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Last Updated: August 11, 2020 6:00 p.m. ET
PPP Loan Forgiveness Details
We continue to incorporate the latest SBA guidance and plan to start accepting online PPP Forgiveness requests in the coming weeks. We’ll email you when you can begin to request Forgiveness.
Please check here for updates and visit SBA.gov and Treasury.gov for program details.
The SBA Loan Forgiveness Form 3508EZ Instructions clarify who can use the simpler form to request Forgiveness. You will find summarized criteria below; please go to this link 3508EZ for complete details.
- Are self-employed, an independent contractor, or a sole proprietor and had no employees when you applied for the loan and did not include employee salaries in payroll costs OR
- Did not reduce by more than 25% the salary or hourly wages of any employee earning $100,000 or less annually during the Covered Period or Alternative Payroll Covered Period -- compared to January 1, 2020 through March 31, 2020 -- and did not reduce the number of employees or hours of your employees OR
- Did not reduce by more than 25% the salary or hourly wages of any employee earning $100,000 or less annually during the Covered Period or Alternative Payroll Covered Period -- compared to January 1, 2020 through March 31, 2020 -- and did experience reductions in business activity as a result of health directives related to COVID-19. Business activity reductions could have resulted directly or indirectly from compliance with COVID Requirements or Guidance from federal, state or local government shutdown orders that prohibited you from maintaining the same Full Time Equivalency (FTE) employee levels.
Borrowers that don’t meet Form 3508EZ criteria can use the updated SBA Loan Forgiveness Form 3508.
Tables 1 and 2 of the Schedule A Worksheet on Form 3508 - on pages 3 and 4 - may help you calculate your payroll costs.
- The total annual amount of cash compensation eligible for Forgiveness may not exceed $100,000 per employee. So if you’re using the 8-week Covered Period, you can receive Forgiveness for no more than $15,385 per employee. If you’re using the 24-week period, you can receive Forgiveness for no more than $46,154 per employee.
- For an owner-employee, self-employed individual, or general partner using the 8-week Covered Period, eligible compensation is capped at $15,385 per individual or the 8-week equivalent of their applicable compensation in 2019, whichever is lower. If using the 24-week Covered Period, eligible compensation is capped at $20,833 per individual or the 2.5-month equivalent of their applicable compensation in 2019, whichever is lower.
Owner compensation limits are the same for both Form 3508EZ and full Form 3508.
The SBA Loan Forgiveness Form 3508 Instructions for Borrowers has information on Average FTE calculations on page 4 that may help.
If you meet one of these two rules, then you may be exempt from any loan forgiveness reduction based on a reduction in your FTE employee levels:
FTE Reduction Safe Harbor 1:
If in good faith, you are able to document that you were unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
FTE Reduction Safe Harbor 2:
- You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; AND
- You then restored your FTE employee levels by not later than December 31, 2020 to your FTE employee levels in the pay period that included February 15, 2020.
- Here are additional updates from the SBA that apply to both PPP Loan Forgiveness Application Forms:
- You now have a 24-week Covered Period to spend loan funds starting the date loan funds were deposited into your Chase business checking account. If you were funded prior to June 5, you can still use the 8-week period and Alternative Payroll Covered Period.
- You must use at least 60% of funds for eligible payroll costs to qualify for full Loan Forgiveness.
- You can use up to 40% of funds for eligible non-payroll costs.
- Payments are generally deferred until 10 months after your 8-week or 24-week Covered Period ends.
- If you apply for Forgiveness in the deferral period, you won’t have to start making payments on unforgiven amounts until the SBA provides a decision on your request or remits funds.
- If you do not apply for Forgiveness within the deferral period, you must begin making payments after your deferral period.
Before you request Loan Forgiveness, we recommend you do the following:
- Your documentation should cover your payroll and non-payroll costs incurred or paid during your Covered Period or your Alternative Payroll Covered Period.
Below are the document types you may need to retain or submit when requesting Forgiveness through Chase. The documents required may differ depending on if you are using Form 3508EZ or 3508. For a complete list of documentation required, please see the Loan Forgiveness Application Instructions for Borrowers for Form 3508EZ and 3508.
- Payroll Documents
Verifying the eligible cash compensation and non-cash benefits payments from the Covered Period or the Alternative Payroll Covered Period.
- Bank statements or third-party payroll provider reports noting cash compensation paid to employees
- Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
- State quarterly tax forms
- Cancelled checks or bank statements documenting employer contributions to health insurance and retirement plans
- Non-Payroll documents
Verifying the existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.
- For business utilities:
- Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
- For business rent or lease:
- Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
- For business mortgage interest:
- Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
- FTE documents
Documents supporting the average number of FTE employees (not required if you don’t have employees) during the Covered Period or Alternative Payroll Covered Period and reference period. Documents may include:
- Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation.
- State quarterly tax forms.
- Individual employee wage reporting.
- Unemployment insurance tax filings reported.
- Familiarize yourself with the SBA Loan Forgiveness Form 3508EZ Instructions to understand if you can use Form 3508EZ.
- You are not required to complete Form 3508EZ or 3508 before starting your online Forgiveness request. You will need to provide this information when requesting Forgiveness through Chase online.
- If Form 3508 applies, then you must complete the PPP Schedule A Worksheet before requesting Forgiveness.
- If you have a payroll provider, request a payroll report from them.
We’ll email you when you can request Loan Forgiveness through Chase. Please keep in mind:
- Forgiveness is not automatic, you must request it through Chase.
- Make sure you have a Chase Business Online profile. If you don’t have one, click here.
- You should request Forgiveness only after you have spent all the funds that are eligible for Forgiveness.
- We will pre-fill your standard business information on your Forgiveness request as well as:
- SBA PPP Loan Number
- Chase PPP Loan Number
- Funded PPP Loan Amount
- PPP Loan Disbursement Date
- You will need to certify and document that you used the loan funds for SBA-eligible purposes.
- You’ll be able to check your Forgiveness status online after you submit your request.
- Once the SBA makes a decision, we’ll email you.
It is your obligation, as the borrower, to understand the SBA's rules. Other eligibility requirements may apply.
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