How to Apply for Forgiveness for Your Paycheck Protection Program (PPP) Loan

How to Apply for Forgiveness for Your Paycheck Protection Program (PPP) Loan

Updated to include the new SBA PPP Direct Forgiveness PortalThe main attraction of a Paycheck Protection (PPP) loan is that it may be fully forgiven. In essence, forgiveness turns the loan into a grant.To qualify for forgiveness requires you to spend your PPP loan funds properly in a specific period of time, and then apply for forgiveness with your lender for loans of more than $150,000 and directly with your lender or through the online SBA PPP Direct Forgiveness portal for loans of $150,000 or less. The rules and applications for applying for forgiveness have changed over time. There are currently three forgiveness forms:

  • Form 3508
  • Form 3508EZ
  • Form 3508S

The latest and simplest form is 3508S and it may be used for loans of $150,000 or less. However, you must still calculate the amount of your loan that is eligible for forgiveness and maintain those records in case your application is audited. For that reason, you may want to fill out either Form 3508EZ or Form 3508 to calculate forgiveness, and keep that documentation with your records.

  • The covered period is now any number of weeks between 8 – 24 weeks after the loan is disbursed. There is no longer an “Alternative Covered Period.” This applies to any PPP loan for which a loan forgiveness payment had not been remitted by SBA as of .
  • EIDL Advances (grants) are no longer deducted from the PPP loan forgiveness amount. This is retroactive to all PPP loans.
  • Forgiven PPP loans are not taxed and the business may still deduct qualified expenses paid for with PPP funds. (States may tax PPP funds; it varies.)
  • You apply for forgiveness with the lender that gave you the loan, or the lender that is servicing the loan.

The SBA’s new online SBA PPP Direct Forgiveness portal allows borrowers with loans of $150,000 or less to apply for forgiveness directly with the SBA.

Please note, the material contained in this article is for informational purposes only, is general in nature, and should not be relied upon or construed as a legal opinion or legal advice. Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and Financial Advisors.

How to Apply for Forgiveness for Your Paycheck Protection Program (PPP) Loan

Tip: To follow along with this information, print out or download the PPP Loan Forgiveness Application (SBA Form 3508 revised ) before you start. Your lender may provide an online version of this form but it is helpful to have a printed copy for your notes.

Understand that completing this application will require a number of calculations. If you are not comfortable with this process, get help from your accountant or financial advisor.

How Does SBA Loan Forgiveness Work

There is a lot to digest here and hopefully it will make sense once you approach it methodically. In this article, we provide both background information as well as details on specific questions related to the application when that information is available in official guidance.

Before we dive into details, let’s quickly review the Paycheck Protection Program (PPP) loan program. (This background may help if you see articles that don’t incorporate the latest changes, or if you are wondering why this round of forgiveness is a little different than before.)

Leave a Comment

Your email address will not be published. Required fields are marked *