Small business assistance
Payroll binder to keep records for PPP Loan Forgiveness application

How to Get PPP Loan Forgiveness

The funding of PPP loans is long gone, and it’s unknown if they will return. However, getting PPP loan forgiveness is still an option for many small business owners who have taken advantage of this financial lifeline during the pandemic. 

Sorting out PPP loan forgiveness can feel like you’re lost in a maze. 

Let’s take a look to understand the process.

We will look at how to get started with PPP loan forgiveness and maximize your chances for success. We’ll cover the differences in other programs, eligibility requirements, usage of funds, rehiring employees, documentation necessities, and more.

Additionally, we’ll offer valuable tips on record-keeping for a successful application. 

Finally, you’ll learn about utilizing no-cost or low-cost experts through the Small Business Assistance Tool to connect to needed help.

This advice will help you start with PPP loan forgiveness and eliminate some of the confusion. 

Differentiating PPP Loans from EIDL Program: 

Before moving on, let’s understand the differences between PPP loans and SBA’s COVID-19 Economic Injury Disaster Loan (EIDL) program.

  • Loan Forgiveness: The most significant difference between PPP and EIDL is that PPP loans can be forgiven if used correctly, while EIDLs must be repaid in full.
  • Borrowing Limits: Business owners can borrow 2.5 times their average monthly payroll with a PPP loan. In contrast, EIDL limits are based on economic injury suffered by the business due to COVID-19 disruptions.
  • Purpose & Usage: While both programs aim at helping businesses during tough times, PPP focuses primarily on maintaining payroll expenses. On the other hand, EIDL covers broader working capital needs such as fixed debts and accounts payable.

With an understanding of these differences, let’s move forward.

Understanding PPP Loan Forgiveness Eligibility

You must spend funds on approved expenses to maximize your benefits under the Paycheck Protection Program (PPP).

Using the funds for these allowable expenses: 

  • Payroll costs include salaries, wages, tips, commissions, and benefits.
  • Mortgage interest incurred before February 15, 2020.
  • Rent in effect before February 15, 2020
  • Software & operational expenses are not covered.
  • Property damage related to civil unrest is not covered by insurance
  • Necessary supplier costs essential to operating the business
  • COVID-related protective measures are not covered.
  • EIDL Refinancing: Applies to loans received between January 31 and April 3, 2020

This ensures that your small business stays compliant with program requirements and increases your chances of receiving forgiveness for eligible expenditures made during this timeframe.

Let’s look at completing the necessary forms for PPP loan forgiveness:

Completing the Necessary Forms

To apply for PPP Loan Forgiveness, complete one of three forms provided by the Small Business Administration (SBA): 

Providing all necessary documentation will ensure a smooth forgiveness process.

Partial Forgiveness: If you don’t spend the entire loan amount on approved expenses, you may still be eligible for partial forgiveness. However, any amount not forgiven will need to be repaid.

The PPP Direct Forgiveness Portal Simplifies the Process

Great news!

Some participating lenders may offer access to the SBA Direct Forgiveness Portal, which streamlines the forgiveness process for loans of $150,000 or less.

This user-friendly platform allows borrowers to apply for loan forgiveness until its maturity.

What Helps Maximize Your Eligibility

  1. If you rehired the employees, you fired or furloughed due to the pandemic.
  2. Keep track of employee hours worked since reductions may affect eligibility based on average full-time equivalency (FTE).
  3. Maintain accurate records of spending your borrowed funds during the covered period.

Rehired Employees Who Were Laid Off

To receive maximum PPP loan forgiveness, small business owners had to rehire employees laid off or furloughed between February 15th and April 26th due to the pandemic before December 2020.

If you reinstated all of the employees you fired or furloughed during this time before December 31, 2020, as required by the PPP Flexibility Act, you might qualify for complete forgiveness.

Calculating FTE Accurately During Covered Period

Accurately calculating average full-time equivalency (FTE) during the covered period since reductions may occur based on employee hours worked.

  • Determine each employee’s average weekly hours worked over this time frame.
  • If employees work more than 40 hours per week, cap their FTE at one.
  • Add up all individual FTEs from step two. This will give you an overall total number of FTEs for your company during the covered period.

Record-Keeping Tips for Successful Forgiveness Application

Alright, let’s talk about record keeping.

We have some tips and tricks to help you stay organized to get the most out of your PPP loan forgiveness.

Importance of Tracking Fund Usage During Covered Period

First up: Tracking how you spend the funds during the covered period is crucial. Tracking your expenditure on the loan during the relevant period is essential to determine if you are eligible for debt forgiveness. Make sure to familiarize yourself with what expenses qualify – so you can track them.

Eligibility Considerations for Pre-Incurred Payroll Costs

Moving on: Did you know payroll costs incurred before but paid during the covered period can also be considered eligible expenses? This could potentially increase your forgiven amount.

Create a System That Works For You

  • Digital tools: Use apps like QuickBooks Online, Wave, or FreshBooks to help you track your expenses.
  • Physical records: If you prefer the old-school approach, keep a binder with all relevant receipts and invoices organized by date.
  • Maintain documentation: Keep payroll reports, quarterly tax returns, and proof of payment for utilities, rent, or mortgage interests handy. You’ll need these if your loan is above $150,000.

To sum it up: Stay organized and diligently track how you spend those PPP funds during the covered period. This will make applying for forgiveness much smoother and increase your chances of success.

Need more guidance? Check out the Small Business Assistance Tool to connect with no-cost or low-cost partners who can help.

Key Takeaway:

For a successful PPP loan forgiveness application, carefully tracking your expenses during the covered period and maintaining thorough documentation, whether digitally or through traditional physical records, is critical.

Documentation Requirements for Loans Above $150,000

Let’s review the PPP loan forgiveness documentation.

If you’re seeking full repayment coverage on loans above $150,000, there are specific documents you’ll need to submit alongside your application.

  • Payroll reports: These will show how much you paid your employees during the covered period. Ensure the reports are exact and current.
  • Quarterly tax returns: Submitting these forms helps demonstrate that you’ve been compliant with tax regulations.
  • Proof of payment for utilities, rent, or mortgage interests: This can include bank statements or canceled checks as evidence that funds were used appropriately.

Here are a few tips to make this task easier for you:

  1. Create a dedicated folder (physical or digital) where all relevant files are stored in one place. Organization is key.
  2. Maintain clear records from day one – don’t wait until the last minute to scramble through piles of paperwork. Trust us; future-you will thank present-you later on.
  3. For the best outcome, collaborate with an accountant who can ensure your financial records are in order before submitting. They know their stuff when it comes to financial documentation.

In case any questions arise during the process or if additional information is needed by lenders reviewing applications – having well-organized documentation readily available makes life so much easier for everyone involved (including yourself.).

And remember, you can seek help from no-cost or low-cost partners through resources like the Small Business Assistance Tool. Our small business providers are here to guide you.

Key Takeaway:

Specific documents must be submitted alongside the application for full repayment coverage on PPP loans above $150,000. These include payroll reports, quarterly tax returns, and proof of payment for utilities, rent, or mortgage interests; it’s important to maintain clear records from day one and work closely with an accountant if possible.

Utilizing No-Cost to Low-Cost Partners Through Small Business Assistance Tool

As a small business owner, you might feel overwhelmed by the process of PPP loan forgiveness.

You can get valuable help from no-cost or low-cost partners through resources like the Small Business Assistance Tool. These services are designed to connect entrepreneurs who may not have access to financial advice or assistance otherwise to expert assistance and resources.

To make things easier for you, here are some actionable steps:

  1. Familiarize yourself with available resources: Visit the Small Business Assistance Tool and explore various no-cost/low-cost partner options tailored to your needs.
  2. Contact a partner organization: Fill out the tool to reach out to one of these organizations and explain your situation. They’re there to help.
  3. Gather necessary documentation: Be prepared with all required documents when working with an advisor. This will speed up the process and ensure accurate guidance.

In addition, consider attending local workshops or webinars hosted by reputable organizations such as SCORE, SBDC, or other small business support groups.

Consulting an expert can be advantageous in the long run.

So go ahead, and use these valuable resources to navigate PPP loan forgiveness, including the PPP loan forgiveness application, with confidence and ease. If you’re unsure about the PPP loan program or the forgiveness process, don’t worry. Participating lenders can help you begin repaying your loans issued before the PPP program. You can also utilize the SBA direct forgiveness portal or the SBA form 3508EZ or 3508S for partial forgiveness.

Take advantage of the available resources and find help to succeed.

FAQs Concerning How to Get PPP Loan Forgiveness

COVID PPP loans can be fully forgiven if borrowers meet specific criteria, including using at least 60% of the loan for payroll costs and maintaining employee headcount during the covered period. If these conditions are not met, a portion or all of the loan may need to be repaid.

To qualify for forgiveness, use your PPP loan primarily on eligible payroll expenses (at least 60%) and maintain or rehire employees within specified dates. Additionally, submit required documentation such as payroll reports and proof of payment for utilities, rent, or mortgage interest.

The process has been simplified with the SBA Direct Forgiveness Portal. Borrowers with loans under $150,000 can apply directly through this portal by providing necessary information about their business and how they used their funds.

Suppose you don’t meet forgiveness requirements or fail to apply in time (within ten months after your covered period ends). In that case, any remaining balance will convert into a standard term loan with an interest rate of 1%, payable over two years (for the first draw) or five years (for the second draw).


Navigating the maze of PPP loan forgiveness might seem like a monumental task, but remember, you can access help. You can confidently take each step with the right guidance, tools, and resources. 

This comprehensive guide was designed to make the journey easier, breaking the steps into manageable parts. You’ll get the most out of your PPP loan forgiveness by diligently following the advice, maintaining accurate records, and availing assistance from no-cost or low-cost partners through resources like the Small Business Assistance Tool. 

So, take a deep breath, roll up your sleeves, and let’s get to it. Applying for PPP loan forgiveness is right around the corner.

Make informed decisions on how to spend your borrowed funds. Stay updated with SBA guidelines and watch for any changes affecting your business.

Need more help navigating PPP loan forgiveness? Check out the Small Business Assistance Tool.

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