Is Small Business Loan Forgivable? A Comprehensive Guide

Borrowers can apply for forgiveness at any time up to the loan's due date. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, PPP loan payments will no longer be deferred and borrowers will begin making loan payments to their PPP lender. Disaster economic damage loan advance funds will be available a few days after the application is submitted, and this loan advance will not have to be repaid. As an expert in small business loans, I'm here to provide a comprehensive guide on loan forgiveness for those who have used the Paycheck Protection Program (PPP).

Read on to learn more about PPP loan forgiveness through the Small Business Administration (SBA), including when and how to apply for them and what expenses are covered. If you're a small business owner who has taken out a PPP loan, you may be eligible for loan forgiveness. To request forgiveness, you must submit an application through the SBA online portal or through an individual lender. It's important to note that if you don't apply for forgiveness within 10 months after the last day of the covered period, your PPP loan payments will no longer be deferred and you'll have to start making payments to your lender.

The Cares Act orders the SBA to issue regulations that correct any situation where the amount of your PPP loan forgiveness was previously reduced by an EIDL grant. Additionally, if you receive both an EIDL target advance and a PPP loan, your target EIDL advance will not be taxable or deducted from any amount of PPP loan forgiveness. When it comes to loan payments, they are considered a permitted use and include principal, interest and fees. These payments are deferred until the SBA repays you the amount of the forgiveness or, if you don't request forgiveness, for 10 months starting from the end of the period covered by the loan forgiveness.

Any company that normally qualifies for the EIDL program could be eligible for PPP loan forgiveness, including sole proprietors, independent contractors, and private non-profit organizations. Depending on how you apply for PPP loan forgiveness, you may receive a response from the SBA or your lender. In the case of second-option loans, borrowers must demonstrate the required loss of income before they can forgive their loan.

What Expenses Are Covered?

If evidence is needed to forgive a PPP loan, the exact documents required depend on how the loan funds were spent. You don't need to detail how the funds were spent, and if this is your first PPP loan, you don't need to submit any receipts, payroll records, or additional documentation.

Loan forgiveness also requires that the income be used to cover eligible expenses during the period covered, and that at least 60% be used for payroll costs. In addition, your PPP loan money must be spent on eligible expenses during the covered period. These expenses include payroll costs such as salaries and wages; employee benefits; rent; utilities; mortgage interest; and other debt obligations incurred before February 15th 2020. Ultimately, your lender will notify you what part of the loan is forgiven and, if applicable, when your first payment is due.


The Small Business Administration (SBA) guide describes how to get some or all of your PPP loan forgiven, as well as what you should do to take advantage of the new EIDL grant programs and closed centers. Depending on the lender, PPP borrowers must apply for loan forgiveness directly through the SBA or through their individual financial institutions.

Lorrie Tappen
Lorrie Tappen

Incurable travel fan. Lifelong internet buff. Amateur zombie advocate. Friendly web ninja. Proud food junkie.

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