SBA Paycheck Protection Program loan forgiveness guidelines
What small businesses need to know to qualify and apply.
The Small Business Administration – SBA – has a loan forgiveness application for businesses that have received First Draw and/or Second Draw loans. You can get the application from the lender that processed and provided your PPP loan. The requirements to qualify for either First or Second Draw loans are fairly simple.
First Draw PPP Loan forgiveness terms
First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
Applying for loan forgiveness
You will need to provide documentation to show that you qualify for the loan forgiveness. You will need to show that you kept the same employee’s employed during the period and that at least 60% of the loan proceeds were used for payroll expenses. The remaining amount must have been used for other qualifying expenses.
How and when to apply for loan forgiveness
A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.
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