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SBA PPP Loan Forgiveness

The SBA and Federal government continue to clarify, as well as change, the rules and regulations regarding CARES Act funding and relief loan forgiveness. We recommend that you carefully review all rules, regulations, and written guidance from the Small Business Administration with the assistance of your legal, tax, and other advisors.

  • The PPP offered a potentially 100% forgivable “loan” that provided you with 2.5 months reimbursement for what you spent on payroll or similar in 2019. The minimum required amount devoted to payroll expenses is 60%, allowing up to 40% of the funds to be spent on certain qualified non-payroll items, starting as soon as you received the loan. If you use the funds as required, you can apply for up to 100% loan forgiveness; even if the money isn’t forgiven, the resulting loan has a 1% interest rate.
  • The new guidelines extend the 8-week forgiveness period to 24 weeks after the disbursement date of your PPP loan, but you can still remain on your 8 week schedule if you prefer and submit a forgiveness application after your PPP loan funds are spent.
  • The maturity date for new SBA PPP loans (on or before June 5, 2020) extends from 2 years to 5 years. If you have an existing PPP loan, any unforgiven amount can be extended to five years upon mutual agreement of the borrower and the bank.
  • The timeline to rehire the number of employees to pre-COVID levels extends from June 30, 2020 to December 31, 2020.
  • You can certify, in good faith, that you tried to rehire employees or fill vacant positions but were unsuccessful. These can count as exceptions and will not impact your forgiveness. The new portion of this law allows for the possibility that COVID related restrictions on your business may have been part of the equation, preventing employees from being rehired or leaving you with vacant positions.
  • Bath Savings Institution cannot guarantee your loan forgiveness.
  • We recommend that you withhold your submission for forgiveness until all funds are appropriately spent. In the interim, please continue to be diligent with your documentation.
  • On June 17, 2020 the SBA released a three-page “EZ” Paycheck Protection Program loan forgiveness application requiring less documentation and fewer calculations than previously required. Form 3508EZ applies to borrowers who meet any one of these three criteria:
    • Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
    • Did not reduce salary or wages for any employee by more than 25% during the Covered Period, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
    • Did not reduce salary or wages for any employee by more than 25% during the Covered Period and experienced reductions in business activity as a result of health directives related to COVID-19.
  • SBA updated the regular Form 3508 to reflect recent changes made by Congress in the PPP Flexibility Act and issued a new interim final rule that implements changes made by the PPPFA.
  • On October 9, the SBA released a simpler loan forgiveness form, Form 3508S, for PPP loans of $50,000 or less. This will streamline the process to provide financial and administrative relief to our small businesses.
  • When you are ready to apply for forgiveness, please submit the appropriate loan Forgiveness Application and supporting documentation to

Download the Forms for PPP Loan Forgiveness

Resources for consumers from the Consumer Financial Protection Bureau: