What Business Owners Need To Know About The Paycheck Protection Program Loan Forgiveness

Preston Rosamond |

The Paycheck Protection Program (PPP) was designed to assist employers in maintaining payroll even when they were shut down or limited by the COVID-19 containment efforts. The most appealing part of the program, perhaps, was the fact that the loans would be eligible for either partial or full forgiveness. While helpful, the program has had many problems and been a source of much confusion for business owners. The Small Business Administration (SBA) recently issued rules that clarify many of the rules. Here are the most important things for business owners to know about PPP loan forgiveness.

When Can You Apply For Loan Forgiveness?

You can apply for forgiveness any time on or before the maturity date of the loan if you have used all of the loan proceeds for which you are requesting forgiveness. You do not have to wait for your coverage period to end if you have already used the money. However, you cannot request forgiveness for loan proceeds that have not yet been used.

How Do I Apply For Loan Forgiveness?

One of the most lauded of the new changes is an easier application form, Form 3508EZ. It is only 3 pages; one page for loan information, one page verifying a number of statements, and one page used to collect voluntary demographic information. Lenders are also allowed to create their own applications. To apply for forgiveness, simply fill out the form and submit it to your lender along with documentation verifying your stated expenses. 

How Long Does It Take For Loan Forgiveness To Be Approved?

Your lender has up to 60 days to review your application and either ask for additional information or documentation or approve forgiveness in whole or in part. The review will include looking at your payroll documentation and the other proof of expenses that you provide.

Once the lender has made their decision, they must submit it to the SBA for review. The SBA has 90 days to conduct its review. Upon completion of their review, the SBA will either approve complete or partial forgiveness or ask for more information. Under current rules, borrowers can repay any unforgiven amounts over 5 years at 1% interest. 

What Is The Maximum Amount That Self-Employed People Can Have Forgiven?

There was confusion previously about how much a self-employed person, owner-operator, or independent contractor could have forgiven through the PPP. Recent guidance changes the cap on forgiveness to $20,833. (1)

What Is Automatic Forgiveness?

The Paycheck Protection Small Business Forgiveness Act is a bill that has been introduced in the Senate that would allow businesses who received PPP loans of $150,000 or less to have them automatically forgiven. All that would be required is a one-page form attesting to the eligibility of the loan for forgiveness. (2)

Can I Still Get A PPP Loan?

If you have not taken out a PPP loan and are interested, you still have time. The deadline to apply has been extended to August 8, 2020, as there is still $130 billion available in the program.  (3)

About Preston

Preston Rosamond is a financial advisor and the founder of The Rosamond Financial Group Wealth Management, LLC with nearly two decades of industry experience. He provides comprehensive wealth management and financial services to individuals, professionals, and families who enjoy simplicity and seek a professional to help them pursue their goals. Preston personally serves his clients with an individual touch and a sincere heart, and his servant’s attitude is evident from the moment you meet him. Learn more about Preston or start the conversation about your finances with him by emailing smrosamond@rosamondfinancialgroup.com or schedule a call with our online calendar.


(1) https://www.forbes.com/sites/allbusiness/2020/07/08/ppp-loan-program-extended-loan-data-released-what-small-businesses-need-to-know/#38b1dbf37f11

(2) https://www.entrepreneur.com/article/353302

(3) https://www.forbes.com/sites/allbusiness/2020/07/08/ppp-loan-program-extended-loan-data-released-what-small-businesses-need-to-know/#5378faa77f11