The economic impacts of the COVID-19 pandemic have been particularly felt by small businesses. The government responded by allowing business owners to apply for small business loans through the Paycheck Protection Program.
The deadline to apply for a PPP loan was August 8, 2020. Currently, you can no longer apply for one, although the Small Business Administration may resume accepting applications at a later date.
However, perhaps you already applied for and received a PPP loan. Now you might have some questions about PPP loan forgiveness. Keep reading to learn what you need to know.
PPP Loan Forgiveness: Essential Information
Don’t worry if you feel you may need to apply for PPP loan forgiveness. Many business owners have already done so. The SBA allows business owners to apply for loan forgiveness if they meet certain criteria.
Specifically, according to the SBA, “Borrowers may be eligible for loan forgiveness if the funds were used for eligible payroll costs, payments on business mortgage interest payments, rent, or utilities during either the 8- or 24-week period after disbursement.”
You also have to have used up all the loan funds before you can request forgiveness for them. If you have more questions about eligibility requirements, the SBA offers the resources you need to determine if you qualify for PPP loan forgiveness.
If you do believe you’re eligible for PPP loan forgiveness, start the process of applying by contacting your PPP lender and asking for the necessary form. You must apply for PPP loan forgiveness through the lender who initially provided the loan. Along with providing the application form, your lender can explain how to submit it.
You also need to gather certain documentation to prove your eligibility for loan forgiveness. This may include bank account statements or documentation from a third-party payroll service provider indicating you used the funds from the loan to pay employees. Your lender may also require you to submit additional documentation, such as tax forms, payment receipts, and more. The required documentation can vary on a case-by-case basis.
Once you’ve completed the form and gathered the necessary documentation, follow your lender’s guidance for submitting the application. The SBA will then decide whether to review it. If they do, they’ll contact your lender to let them know, so you should keep in touch with them to ensure you’re aware of what stage in the process your application has reached.
Again, you have options if you need forgiveness for a PPP loan. Just make sure you act fast. After a certain period of time, you’ll no longer be eligible to apply, even if you meet all other requirements.