Paycheck Protection Program (PPP) Loan Forgiveness
Learn how to prepare and apply for PPP loan forgiveness for loans under $150,000
Need Help With Your Application?
Call the SBA PPP Direct Forgiveness customer service hotline Monday to Friday between 8:00 a.m. and 8:00 p.m. ET
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:
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Employee and compensation levels are maintained
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The loan proceeds are spent on payroll costs and other eligible expenses
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At least 60% of the proceeds are spent on payroll costs
Apply Today
The SBA has streamlined the application process, so that it only takes 5 minutes! Forgiveness applications will be completed through the SBA PPP Direct Forgiveness Portal.
View the Direct Forgiveness Portal User Guide to see step-by step instructions on registering in the portal and submitting your application.
Instructions
Find instructions below for applying for PPP loan forgiveness.
ECDI borrowers of less than $150,000 will use the U.S. Small Business Administration's
PPP Direct Forgiveness Portal to apply for forgiveness.
Need help with your application or using the portal?
PPP Loan Forgiveness Details and Instructions
About PPP
The first iteration of the program (now referred to as PPP Round 1) was passed in March of 2020, with more funding added to it in April. A second stimulus package and PPP were passed on December 27, 2020 (known as PPP Round 2), which added more funding and expanded the types of expenses that businesses are able to use the funds for.
The goal of this loan is to cover your operating expenses for 8-24 weeks, so that you can maintain your employee count and level of compensation. Therefore, the amount you are able to borrow and the length of time your loan payments are deferred are based on documentation of your company's average 2019 or 2020 payroll expenses. The loan is entirely forgivable, as long as you meet spending and documentation requirements.
PPP loans are fully forgivable
PPP loans are 100% forgivable (meaning you will not be required to pay back the loan) if you meet all forgiveness requirements.
Basic forgiveness requirements:
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Maintain employee and compensation levels (there is a safe harbor for companies that are unable to maintain pre-COVID employee levels due to reduction in business)
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Spend at least 60% of loan funds on payroll costs
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Spend up to 40% of funds only on other eligible expenses
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Provide required forgiveness documentation before the end of your 8- to 24-week loan period (or 8-week loan period for loans made prior to June 5, 2020)
What happens if forgiveness requirements are not met
If you are unable to fully meet the forgiveness requirements, the SBA may not forgive part or all of your loan. You will be required to repay any unforgiven portion at an interest rate of 1%, over five years.
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:
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Employee and compensation levels are maintained
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The loan proceeds are spent on payroll costs and other eligible expenses
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At least 60% of the proceeds are spent on payroll costs
Eligible uses of funds
PPP loans can be used to help fund payroll costs (including benefits), mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations. Full list of eligible uses.
Borrower beware: As part of your application, you'll have to certify that you will spend the funds in the appropriate way. If you do not spend the funds appropriately, you could be charged with fraud. (Plan ahead to keep good records of all your expenses!)
Instructions for filing for loan forgiveness
When to file for forgiveness
After using all of the PPP loan funds they receive, a borrower can apply for forgiveness at any time after the end of the covered period, up until the maturity date of the loan (5 Years from the date of disbursement).
However, 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 must begin making loan payments. Therefore, we recommend you file for forgiveness after you have spent all the funds, but before 10 months after the last day of your covered period.
How to file for forgiveness
Please note, these instructions are for borrowers whose PPP loan is under $150,000.
1. Compile your documentation
Payroll
Include all payroll periods that overlapped with the Covered Period or the Alternative Payroll Covered Period
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Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees
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Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
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Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941)
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State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state
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Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the borrower included in the forgiveness amount
Non-payroll
Include any expenses that were incurred or paid during the covered period and/or obligations or services that existed prior to February 15, 2020:
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Business mortgage interest payments: Copy of lender amortization schedule and receipts verifying payments, or lender account statements
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Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments
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Business utility payments: Copies of invoices and receipts, cancelled checks or account statements
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Covered property damage costs: Copy of invoices, orders or purchase orders paid, and receipts, cancelled checks or account statements verifying eligible payments, and verification that costs were related to uninsured property damage due to public disturbance vandalism or looting that occurred in 2020
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Covered supplier costs: Copy of contracts, orders or purchase orders in effect at any time before the Covered Period (except for perishable goods), and copy of invoices, orders or purchase orders paid, and receipts, cancelled checks or account statements verifying eligible payments
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Covered worker protection expenditures: Copy of invoices, orders or purchase orders paid, and receipts, cancelled checks or account statements verifying eligible payments, and verification that expenditures were used to comply with COVID-19 guidance
Note: This list of documents required to be submitted is not all-inclusive. You will need to assure you have documented any expense that is covered by your PPP loan.
2. Submit your documentation
Forgiveness applications will be completed through the SBA PPP Direct Forgiveness Portal.
View the Direct Forgiveness Portal User Guide to see step-by step instructions on registering in the portal and submitting your application.
3. Continue to monitor your application for forgiveness:
The SBA or ECDI will notify you of the review and the SBA loan review decision. You have the right to appeal certain SBA loan review decisions. ECDI is responsible for notifying you of the forgiveness amount paid by SBA and the date on which your first payment will be due, if applicable.
Additional information that may be helpful:
SBA's Direct Forgiveness Knowledgebase
The Paycheck Protection Program (PPP) is a U.S. Small Business Administration (SBA) loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
