PPP Loan Forgiveness

PPP Loan Forgiveness
September 13, 2021

The COVID-19 pandemic has taken its toll on small businesses. Some businesses are dependent on financial support, grants, and loans to sustain their business. Paycheck Protection Program (PPP) is a federal loan initiative. This loan provides businesses with financial support to help retain their workforce. That is, towards the maintenance of their payroll during this trying time. Further assistance is supported through PPP Loan Forgiveness application for extension of payment to this loan.

The PPP serves under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This program offers loans to small businesses or self-employed individuals to help them with the payroll for and retaining their workforce and financing of business expenses. The PPP loans were funded by private lenders with the support of the Small Business Administration (SBA) in the United States.

The SBA no longer accepts applications for the PPP. However, struggling PPP loan borrowers can still seek relief through the application of PPP forgiveness. This will give them a longer grace period to make payment. It is the purpose of this article to provide all the necessary information for you to determine if you are eligible. Also, we will provide instructions for the application process of PPP loan forgiveness.

Eligibility Criteria for PPP loan forgiveness 

The PPP loan may receive partial or full forgiveness. PPP loan forgiveness will receive approval under pre-determined purposes, and or conditions. This includes:

  • payroll 
  • mortgage interest
  • rent
  • utilities
  • operations expenditures
  • property damage costs
  • supplier costs
  • worker protection costs.  

General Conditions 

All the expenses that fall under one of the above categories are eligible for loan forgiveness. However, the borrower must submit the request within eight to twenty-four weeks after receiving the loan or lose this opportunity to submit the request. Borrowers must also demonstrate that employee staffing and compensation levels were maintained during this time.

PPP’s primary purpose was to ensure that companies had the resources they needed to keep their employees employed and paid during the COVID-19 crisis. Hence, payroll costs must make up at least 60% of the loan in order to secure approval for forgiveness.

How and when to apply 

To get loan forgiveness, borrowers must apply directly to the lenders by submitting their PPP loan forgiveness application form within ten (10) months after the end of the covered period (8 to 24 weeks).  

You can submit your forgiveness request once the money from the loan has been expensed. You can also submit a request at any time within the 10 months period. In the event that borrower did not submit the forgiveness application within the stipulated timeline, borrowers must repay their PPP loan to their lenders. It is important to note that SBA will not accept any late submission of requests.

After the application is submitted, lenders are required by law to provide a response within 60 days, and borrowers have 30 days to appeal SBA’s decision.  

Documentation Requirements  

The application process will require the following record-keeping documents from the coverage period (8 to 24 weeks): 

  • Payroll reports documenting compensations paid to employees 
  • Tax forms reports 
  • Payment receipts or account statements documenting employer’s contributions to employee health insurance and retirement plan 

Proof documentation showing: 

  • The number of full-time employees 
  • Business mortgage interest payments 
  • Office rent and lease payments 
  • Utility payments

Getting professional help with your PPP loan forgiveness 

Some details on the application process may be hard to understand or confusing. Get professional help here! They have the expertise to help you prepare the right documents. Fill the right forms for your situation. Assist you to determine how much of the loan is forgivable. Most importantly, getting professional help is a great way of avoiding mistakes and ensures success in your loan forgiveness application.  

Our accountants and tax specialists at Waters Hardy are highly qualified and experienced. The very best to advise you and prepare you for your application. Contact us to discover your options.   



PPP Loan Forgiveness

Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

PPP loan forgiveness application form


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