PPP & Loan Forgiveness
What You Need to Know - The Paycheck Protection Program (PPP) is a loan designed by the Small Business Administration (SBA) to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employee retention criteria are met, and the funds have been used for eligible expenses.
For borrowers with PPP loans, you may be eligible for loan forgiveness if the funds were used for eligible payroll costs, payments on business mortgage interest payments, rent, or utilities during either 8- or 24-week period after disbursement. A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Application for forgiveness may be made 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.
Finished with harvest?
If your PPP loan is with Farm Credit Midsouth, call your loan officer for help with the loan forgiveness process. We can ensure you complete the correct application for your operation, and we can help simplify a seemingly complex process. We are committed to helping you work through the challenges COVID-19 has presented and want to help you to maximize your SBA forgiveness potential.
Applying for Loan Forgiveness:
• Contact your PPP lender and complete form.
Your lender can provide you with either the SBA Form 3508, SBA Form 3508EZ, SBA Form 3508S, or a lender equivalent. See your lender for further guidance on how to submit your application.
• Compile documentation
(this list is not all-inclusive)
- Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
- 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:
- Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
- State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
- 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.
- Business mortgage interest payments: Copy of lender amortization schedule and receipts verifying payments, or lender account statements.
- Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments.
- Business utility payments: Copies of invoices and receipts, cancelled checks or account statements.
• Submit the forgiveness form and documentation to your PPP lender.
Complete your loan forgiveness application and submit it to your lender with the required supporting documents. Follow up with your lender to submit additional documentation as requested.
• Continue to communicate with your Lender throughout the process
If SBA undertakes a loan review of your loan, your lender will notify you of the review and the SBA loan review decision. You have the right to appeal certain SBA loan review decisions. Your lender 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.
If applicable, SBA will deduct any EIDL advance amount you have received from the forgiveness amount remitted to the lender, as required by section 1110(e)(6) of the CARES Act. Borrowers are required to retain certain documents for six years after the date the loan is forgiven or repaid in full.