Paycheck Protection Program (PPP) Loan Forgiveness
On October 8th, the SBA released a new application form, Form 3508S, for requesting forgiveness of PPP loans of $50,000 or less. This is a welcomed change that simplifies the forgiveness process for many PPP borrowers.
For more information about the new Form 3508S, please visit the SBA’s website here.
An Overview of PPP Loan Forgiveness
The Milford Bank is following current program requirements and SBA guidance for the PPP. We will continue to update this page if any legislative changes are made to the PPP or additional SBA guidance is received.
As you prepare to apply for forgiveness, it’s important to determine when you’ll be eligible to apply and when is the right time for you to apply. Keep in mind your PPP loan payments are temporarily deferred in accordance with the terms of the program.
Step 1: Determine if your business is eligible and ready to apply
Only loan proceeds spent on qualified expenses are entitled to forgiveness. Qualified expenses include payroll expenses (minimum 60% of proceeds) and non-payroll expenses (up to 40% of proceeds). For a full list of all qualified expenses and items that may reduce your forgiveness amount, please visit sba.gov.
Your loan proceeds must have been spent (or incurred, per program guidelines) within your covered period, which begins on the date your PPP loan was funded. Submitting a forgiveness application before spending your loan proceeds on qualified expenses could reduce your forgiveness amount. We can only submit your forgiveness request once to the SBA.
Step 2: Gather important documents and digitally organize them
Bank account statements or payroll service reports documenting wages paid to employees
Federal and State payroll tax filings.
Federal tax documentation showing compensation to owners (i.e. Schedule C, 1099, K-1 etc.).
Business mortgage account statements showing interest paid and proof of payment.
Business rent or lease payment statements and proof of payment.
Business utility bills and proof of payment (e.g., electric, gas, water, transportation, telephone or internet).
Your SBA loan number (found on your Promissory Note).
Organize your documents.
Step 3: Prepare by reviewing the SBA application forms
Go to sba.govor www.treasury.gov to determine whether you must use Form 3508 or qualify to use either Form 3508 EZ or Form 3508S.
Work through the applicable SBA Form, together with its supporting schedules and worksheets, and gather any necessary receipts or statements, along with proof of payment.
Step 4: Complete the appropriate PPP loan forgiveness application
Submit the appropriate application and back-up documentation to your Milford Bank Banker.
Step 5: The Milford Bank will review your PPP loan forgiveness application
Once you’ve submitted your application, a Milford Bank representative will reach out if any information or documentation is missing or incomplete. Please watch for emails and phone calls from us.
You will be notified when your complete application is being submitted to the SBA for review and final decision.
Submission of a completed forgiveness application does not guarantee that your application will be approved, in whole or in part, by the SBA.
Step 6: Await SBA approval
The SBA has up to 90 days from their receipt of your forgiveness request to complete their review and render a decision.
We will notify you when we receive a final decision from the SBA.
As the borrower, you’re responsible for understanding the program rules and if your loan qualifies for forgiveness. You should also check the SBA’s site and the Treasury’s site frequently as they are regularly updated.
The Milford Bank cannot provide financial, legal or tax advice, including interpretation of the SBA’s rules or guidance for loan forgiveness, or how they may apply to the circumstances of your business. Please seek financial, legal or tax advice from your financial, legal and/or tax professional(s). Please note that the information above is taken directly from the SBA and/or the SBA Paycheck Protection Program Loan Forgiveness Application, and is posted here solely for your convenience. It is not intended to be, and should not be considered, comprehensive or definitive. Please be sure to consult the SBA and/or U.S. Treasury PPP websites for information related to loan forgiveness and the PPP program. Guidance and rules directly from the SBA and/or the U.S. Treasury will supersede and control over any information below or in any FAQ posted here, to the extent of any conflict.
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