On August 8, 2020, the Paycheck Protection Program (PPP) closed and the Small Business Administration (SBA) stopped accepting applications from participating lenders. The focus has now shifted towards those who received PPP loans to apply for forgiveness. According to the SBA, borrowers are given a covered period of either an 8 or 24 week period to spend funding on payroll and specific non-payroll costs before applying for forgiveness. It should be noted that if you use your funding after 8 weeks, but before 24 weeks, you can apply for forgiveness at that point. Borrowers have up to 10 months after their covered period to apply for forgiveness before making a payment.
In addition to payroll costs, the SBA has provided that up to 40% of the loan amount could be spent on the following:
- Business mortgage interest on real or personal property (excluding prepayments).
- Business rent or lease payments for real or personal property.
- Business utility payments including electricity, water, phone, internet, gas and transportation utility fees assessed by state and local governments.
Although the SBA opened their forgiveness portal on August 10th, many lenders are only beginning to accept forgiveness applications. It is important to understand your lending institutions process and procedures. Also, documentation to support loan forgiveness should be maintained by the borrower for six years after the loan is forgiven. As this process seems to be fluid, the SBA regularly publishes frequently asked questions for clarification to those completing these applications.
The SBA has provided for some borrowers that meet specific qualifications to utilize PPP Loan Forgiveness Application Form 3508EZ. Others are required to file the full version of the PPP Loan Forgiveness Calculation Form. Overall, it may also depend on the options provided by your banking institution for forgiveness filing.
In addition, the SBA has issued several warnings that during this sensitive time, borrowers should be aware of malicious COVID-19 phishing scams. Emails that comes from the SBA will always end in sba.gov and they never use a 3rd party platform to solicit personal information.
Should you have questions regarding your PPP forgiveness application, please feel free to contact our office.