SBA Publishes Additional Guidelines for PPP Loan Forgiveness

The SBA has published additional guidance regarding PPP loan forgiveness. The guidance attempts to answer continued questions from small businesses about the process of applying for loan forgiveness and how loans will be audited for forgiveness eligibility.

Process of Application for Loan Forgiveness

To apply for loan forgiveness, a borrower must complete and submit the Loan Forgiveness Application (SBA Form 3508 or the specific lender-equivalent form) to its lender. The lender will review the application and make a determination on the amount of eligible loan forgiveness within sixty (60) days of receipt of the complete application. Thereafter, the lender will issue its decision to the SBA. If the lender determines that the borrower is eligible for full or partial forgiveness, it will request payment from the SBA for the specific forgiven amount.  Within ninety (90) days of the lender’s submission of its decision, the SBA will make its own forgiveness determination and will remit the requested amount (or the SBA-approved amount, if different from lender’s request) to the lender, plus any interest accrued through the date of payment.

If, in the course of review, the SBA determines that the borrower was ineligible for a PPP loan at the time it applied, the loan will not be eligible for forgiveness. Whether approved for partial or full forgiveness or determined to have been ineligible, the lender will notify the borrower of the final determination regarding loan forgiveness. If part or all of the loan is denied for forgiveness, the remaining balance due on the loan must be repaid by the borrower within the two (2) year maturity of the loan.

It should be noted that this process applies only to loans that have not been reviewed by the SBA for forgiveness eligibility prior to borrower application for forgiveness and lender submission of the same.

Documentation Required for Application of Forgiveness

The SBA Form 3508 details the documents required to be submitted with the application, documents required to be maintained by the borrower and made available upon request, and documentation the borrower may voluntarily submit with the application.