Paycheck Protection Loan Forgiveness

Paycheck Protection Program Loans

A note to our customers on the Paycheck Protection Program

At F&M Trust, we understand that forgiveness for your Paycheck Protection Program (PPP) loan is important to your business. While you may submit your loan forgiveness application to F&M Trust at any time, we encourage you to take the following considerations into account in deciding when to submit your forgiveness applications:

Extended coverage - The covered period of PPP loans was extended from 8 weeks to 24 weeks (168 days) from the date the loan was disbursed. Taking advantage of the full 24 weeks may give you additional time to take steps that will help you achieve full loan forgiveness. Please note that businesses that received the loan prior to June 5, 2020, may elect the 8-week (56-day) or 24-week covered period, while businesses that received the funding after June 5, 2020, must use the 24-week period.

There is no immediate need to apply for PPP loan forgiveness - Current SBA guidance is as follows: As long as a borrower submits its loan forgiveness application within 10 months of the completion of the Covered Period, the borrower is not required to make any payments until the forgiveness amount is remitted to the lender by SBA. If the loan is fully forgiven, the borrower is not responsible for any payments.

Payments will be due after SBA determines eligibility - Current SBA guidance states: If only a portion of the loan is forgiven, or if the forgiveness application is denied, any remaining balance due on the loan must be repaid by the borrower on or before the maturity date of the loan. Interest accrues during the time between the disbursement of the loan and SBA remittance of the forgiveness amount. The borrower is responsible for paying the accrued interest on any amount of the loan that is not forgiven.

Guidance continues to change - The U.S. Department of the Treasury and the Small Business Administration (SBA) continue to issue new guidance. Rest assured, we will share updates with you as new information about the Paycheck Protection Program forgiveness process becomes available. In the meantime, please retain receipts and documentation detailing how your PPP funds were spent.

Have questions or need help? Contact Us.

About PPP Loan Forgiveness

As noted in the CARES Act, as well as the Interim Final Ruling for the Paycheck Protection Program (PPP), all or part of your PPP loan may be forgivable, provided that certain specific criteria relative to the use of the proceeds of the loan are met. On May 15, 2020, the SBA released the Paycheck Protection Program Forgiveness Application. Additionally, on June 17, 2020, the SBA released a three-page "EZ" Paycheck Protection Program Forgiveness Application that is expected to streamline the forgiveness process for a substantial portion of PPP borrowers. 

UPDATE: On January 19, 2021, the SBA released revised loan forgiveness forms for the Paycheck Protection Program. The revised forms include a streamlined forgiveness application for all PPP loans of $150,000 or less. An eligible borrower that received a PPP loan of $150,000 or less should use the new SBA Form 3508S.

For Second Draw PPP loans, all borrowers must certify on their loan forgiveness application that all First Draw PPP loan funds were used for eligible expenses prior to the disbursement of the Second Draw PPP loan. For Second Draw PPP loans more than $150,000, borrowers must submit their loan forgiveness application for the First Draw PPP loan before or simultaneously with the loan forgiveness application for the Second Draw PPP loan.

As noted by the US Department of the Treasury, you will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments within the specified time frame.  You will also owe money if you do not maintain your staff and payroll.

The Paycheck Protection Program Flexibility Act of 2020 now provides additional flexibility for the use of Paycheck Protection Program (PPP) loan proceeds. The bill also changes the time period in which the proceeds can be used as well as the term of any unforgiven portion of the loan. Highlights of the bill include:

  • Extension of the deadline to use PPP loan proceeds from eight weeks to 24 weeks
  • Reduction in the share of funding that must be directed toward payroll costs from 75% to 60%
  • Adjustment of the deadline to rehire furloughed employees

Click Here for additional information and guidelines from the U.S. Department of the Treasury and guidelines on loan forgiveness.

For borrowers completing the Paycheck Protection Program Loan Forgiveness Application, Click Here for the Paycheck Protection Program Forgiveness Application and instructions.

For borrowers eligible to complete the EZ Paycheck Protection Program Loan Forgiveness Application, Click Here for the EZ Paycheck Protection Program Forgiveness application and instructions.

Borrowers with PPP Loan amounts less than $150,000 are eligible to use the new forgiveness application Form 3508S, Click Here for the simplified Paycheck Protection Program Forgiveness application (Form 3508S) and instructions.  

When preparing your application for forgiveness*, please be sure to review the guidelines, instructions and application in its entirety. Fully complete applications accompanied by the required documentation is imperative to be considered for forgiveness. Click Here for a checklist detailing the documentation that must be submitted along with your application. 

*Your SBA loan/lender number can be found at the top of your promissory note.

How to Apply for PPP Loan Forgiveness

1. Carefully review the PPP Loan Forgiveness Guidelines released by the Small Business Administration and US Department of the Treasury.
2. Carefully review and fully complete the SBA PPP Loan Forgiveness Application or PPP Loan Forgiveness Application EZ Form or PPP Loan Forgiveness Application Form 3508S.

3. Gather ALL documentation outlined on the PPP Forgiveness Checklist.
4. Upload the completed application and ALL required documents via our Secure File Transfer (please use 'PPP Forgiveness' in the attention to field). 

* Important Note: In order to be considered for loan forgiveness, it is extremely important that the application is complete and is accompanied by the appropriate documentation. 

F&M Trust continues to monitor the PPP Loan Forgiveness and will provide timely communications to our borrowers in the event new guidance is issued. Additionally, we stand ready to assist in the event you need help navigating this process. Please contact your F&M Trust Relationship Manager with questions at any time. Thank you for your business.


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