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If it feels like the Paycheck Protection Program (PPP) and its loan forgiveness program are continuously changing, you are not crazy. They are. To help, we gathered and decoded the most Frequently Asked Questions about the PPP Loan Forgiveness. Have more questions? Contact us; we're happy to help.

Q: Is November 30, 2020, the deadline for borrowers to apply for forgiveness?

No. Your PPP loan’s maturity date is based on your loan’s origination date. So what is the expiration date on each of the three forgiveness applications (3508, 3508EZ, and 3508S)? The SBA is required to display this expiration date to comply with the Paperwork Reduction Act. This expiration date is a temporary expiration date that will be extended.

Q: Which loan forgiveness form should I use?

The form you’ll use for loan forgiveness will ultimately depend on who your lender is and what forms they are using. So before starting the process, confirm with your lender that you are using the right form.

• If you are a sole proprietor, independent contractor, or self-employed individual with no employees and did not include any employee salaries in your Borrower Application, you may use Form 3508EZ.

• If you are a business or nonprofit with employees that did not reduce annual salaries or wages of any employee by more than 25% during the selected period and meets other exceptions, you may use Form 3508EZ.

• If you are a business or nonprofit with a loan amount below $50,000, you may use form 3508S. If, together with any affiliates, you received $2 million or more in PPP loans, then you may not use Form 3508S.

• If you are a business or nonprofit with a loan amount above $50,000 or do not qualify to use Form 3508EZ and 3508S, you may use form 3508.

Q: If I submit my loan forgiveness application on time, do I have to make any payments before the SBA decides my loan forgiveness amount?

As long you submit your loan forgiveness application within 10 months of completing the covered period, you are not required to make any payments before learning the SBA’s loan forgiveness decision.

If the loan is forgiven, you will not be responsible for any payments. If the loan is partially forgiven or denied, any remaining balance will convert to a loan, which may have a maturity of two or five years. You will want to check with your bank on the term of your loan.  

Q: How long after I submit my loan forgiveness application, will I hear about the SBA’s decision?

Your lender has 60 days from the time they receive your complete application to communicate an SBA decision to you.

Q: Are payroll costs that occurred during the Covered Period or the Alternative Payroll Covered Period but were then paid after the Covered Period or the Alternative Payroll Covered Period eligible for loan forgiveness?

Yes, as long as payroll costs were paid on or before the next regular payroll date after the Covered Period or Alternative Payroll Covered Period. What about payroll costs occurring before the Cover Period, but they are paid during the Covered Period? Yes, those are eligible too.

Q: Are non-payroll costs like mortgage costs or electric bills that occurred before the Cover Period or the Alternative Covered Period but were then paid during the Covered Period or the Alternative Payroll Covered Period eligible for loan forgiveness?

Yes. If, for example, your Covered Period ran from April 20 to October 4, and on May 1, you receive and pay an electric bill for services in April, the payment is eligible for loan forgiveness. Other non-payroll costs that are eligible include business mortgage interest costs, business rent or lease costs, and business utility costs. Although business mortgage interest costs are eligible, advance payments of interest on a qualified business mortgage do not qualify for loan forgiveness. What if the non-payroll costs occurred during the Covered Period but were then paid after the Covered Period? Yes, they are also eligible for forgiveness.

Q: Is interest on unsecured credit eligible for loan forgiveness?

No. While you are allowed to PPP loan to pay interest on unsecured credit incurred before February 15, this payment is not eligible for forgiveness.

Q: Are interest payments on refinanced mortgage loans eligible for loan forgiveness?

Maybe. If the original mortgage that was refinanced existed before February 15, 2020, and was then refinanced after February 15, 2020, yes, the interest payments made during the Covered Period are eligible for forgiveness. Similarly, if you had a lease before February 15, 2020, and it was renewed after February 15, 2020, the lease payments made during the Covered Period are eligible for forgiveness.

Q: Should I include the employer health insurance and retirement contributions if I’m self-employed?

No. Since it is already included in your compensation, it is not eligible. This is also true for general partners. If you’re an owner-employee, it might be true. Suppose you are an owner-employee with more than a 5 percent ownership stake in a C- or S-Corporation. In that case, you should not include the employer health insurance and retirement contributions. Still, if you have less than a 5% stake, you can include these expenses.