgiveness amount
- Reductions in hourly wages or salaries of employees by more than 25%
- Reductions in the number of employees or the hours your employees worked
There are Safe Harbor exceptions which may still allow you to receive full forgiveness even if you reduced employees, hours worked or wages. The SBA instructions and the Regions online application will help guide you through the Safe Harbor calculations. Additional information about reasons for reductions in loan forgiveness amount can be found in the CARES Act, PPP Flexibility Act, Economic Aid Act and the SBA's various interim final rules.
- the SBA remits the loan forgiveness amount to Regions; or
- 10 months after the end of the maximum covered period of 24 weeks, if the borrower has not applied for forgiveness by that time, unless SBA determines that the loan is not eligible for forgiveness (in whole or in part).
Borrowers may request a loan review under certain circumstances within thirty (30) days of notification of the SBA’s initial forgiveness decision.
A borrower's timely appeal of a final SBA loan review decision finding that the loan is not eligible for forgiveness (in whole or in part) extends the deferment period for the PPP loan until the SBA's Office of Hearings and Appeals (OHA) issues a final decision on the appeal. If the borrower appeals a final SBA loan review decision, payments of principal and interest on the remaining balance of the PPP loan will not be due until OHA issues a final decision on the timely appeal. The borrower must notify Regions of the appeal so that Regions can extend the deferment period. Interest accrues during the deferment period, and the borrower is responsible for paying the accrued interest on any amount of the loan that is not forgiven.
- Is 60 days or more past due on scheduled loan payments and the default has not been cured
- Is permanently closed and does not plan to submit a forgiveness application
- Has filed for Chapter 7 bankruptcy protection
- Has filed for Chapter 11, 12 or 13 bankruptcy once a period of at least 60 days has elapsed from the end of the PPP loan deferment period or any time after an order is entered confirming a plan if the plan does not provide for payment of 100% of the underlying debt
- In the case of self-employed individuals, sole proprietors, single-member LLCs, or independent contracts, the owner is deceased
- The borrower or any owner of 20% or more of the borrower, has been indicted for or convicted of a felony related to the PPP loan
- The borrower has filed an appeal of a final SBA loan review decision with the Office of Hearings and Appeals (OHA) in accordance with PPP Loan Program Requirements. Lender may request guaranty purchase 60 days after the borrower has filed its appeal with OHA.
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