Why do I need to apply for forgiveness? I thought this was free money?
The Paycheck Protection Program has always provided loans that could be completely forgiven if the borrower requested forgiveness and was approved by the lender and the SBA. If you don’t apply for forgiveness, or you are not approved, you still need to pay back the loan you took out.
When am I eligible to apply for forgiveness?
You may apply for forgiveness as soon as the loan amount has been spent. If you’re a 1099 / sole proprietor, this means you are eligible to apply as soon as the “business” has used the loan to cover your payroll / wages.
How do I need to spend the loan in order to have it completely forgiven?
In order to have your PPP loan fully forgiven, you must have spent PPP funds on the following expenses DURING the covered period that you choose, between 8 and 24 weeks from the day you received PPP funds:
- At least 60% of loan proceeds must have been spent on payroll incurred, not necessarily paid, during the covered period you choose (including the owner’s pay, salaries, wages, vacation pay, leave pay, health benefits BUT NOT payments made to independent contractors)
- Commercial rent (as long as lease was in effect prior to February 15, 2020)
- Mortgage interest (as long as the mortgage was signed before February 15, 2020)
- Utilities (as long as the service began before February 15, 2020)
- Property damage costs due to public disturbances occurring in 2020 and not covered by insurance
- Supplier costs that were essential to business operations made prior to receiving your PPP loan
- Worker protection expenditures, such as personal protection equipment or property improvements necessary to remain COVID compliant from March 1, 2020 onward
Will my PPP loan be automatically forgiven?
No. You must fill out a forgiveness application with the PPP Lender who originated your loan OR with a service provider with whom your Lender is working to process forgiveness applications.
When will I know if my loan has been forgiven?
After you submit your forgiveness application, your funding lender will review and approve or disapprove your request. The lender has 60 days to make a decision, but most happen much faster than that.
After your lender makes their decision, they then submit your application to the SBA to verify and concur with the initial decision. They then have 90 days to agree with or deny the lender’s decision.
Random loans will be chosen for review by SBA and those will take more time and SBA has not outlined a timeframe for these.
Will my loan be audited?
Random loans will be chosen for review by SBA as part of their process of PPP quality control. If your loan is selected for a more in-depth review, we will receive notice from the SBA, and will contact you for additional documentation and verification.
How much time do I have to apply for forgiveness?
Forgiveness must be requested within 10 months of the disbursement of your PPP loan. After 10 months you will be required to start making payments on your outstanding loan amount. Your lender will contact you directly after 10 months to arrange payment and service for your loan account.
What if I don’t apply for forgiveness?
If you do not apply for forgiveness within the required 10 month timeframe, you will be required to repay the loan in monthly installments with a 1% interest rate over either two years or five years, depending on when your loan was originated (initially the term was two years and then it was changed later in the program). There is no prepayment penalty;you may pay down or pay off the loan at any time with no additional fees.
Do I need proof of my loan spending?
Yes, every PPP borrower must retain proof of how funds were spent and be prepared to submit this proof to the SBA, if requested.
Can I pay myself a salary with the loan?
Yes, owner salary and employee salary are eligible ways to spend PPP funds.
If I pay my bills using my funds, will I still get forgiven?
If you can show documentation that you paid payroll and business operating expenses during the covered period, your loan can be partially or fully forgiven.
If you used your PPP funds to pay personal expenses, you will just need to prove that the “business” first paid you personally.
Can you share a list of eligible PPP expenses??
In order to have your PPP loan completely forgiven, you are required to have spent the funds on:
- Payroll expenses (wages, salaries, cash or benefits) – * minimum of 60% of loan should have been spent here
- Business mortgage interest payments
- Business rent or lease payments
- Business utility payments
- Covered operations expenditures
- Covered property damage costs
- Covered supplier costs
- Covered worker protection expenditures
If your loan was under $150,000, you only need to prove the amount you spent on payroll / wages.
What if my forgiveness application gets denied?
If your forgiveness application gets denied by the original lender, you will have to start paying back your PPP loan. Payments begin 10 months after the date you received your loan. Your lender will contact you directly to set up your payments and service your account.
How long do I need to keep any of the documentation?
The SBA can go back and audit your loan for up to 5 years after the date of disbursement. You are required to be able to provide documentation up to that point.
What if I don’t have my funds yet?
If you don’t have your loan funds yet, you are not eligible to apply for forgiveness. To be eligible to apply for forgiveness, you first need to have used the entirety of your loan amount.
If you are awaiting funding, please note that our customer support team is working diligently to process and fund your loan. You may get in contact with them for updates on status.
Should I apply via the SBA or the BA Portal for forgiveness?
You can apply for forgiveness directly with the SBA or blueacorn. That said, we are encouraging our borrowers to apply via the Blueacorn portal so that we can assist them with any needs along the way.
Can you help me with my Forgiveness Application submitted through the SBA Forgiveness Portal?
Unfortunately we aren’t able to provide assistance with the SBA Forgiveness portal or your SBA forgiveness application once it has been submitted through their system.