What You Need to Apply for PPP Loan Forgiveness
SBA PPP loans are designed to provide small businesses with funds to help keep employees on their payrolls. For more information on how PPP loans work, check out our guide. All or a portion of each Paycheck Protection Program loan is eligible for loan forgiveness, as long as the business meets certain criteria. Keep reading to learn more about what documents you should have on hand to apply for PPP loan forgiveness.
As a reminder, only PPP loan funds used for payroll costs, operation expenses, supplier costs, worker protection expenses, covered property damage costs, rent, covered utilities, and interest on a mortgage (no prepayments) are eligible for forgiveness. And, at least 60% of total PPP loan funds must be used for payroll costs (including benefits).
The forgivable amount is equal to the amount spent on allowable costs in the covered period (8-to 24-weeks) after:
- You received your PPP loan funds or,
- The first day of your next payroll cycle
There are 3 forgiveness applications:
- For businesses with PPP Loans at or under $150,000: Application 3508 S
- For businesses with PPP Loans over $150,000:
- If you are eligible for the EZ Application: Application 3508 EZ
- If you are not eligible for the EZ Application, the full forgiveness application: Application 3508
Depending on the application you are eligible for, there are different documents required.
Expenses: Payroll Documentation
The 3508 S application does not require these documents to be submitted upfront, but you must retain them as they may be requested by the SBA to approve your forgiveness application.
The 3508 EZ and 3508 applications do require these documents to be submitted upfront.
Please see the required documents in the table below.
Categories | Preferred Documents | Other Acceptable Documents |
Non-employers | Monthly Net Income:
Health Insurance / Retirement Contribution
|
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Employers | Payroll
Health Insurance / Retirement Contribution
|
|
Expenses: Non-Payroll Documentation
The 3508 S application does not require these documents to be submitted upfront, but you must retain them as they may be requested by the SBA to approve your forgiveness application.
The 3508 EZ and 3508 applications do require these documents to be submitted upfront.
Please see the required documents in the table below.
Categories | Preferred Documents | Other Acceptable Documents |
Rent:
|
|
|
Utilities:
|
|
|
Mortgage Interest:
|
|
Cancelled checks |
Covered Operations Expenditures |
|
|
Covered Property Damage Costs |
|
|
Covered Supplier Costs |
|
|
Covered Worker Protection Expenditures |
|
Proof of Number of Full Time Employees or Average Paid Hours
The 3508 S application does not require these documents at all.
The 3508 EZ application requires these documents, but only if Check Box 2 is selected (i.e., no reduction in headcount). The 3508 application always requires these documents. Please see the required documents below:
- Payroll Service Provider Reports
- Payroll Records or Pay Stubs
Proof of Annual Salary or Hourly Wages
The 3508 S and 3508 EZ applications do not require these documents at all.
For the 3508 application, please see the required documents below:
Payroll
- Payroll Service Provider Reports
- Payroll Records or Pay Stubs
Health Insurance / Retirement Contribution
- Payment receipts, cancelled checks, or account statements
Safe Harbor Documentation
These documents are not required to be submitted upfront for any of the forgiveness applications, but you must retain them as they may be requested by the SBA to approve your forgiveness application.
Safe Harbor 1: Inability to Operate
You must retain documentary proof as follows:
- Applicable COVID related Orders or Guidance for the business location
- Bank Statements demonstrating decrease in business activity
You should be able to establish a direct or indirect link between the relevant order/guidance with the reduction of business activity that you’ve experienced.
Safe Harbor 2: Unsuccessful Attempts to Re-Hire
SBA Guidance: Documentation regarding any employee job offers and refusals, refusals to accept restoration of reductions in hours, firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and any inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020.