SBA Paycheck Protection Program Forgiveness

To begin the forgiveness application process contact your Business Banker or Treasury Banker directly. The forgiveness forms and corresponding calculators can be found on the right-hand side of this page. Questions about Forgiveness? For your convenience, we've listed some of the FAQs below. 

A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.
Borrowers of Second Draw loans in excess of $150,000 must submit their forgiveness application for the First Draw before or simultaneously with the forgiveness application for the Second Draw, even if the calculated forgiveness amount for the First is zero.
While some exceptions apply, the general process for loan forgiveness is as follows:
  • for either First Draw or Second Draw loans, the borrower must submit a complete Loan Forgiveness Application (SBA Form 3508, Form 3508-EZ, or 3508-S) to their lender (Blackhawk Bank) and any lender application requirements (corresponding Calculator), all of which can be found on the right-hand side of this page
    • NOTE: for Second Draw loan applications in excess of $150,000, the borrower must submit its loan forgiveness application for First Draw before or simultaneously with the Second Draw forgiveness application, even if the calculated amount of forgiveness on the First Draw loan is zero. 
  • the lender has 60 days from receipt of complete application to issue a decision to SBA
  • if the application meets forgiveness criteria, the lender will request payment from SBA
  • SBA reviews forgiveness request and remits the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, not later than 90 days after receiving the request, unless partial or no amount of the loan is eligible for forgiveness
  • the lender will notify the borrower of the forgiveness amount 
  • should only a portion of the loan be forgiven, or if the request is denied, any remaining balance due on the load must be repaid by the borrower on or before the maturity date of the loan 
For loans:
  • $150,000 or less, use Form 3508S; documentation is required for forgiveness, if not provided at time of loan application

  • in excess of $150,000, use Form 3508 or 3508EZ 
    • 3508EZ is the shorter application for those with no reduction in FTE count or employees with 25% greater pay cut of safe harbor for doing so; payroll documentation is required
    • 3508 is the full application for those with FTE reduction and/or 25% or greater pay reductions; documentation is required (ex- payroll, mortgage interest, utilities, covered operations, supplier costs, and PPE expenditures)
      • NOTE: Borrowers of Second Draw loans in excess of $150,000 must submit their forgiveness apploication for the First Draw before or simultaneously with the forgiveness applocation for the Second Draw, even if calculated forgiveness amount for the First is zero
Subject to several important limitations, borrowers are eligible for a forgiveness amount equal to the sum of the following costs incurred or paid during the Covered Period. Examples include:
  • payroll costs, up to $100,000 of annualized pay per employee (ex- salary, wages, commissions, bonuses, paid vacation, hazard pay, parental, family medical or sick leave)
  • payment of health care benefits (ex- group life, disability, vision, dental)
  • payment of state and local payroll taxes
  • mortgage interest payments incurred before February 15, 2020 (not pre-payments or payment of principal)
  • payment of business rent/lease for agreements in place before February 15, 2020
  • business utilities for services in place before February 15, 2020 (ex- electric, gas, water, transportation, telephone, internet)
  • eligible nonpayroll costs cannot exceed 40% of the loan forgiveness amount and include items such as: 
    • covered operations expenditures (ex- software or could computing service, the processing, payment, or tracking of payroll expenses, accounting or tracking of supplies/inventory)
    • covered property damage costs
    • covered supplier costs
    • covered worker protection expenditures (ex- PPE, sneeze guard/barriers, air filtration system, or other COVID compliance-related expenses)
Yes. Forgiveness is capped at 2.5 months' worth (2.5/12) of an owner-employee or self-employee individual's 2019 or 2020 compensation, up to a max of $20,833 per individual in total across all businesses. The individual's total compensation may not exceed $100,000 on an annual basis, as pro-rated for the period during which the payments are made or the obligation to make the payments is incurred. 
  • For example, for borrowers that elect to use an eight-week Covered Period, the amount of loan forgiveness requested for owner-employees and self-employed individuals' payroll compensation is capped at eight week' worth (8/52) of 2019 or 2020 compensation (i.e. approx. 15.38 percent of 2019 or 2020 compensation) or $15,385 per individual, whichever is less, in total across all businesses
In general, costs paid or incurred during the Covered Period are eligible for forgiveness. Further, expenses that were incurred during the Covered Period and paid at the next due date, even if outside the Covered Period, would also qualify. If you paid the expense during the Covered Period OR incurred the expense and then paid the expense at the next regular due date, it is an allowable expense (with some limitations)
The Covered Period begins on the date the loan was originally disbursed. It ends on a date selected by the Borrower that is at least 8 weeks following the date of loan disbursement and not more than 24 weeks after the date of loan disbursement.
  • For example, if the Borrower received their PPP loan proceeds on Monday, April 20, 2020, the first day of the Covered Period is Monday, April 20, 2020 and the final day of the Covered Period is any date selected by the Borrower between Sunday, June 14, 2020 and Sunday, October 4, 2020.
Examples of supporting documentation could include: 

Payroll (provide documentation for all payroll periods that overlapped with the Covered Period or the Alternative Payroll Covered Period):

  • Bank account statements or third-party payroll service provider reports which document the amount of cash compensation paid to employees
  • Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
    • Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
    • State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state

Non-payroll (for expenses that were incurred or paid during the covered period and showing that obligations or services existed prior to February 15, 2020):

  • Copy of lender amortization schedule and receipts verifying mortgage interest payments, or lender account statements
  • Copy of current rent/lease agreement and receipts or cancelled checks verifying eligible payments
  • Copies of utility payments invoices and receipts, cancelled checks or account statements
Generally speaking, a reduction in FTE employees during the Covered Period would reduce the loan amount by the same percentage. However, a reduction in an employee's salary or wages in excess of 25% will result in a reduction of the loan forgiveness amount (with a few exceptions). The borrower may exclude any reduction in FTE employee head count as long as: 
  • the borrower made a good faith, written offer to restore reduced hours
  • the offer was for the same salary or wages
  • the offer was rejected by the employee and the borrower has documentation
  • the employee was fired for cause, voluntarily resigns, or voluntarily requests a reduced schedule during the Covered Period
Full-time equivalent employee is defined as an employee that works 40 hours or more, on average, each week. Those working less than 40 hours are calculated as proportions of a single full-time equivalent and aggregated. Should you need assistance calculating FTEs for forgiveness, please contact your Business Banker or Treasury Banker who are happy to help. 
Yes. A borrower of $50,000 ore less is exempt from any reductions based on reductions in FTE employees, except borrowers that together with their affiliates received First Draw or Second Draw loans totaling $2 million per loan. 
Yes. SBA may review any loan as the Administrator deems appropriate.
Regardless of loan size, SBA may review loans at any time. SBA may review loans for the following, but not limited to:
  • eligibility of loan request
  • eligibility of forgiveness request
  • any records the borrower is required to retain
Yes. If SBA requests additional information about the eligibility of a loan, the loan amount, or forgiveness amount, the SBA will require the lender to contact the borrower in writing or SBA may also request information directly from the borrower. SBA will consider all information provided by the borrower in response to such an inquiry. A borrower may also appeal SBA determination of eligibility. 
No. Congress has clarified that you do not need to consider forgiven loan proceeds into your revenue for tax purposes and allows you to continue to deduct the expenses that were paid with these funds; therefore, there are no elements of the PPP that become taxable
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