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The Small Business Administration’s Paycheck Protection Program doled out $790. Between April 2020 and May 31, 2021, when the program came to an end, 9 billion in small-business loans were made to struggling businesses. Nearly $661. As of January 2, 2022, 5 billion of that loaned sum has been forgiven.
Learn more about PPP loan forgiveness through the SBA in the following paragraphs, including when to apply, how to do so, and what costs are covered.
When to apply for PPP loan forgiveness
The covered period for borrowers who received a PPP loan before the program’s closure on May 31, 2021, has already passed, and they can now apply for forgiveness. If you haven’t heard from your lender about forgiveness, get in touch with them right away.
You have two years if your loan was issued before June 5, 2020, and five years if it was issued after that date to apply for PPP loan forgiveness before your loan matures. However, it is best to take action well in advance of that date, ideally before any payments are due. After the covered period has ended, PPP loan payments are postponed for ten months.
How Much Do You Need?
How to apply for PPP loan forgiveness
Around 92 percent of borrowers fall into this category. These business owners have two options for applying for PPP loan forgiveness.
You will respond to the same set of questions on SBA Form 3508S regardless of how you apply. to, to a. a a s to a treble , a snaral, there was a a a a s Borrowers must demonstrate the necessary revenue loss for second-draw loans before their loan can be forgiven.
If your loan was for more than $150,000
Business owners with a PPP loan in excess of $150,000 will apply for forgiveness with their PPP lender. Many have their own application process, which should follow SBA Form 3508, so check with your lender before applying.
If you fit this description, you’ll have to provide documentation of your loan usage. It will be simpler to ask for forgiveness if you keep track of all of your documents as you go. The types of documentation you might be required to provide are listed below.
Requirements for PPP loan forgiveness
For both first- and second-draw PPP loans, the loan forgiveness requirements are the same. You must maintain staffing and compensation levels throughout the covered period in order to receive full loan forgiveness.
Additionally, during the covered period, funds from your PPP loan must be used for eligible expenses (see below). At least 60% of your loan must be used for payroll costs in order for it to be fully forgiven.
The majority of loans made in 2020 have a covered period of 24 weeks following loan disbursement, but borrowers with loans made before June 5, 2020 can choose to keep the original eight-week period. In 2021, business owners who receive a first- or second-draw loan can choose a covered period ranging from eight to 24 weeks.
Expenses eligible for loan forgiveness
The coronavirus relief bill passed in December 2020 expanded the list of eligible expenses to include supplier costs, expenses related to health and safety enhancements, and some property damage. Initially, eligible expenses were only limited to payroll and operating costs.
The costs listed below are now covered by the PPP loan forgiveness program:
There are a few details to keep in mind: You can get reimbursed for expenses you paid that were incurred before the covered period but not before. Costs paid after the covered period has ended but incurred during it are also covered as long as they are paid on or before the following regular payroll or billing date.
FIND NON-PPP LOANS
PPP has exhausted its funds, but other lenders may be able to assist you. See options with Fundera by NerdWallet.
Documentation needed for PPP loan forgiveness
You must show evidence of how you used your PPP loan if it was for more than $150,000. Only funds used for allowable expenses will be forgiven, and in order to receive full forgiveness, at least 60% of your loan must be used for payroll costs.
The list of supporting documents for your PPP loan forgiveness application is provided below. Not all of the items on this list will be required for every business, so take that into consideration.
When you apply for forgiveness of your first PPP loan, you do not have to submit any additional documentation if your PPP loan was less than $150,000. a d a a a a a the
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COVID EIDL loans
While payments are deferred for the first two years on loans obtained through the SBA’s COVID-19 Economic Injury Disaster Loan (EIDL) program, they must be repaid in full.
Borrowers who received a Targeted EIDL Advance or Supplemental Targeted Advance are exempt from making interest payments on the first $15,000 of their loan. Since these advances are considered grants, no application for forgiveness is necessary.
Author information: Kelsey Sheehy writes about personal finance for NerdWallet. The New York Times, USA Today, CBS News, and The Associated Press have all featured her work. Read more.
Will EIDL loans be forgiven 2022?
EIDL Loan Forgiveness Update For 2022. EIDL loans cannot be forgiven. However, EIDL loans do have a deferment period. The maturity date of any EIDL loan approved in 2020, 2021, or 2022 may be postponed for up to 30 months.
Is the SBA EIDL loan forgivable?
A new Targeted EIDL Advance provides applicants or previous EIDL Advance recipients in low-income communities with up to $10,000. The Shuttered Venue Operator Grant (SVOG) program provides qualified applicants with forgiveness of up to $10 million in costs.
How do I get my SBA disaster loan forgiven?
- Check to see if your lender is taking part in the SBA’s direct forgiveness program, then fill out the appropriate form:
- Compile your documentation: …
- Send the documentation and forgiveness form to the SBA or your PPP lender:
- Continue to monitor your application for forgiveness:
What happens if you can’t pay back SBA EIDL loan?
The lender will first ask the company for payment of the remaining loan balance. However, the lender will foreclose on the business’s pledged collateral if the borrower is unable to make the full payment. Your business assets may not have much value. In that case, the lender will abandon the collateral.