Paycheck Protection Program (PPP) loan forgiveness guidelines

Documents for PPP loan forgiveness

If you were one of the millions of businesses approved for SBA Paycheck Protection Program (PPP) loans, your next step is applying for loan forgiveness.

We’ve compiled the information available based on the latest guidelines from the SBA and the U.S. Department of the Treasury. Check back here often for updates, as the guidance is subject to change regularly. You can also read our frequently asked questions for more information.

Because guidelines are still being provided by the SBA, we recommend waiting 24 weeks after your loan disbursement to apply for loan forgiveness. If you apply before guidance is finalized, you could risk reducing your forgiveness amount.

How to prepare for PPP loan forgiveness

You could be eligible to have up to 100% of your loan forgiven⁠—meaning you won’t have to repay the principal or any interest—if you follow the program guidelines and meet certain criteria.

How to apply for loan forgiveness

At the end of the 24-week period, you can begin to apply for loan forgiveness directly through your lender (Kabbage). You’ll need to provide:

  • Details on how you used your PPP loan.
  • Information on whether your payroll and number of employees stayed consistent throughout the 24-week period.
  • Documentation verifying your responses on the above. 

How the loan forgiveness amount is calculated

To calculate how much of your loan can be forgiven, your lender (Kabbage) will use the responses from your application to:

  1. Determine the maximum amount of possible loan forgiveness. This is based on how much you spent on payroll and other eligible expenses like rent and utilities during the 24-week period. 
  2. Calculate the amount (if any) by which the maximum loan forgiveness will be reduced. If you reduced your number of employees or their wages during the period, your loan forgiveness amount will be reduced.
  3. Understand how much of your loan was used on eligible expenses. Only 40% of your PPP loan can be used for expenses other than payroll for certain business structures. If you used more than 40% on non-payroll expenses, your forgiveness amount will be reduced. 

Once the amount is calculated, your lender (Kabbage) will submit the information to the SBA within 60 days. The SBA will provide a final decision within 90 days of receiving your application from your lender.

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