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Applying for PPP Loan Forgiveness

Millions of businesses nationwide used the SBA’s Paycheck Protection Program (PPP) loans in 2020 to keep more Americans employed during the COVID-19 pandemic. At LSB, we’re proud to have played a part in helping 681 Iowa businesses maintain payrolls by facilitating more than $78,000,000 in PPP loans. In our state alone, it is estimated that PPP loans supported 796,000 jobs.

For businesses, one of the PPP loans most beneficial features is that the loan is forgivable when used for eligible purposes. Many are now turning their attention to how to obtain loan forgiveness, which we’ll cover below.

Eligibility for Loan Forgiveness

A PPP loan can be 100% forgiven if eligibility criteria is met. First, here’s a quick reminder of what types of expenses PPP loans can be used for:

  • Payroll costs such as salaries, health insurance, sick leave, and retirement plans
  • Mortgage interest
  • Rent
  • Utilities

PPP loan forgiveness is a calculation. Full loan forgiveness is contingent on:

  • Using the loan for eligible expenses (At least 60% must be payroll)
  • Maintaining (or quickly rehiring) employees.
  • Maintaining salary levels.

Employers that made good-faith, written offers to rehire workers that were declined won’t be penalized with a reduced forgiveness amount.

How to Obtain PPP Loan Forgiveness

  1. Timing. A business can apply for loan forgiveness once it has used all of the loan proceeds for which it is asking forgiveness. You can apply any time up to the maturity date of the loan.  
  1. Application. To receive loan forgiveness, you must fill out the SBA's loan forgiveness application. Contact LSB, or your PPP lender, to obtain the appropriate SBA form.
  1. Documentation. You will need to provide documentation that verifies your PPP loan was used for eligible purposes during the covered time period. The following are examples of documents a business may be required to submit, based on how the PPP loan was used.
  • Copies of payroll reports documenting employee compensation during the covered period.
  • Payment receipts or account statements showing employee health insurance premiums.
  • Documentation of employee retirement plan funding.
  • Copies of lease agreements and proof of payment.
  • Statements showing mortgage interest paid.
  • Copies of cancelled checks, statements, or other evidence of utilities paid.
  1. Submission. Provide your completed loan forgiveness application and corresponding documentation to LSB or your PPP lender.
  1. Decision. LSB, or your PPP lender, will notify you of the forgiveness amount paid by the SBA. If part or all of your loan isn’t forgiven, there may be an opportunity to appeal the decision, depending on the circumstances.

If you’re an LSB customer with questions about PPP loan forgiveness, please contact your lender or the LSB business lending team at 800-588-7551. Additionally, detailed information can be found on the SBA website.

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