The most significant benefit of the Paycheck Protection Program is the opportunity for the full amount of the loan to be forgiven. Loan forgiveness is based on payroll costs, rent, utilities, and mortgage interest expenses during the eight-week period following funding of the loan. Here, we have put together a list of resources that will help Pursuit PPP borrowers get organized around loan forgiveness.
Loan forgiveness updates
Congress has passed the Paycheck Protection Program Flexibility Act of 2020, which has meaningful impact on the loan forgiveness aspect of the program. Key changes to the program include:
- The forgiveness period is now 24 weeks (originally 8 weeks)
- The minimum amount that must be spent on payroll is now 60% (originally 75%). This means that you can spend up to 40% on non-payroll costs, such as rent, utilities and mortgage interest. (1% interest will apply to the balance after forgiveness.)
- The loan maturity is now 5 years (originally 2 years)
- The deferral period has been extended so that payments are not required until loan forgiveness has been determined
SBA has not yet provided details on how these changes will be applied to existing PPP loans. We are closely monitoring for this information and will provide updates. For now, you do not need to take any action to take advantage of the updated program.
SBA recently released its Loan Forgiveness Application (SBA Form 3508) which will be used by borrowers to calculate and document their requested loan forgiveness. We encourage you to review this form and the specific guidelines outlined by SBA. You do not need to fill out or submit this form. Pursuit will have an easy-to-use online forgiveness application available in the coming weeks.
Loan forgiveness process
Although the PPP program is governed by SBA, Pursuit made your PPP loan and we will be assisting you in completing the forgiveness application. We will also process it with SBA – all communication about loan forgiveness will go through Pursuit. Here is what you can expect:
- Pursuit will send you access to a Sharefile document upload portal where you will upload documents relevant to loan forgiveness. We will also send periodic reminders to do so.
- We will also send a link to a digital forgiveness application in a few weeks. Until then, there is no action to take in terms of the application on your part.
We expect the rules around forgiveness to evolve and change over the next few weeks and that the forgiveness rules will become clearer and more generous. We encourage you to be patient as you won’t be penalized for waiting to apply for forgiveness!
Where to get assistance with loan forgiveness
We understand that the loan forgiveness process can feel overwhelming. Luckily, there are many resources available that can help.
- First, start with Pursuit’s Loan Forgiveness Guide.
- You can also view our PPP loan forgiveness webinar on-demand. The slides can be viewed here.
- We also encourage you to visit the SBA’s website and review the U.S. Chamber of Commerce summary on the PPP.
Pursuit is available to assist with the rules and processing of your forgiveness application, but we are unable to provide in-depth business advice on loan forgiveness. We recommend that you speak with your accountant, business advisor, or seek assistance from a local Small Business Development Center. (You can locate one near you on the SBA website here).
Please be aware that there is no need to pay a third party “expert” to maximize PPP forgiveness. Be wary of those who claim they are experts in this area, especially as many details have yet to be released by SBA!
SBA and the U.S. Treasury Department have published a variety of resources for borrowers related to PPP forgiveness. We’ve aggregated these resources for you here:
- CARES Act
- PPP Flexibility Act
- Interim Final Rules:
- General Program Guidance (4/2/20)
- Applicable Affiliation Rules (4/3/20)
- Eligibility Criteria for Self-Employed and Independent Contractors (4/14/20)
- Requirements for Promissory Notes, Authorizations, Affiliation, and Eligibility (4/24/20)
- Additional Criterion for Seasonal Employers (4/27/20)
- Disbursements (4/28/20)
- Corporate Groups and Non-Bank Lenders (4/30/20)
- Nondiscrimination and Additional Eligibility Criteria (5/5/20)
- Safe Harbor Regarding Certification of Need (5/8/20)
- Loan Increases (5/13/20)
- Eligibility of Certain Electric Cooperatives (5/14/20)
- Treatment of Entities with Foreign Affiliates (5/18/20)
- Second Extension of Safe Harbor (5/20/20)
- Frequently Asked Questions (6/26/20)
- How to Calculate Loan Amounts
- Loan Forgiveness Application (Full) with Instructions
- Loan Forgiveness Application (EZ) with Instructions
- U.S. Chamber of Commerce Summary