Applying for Forgiveness for PPP First Draw


PHB CPAs is one of the best CPA firms Franklin, TN, has to offer. So, you know you can count on us for the latest information and advice concerning the SBA Paycheck Protection Program. If you have not applied for forgiveness for the first draw of the SBA Paycheck Protection Program … the clock is ticking.

Be Aware of Changes in Forgiveness Rules

Over time, the SBA has made significant changes to PPP forgiveness. One of the latest changes really simplifies applying for forgiveness if your loan is $150,000 or less. More expenses are now allowable too. These include:

  • Mortgage interest and lease payments
  • Utility costs
  • Interest payments on any other debt obligations incurred prior to Feb. 15, 2020
  • Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020
  • Operations expenses including software, cloud computing, human resources and accounting needs
  • Property damage due to public disturbances during 2020 not covered by insurance
  • Supplier costs pursuant to a contract, purchase order or order for goods that was in effect prior to taking the loan and was essential to operations at the time. And supplier costs for perishable goods can be made before or during the life of the loan.
  • Worker protection expenses like PPE and other adaptive costs to help comply with federal or state health and safety guidelines for COVID-19.

Know the Deadline for Applying for Forgiveness

Everyone’s deadline is different, and the disbursement date determines the deadline for the loan. However, before the borrower can even apply, all loan proceeds for which the borrower is requesting forgiveness must have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan, however, 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.

Compute Your Deadline

Here is an example of how to compute the deadline date for a loan that had a disbursement date of 04/21/2020. If the client applies for a 24-week covered period, the covered period ends on 10/05/2020. Then the borrower has 10 months after the covered period ends to apply for forgiveness. If the borrower does not submit a loan forgiveness application to its lender by 08/05/2021, the borrower must begin making payments on or after 08/05/2021.

Instructions for Applying

Your lender should have instructions and videos to help you apply for forgiveness. You have probably already received several emails from your lender about this already. So, revisit the most current emails (older emails may not reflect the current changes), and see what the process is with your lender.