Start planning to get your loan forgiven
If your small business has received a PPP loan, there are specific requirements you’ll need to meet in order to get your loan forgiven. We will update this page with the latest information from the SBA, and provide helpful resources for beginning your loan forgiveness process. Please check back frequently to stay informed and prepare for this next phase of the PPP loan.
Get prepared
While specific guidance has not been given by the SBA or Treasury, you will likely have to provide proof of qualifying expenses, so make sure to keep very good payroll and expense records. Some small businesses may want to consider working with a tax professional or a CPA for help with recordkeeping.
The following actions may increase your likelihood of forgiveness after the eight-week period:
- Keep the PPP funds separate: Consider putting the loan into its own designated account to better keep track of the funds.
- Keep disciplined records: Create account codes or sub-codes so there’s a paper trail for qualified expenses.
- Keep supporting documents: Stay organized with your documentation of PPP fund usage - especially for payroll, interest, rent, and utilities payments.
- Payroll: Retain payroll registers and proof of ACH transfers. If you outsource to a professional employer organization (PEO), save your payroll invoice that shows payroll costs and employee benefits.
- Utilities: Keep invoices and statements for electric, phone, internet, gas and heating providers.
- Rent and mortgage interest: Keep proof of payments.
If you have questions regarding the forgiveness process, talk with your lender. Each bank may have its own forgiveness application process.
Please keep in mind, these are just a few of the things your small businesses may want to consider, but they are by no means all the factors you may need to take into account to qualify for PPP loan forgiveness. Finally, as a PPP lender, Bank of the West can’t offer an opinion on whether the loan of any particular borrower qualifies for forgiveness.
Learn about the application process
Watch a short video about the forgiveness application process at Bank of the West
Are you eligible to complete the EZ application?
There are two types of applications: the EZ application which has fewer calculations, and the standard forgiveness application, which is required for more complex situations. You'll only need to do one or the other.
If you meet the criteria of at least one of the three bullet points below, then you may be eligible for the EZ application process.
- You are self-employed, an independent contractor, or a sole proprietor with no employees.
- You didn't reduce annual salary or hourly wages by more than 25% between Jan. 1 and Mar, 31, 2020, and you didn't make cuts to the number of employees or their hours (some exceptions apply).
- You didn't reduce annual salary or hourly wages by more than 25% between Jan. 1 and Mar, 31, 2020, and you had to reduce business activity due to COVID-19 health laws.
See the full eligibility requirements here.
Not eligible for the EZ application?
If you don't meet the criteria of at least one of the points above, then you'll need to complete the standard forgiveness application. Don't worry, we have created a custom tool we call the Forgiveness Assistant Form to help you complete the standard forgiveness application. Learn more about the Forgiveness Assistant Form in Step #3 and Step #4 of the application process video. You can download the Forgiveness Assistant Form after you receive your email inviting you to apply for forgiveness.
Gathering your documents for loan forgiveness
To apply for the Paycheck Protection Program (PPP) loan forgiveness, you’ll need to provide documents to substantiate how your loan proceeds were used by your business. Many payroll providers are creating custom reports for this purpose, so you may want to check in with yours to see what’s available. If you plan to start gathering documentation on your own, here’s what you’ll need.
1. Payroll Documents
You'll need to provide documents that verify your eligible cash compensation and non-cash benefit payments during the 8 or 24-week loan Covered Period (or Alternative Payroll Covered Period), including:
Bank account statements or third-party payroll service provider reports documenting 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 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.
Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans
2. Full-time Equivalent (FTE) Documents
Note: If you qualify for the EZ application, you may not need to gather the FTE documents.
For the full forgiveness application, you'll need to provide documents showing your average number of FTE employees on payroll per month based on one of the following date ranges of your choice:
- February 15, 2019 and June 30, 2019;
- January 1, 2020 and February 29, 2020; or
- If you're a seasonal employer, either of the previous date ranges or any consecutive twelve-week period between May 1, 2019 and September 15, 2019.
You’ll need to provide Average FTE for this date range when you apply for forgiveness, but your document(s) can cover periods longer than your chosen reference period. These include:
- 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.
If you were unable to return to the previous FTE levels, be prepared to maintain documentation related to any permitted “safe harbor” FTE reduction situations, that include:
- There was an inability to rehire individuals who were employees on February 15 (for example an employee refused a written offer of rehire because they left the area or were concerned about their health status);
- There was an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020 (for example, you placed advertisements that required certain education or work history, and no applicants applied who met that minimum criteria), or;
- You were unable to return to prior FTE levels because your business was not able to operate at the same level of business activity due to compliance with legal requirements established or guidance related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19 (for example local authorities only permitted your restaurant to provide take-out or delivery, or only allowed 50% of the tables to be occupied).
3. Nonpayroll documents
Finally, for any nonpayroll expenses you submit for forgiveness, you’ll want to gather documents showing (1) that these obligations/services existed before February 15, 2020 and (2) eligible payments from the 8 or 24-week loan Covered Period. These include:
Business mortgage interest payments
- 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 from the beginning of the covered period through one month after, verifying interest amounts and eligible payments.
Business rent or lease payments
- 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 beginning of the Covered Period through one month after, verifying eligible payments.
Business utility payments
- Copy of invoices from February 2020 and those paid during the Covered Period, and
- Receipts, cancelled checks, or account statements verifying those eligible payments.
This list applies to the majority of businesses, but your situation may be unique, especially if you are a self-employed. The Paycheck Protection Program Forgiveness Applications (SBA Form 3508 or 3508EZ) covers many special circumstances, provides information on selection of the Covered Period (or Alternative Payroll Covered Period) for payroll, and addresses how to treat FTE Reduction. The SBA also continues to provide updates on forgiveness documentation requirements at SBA.gov.
Organize all the documents you gather and put them in a safe place; the SBA requires you to retain them for six years after your loan is fully forgiven and/or repaid, and to have them available for review in the future if requested.