Great news – Paycheck Protection Program (PPP) borrowers may be eligible for loan forgiveness if funds were incurred during the eight- or 24-week periods after disbursement by the Small Business Association (SBA) to cover the following expense categories:

• Payroll Costs
• Payments on Business Mortgage Interest Payments
• Rent
• Utilities

Loan forgiveness is not automatic; however, a borrower must apply for forgiveness once all disbursed proceeds have been used. Borrowers may also apply for loan forgiveness any time leading up to the maturity date of the loan.

Keeping a record of when PPP funds were received is important in requesting loan forgiveness. If a borrower is unsure about the exact date funds were obtained, they should contact their PPP lender. It is likely that PPP loan payments will no longer be deferred if applications for forgiveness are not completed within 10 months after the last covered period. If this occurs, the loan must be repaid.

Steps to Apply for PPP Loan Forgiveness:

1. Contact your PPP lender and complete the correct form for your situation and loan. Your lender can assist you in completing either of the following forms based on your particular situation:
   1.  SBA forms – 3508, 3508EZ, 3508S, or a lender equivalent.
2. Compile all needed documentation:
   1. Payroll items including bank account statements, tax forms (such as quarterly 941 filings and other applicable federal and state reports), and payment receipts for any other applicable employer-paid expenses for items such as health insurance or retirement plan contributions.
   1. Non-payroll items including business mortgage interest payments, rent payment receipts, and utility receipts for the business.
3. Submit the loan forgiveness form and documentation to your PPP lender. Do this promptly to ensure that you have time to work through any additional documents that may be needed.
4. Communicate with your lender throughout the process. If the SBA determines that a review of your loan application for forgiveness is required, your lender should notify you of this fact. You can appeal certain SBA loan decisions if unsatisfactory. It is important to work closely with your lender if this occurs. Your lender will notify you of the forgiveness amount awarded to your business via the SBA and will let you know when to begin making payments if due as applicable.

Please note that the SBA will deduct Economic Injury Disaster Loan advance amounts received from the forgiveness amount remitted to your lender as applicable in accordance with the CARES Act, section 1110(e)(6). Borrowers are also required to retain loan documentation for six years after the loan is forgiven or repaid in full.

For additional guidance through the process of applying for loan forgiveness, call our main office at (575) 521-7700 or visit the SBA website for more information.