PPP Loan Forgiveness
PPP Loan Forgiveness
As your Paycheck Protection Program (PPP) lender, we want to assist you in preparing and applying for forgiveness for your 2021 PPP loan. The following provides helpful information in determining forgiveness eligibility, terms, how and when to apply, and which application you should use.
What is PPP Loan Forgiveness?
There are two separate and distinct components that make up PPP
- The first is your application for funding
- The second is your application to apply for forgiveness
Borrowers may be eligible for loan forgiveness by the SBA if loan funds were used for eligible payroll costs, payments on business mortgage interest payments, rent, utilities, or employer expenses associated with Covid during either the 8- 24-week covered period.
A borrower can apply for forgiveness once it has used all loan proceeds for which the borrower is requesting forgiveness.
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.
If your loan is approved for forgiveness or partially approved for forgiveness by the SBA, your loan balance plus any accrued interest is paid off and there is nothing else you are required to do.
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What it is
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Formal submission of the loan forgiveness application. | Formal review by Fulton Bank of the loan forgiveness application and required supporting documents. | SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the Lender. |
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Timeframe
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Borrower has up to 10 months from the end of your covered period (typically 8 weeks or 24 weeks from funding) to apply for forgiveness; however, we encourage you to complete your application within 60 days from the date you receive our invitation to apply. | Fulton Bank has up to 60 days to review the completed application and issue a loan forgiveness decision to the SBA. | SBA has up to 90 days from the receipt of Fulton Bank’s loan forgiveness decision to remit the requested forgiveness amount to Fulton Bank. |
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What you do
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Complete the appropriate loan forgiveness application. | Nothing unless Fulton Bank requires additional information or identifies incomplete information on your application. | Nothing unless you disagree with Fulton Bank’s loan forgiveness decision in which case you have 30 days to submit a request to the SBA to review Fulton Bank’s decision. An escalation process is still being finalized by the SBA for these cases. |
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What we do
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Fulton Bank will send a "loan forgiveness application" invitation email to PPP borrowers to initiate the forgiveness process. Upon receipt of your completed application, Fulton Bank will email confirmation of receiving your application. | Review application and supporting documents for completeness. Issue a loan forgiveness decision based on the calculations of payroll and non-payroll when entered in to the application. Fulton Bank notifies you of this decision. | Nothing unless the SBA requires additional information or supporting documents for a particular loan. Fulton Bank notifies you of the forgiveness amount paid by the SBA to Fulton Bank. |
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What the SBA does
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Nothing in this phase. | Nothing in this phase. | Remits requested loan forgiveness amount to Fulton Bank. Reserves right to randomly review any PPP loan in detail. |
Loan Forgiveness Terms:
First Draw PPP Loan forgiveness terms
First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8 to 24 week covered period following loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
- Learn how to calculate revenue reduction and maximum loan amounts (PDF)
When to Apply for Forgiveness
- We will send you an invitation to apply. Our forgiveness application can only be accessed through the invitation email.
- 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.
- For borrowers who received both a first and second draw application, the first draw forgiveness application must be submitted prior to the second draw application.
How to Apply for Forgiveness
- Fulton Bank will send each borrower a secure email, which includes a customized application link. The email will include both the name of the business and the application draw. Our forgiveness application can only be accessed through the invitation email.
- The link will require you to authenticate yourself
- The link will take you to an interactive guide that will help you choose which application you should complete
Which application should I choose?
- SBA Form 3508S - first or second draw borrowers with loans under $150,000
- SBA Form 3508EZ – first or second draw borrowers who did not reduce employee levels, wages, or hours
- SBA Form 3508 – first or second draw borrowers with loans of $150,000 or more
Important Definitions
- Covered Period: 8 – 24 weeks of eligible expenses under the PPP program. Begins the date of your first loan disbursement
- Payroll Costs: average monthly cost of the salaries for you and your employees
- Mortgage Interest Payments: interest paid on a mortgage for property you use as your business
- Rental expense: any amount that is paid in a periodic manner, in order to use property for business purposes. These expenses must be a result of a signed agreement from before February 15, 2020.
- Utilities: electricity, water, gas, sewage, telephone, internet, and transportation costs.
- Covered Operating Expenditures: any business software or cloud computing service that facilitates business operations; product or service delivery; the processing, payment or tracking of payroll expenses; human resources; sales and billing functions; accounting or tracking of supplies, inventory, records and expenses
- Covered Property Damage: cost related to property damage and vandalism or looting due to the public disturbances that occurred in 2020, but cannot have been reimbursed by insurance
- Covered Supplier Costs: costs, including payments made to a supplier of goods for supply that meets the following criteria: is essential to operations of the business: AND payment made pursuant to a contract, order, or purchase order that was either: in effect any time before the covered period, OR for perishable goods only, in effect any time prior to the end of the covered period
- Covered Worker Protection Equipment: operating or capital expenditures to facilitate the change of business activities related to COVID. This may include purchases, maintenance or renovation of assets that create or expand: drive-through window facility; indoor, outdoor, or combined air or air pressure ventilation or filtration system; physical barriers such as a sneeze guard; expansion of additional indoor, outdoor, or combined business space; onsite or offsite health screen capabilities
- Approved in Full: payment remittance by the SBA satisfies your loan agreement with Fulton Bank
- Partially Approved: the SBA remits payment satisfying a portion of your loan agreement with Fulton Bank; we will notify you of the amount and the associated changes to your loan documentation
- Denied: we will notify you of the denial and the associated changes to your loan documentation
Instructions and Documentation to help you prepare
SBA FORM 3508S
SBA FORM 3508EZ
SBA FORM 3508
Application Demonstration
Sample Payroll Documents
Questions about Forgiveness?
Contact us for questions about the process, documentation or your application. Your inquiry will be assigned to a PPP Specialist and he or she will respond as soon as possible.