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The PPP loan forgiveness chronicles

Posted by Tasnim Ahmed

July 9, 2021

With Covid-19 raging on for the better part of 2020 and 2021, small businesses were faced with the gargantuan task of staying afloat and supporting their stakeholders and employees. Businesses were blindsided by the pandemic, making it imperative for funds to be rapidly infused in the system to help protect the backbone of the economy. Small business proprietors do not have it easy on a good day, and with such tumultuous times, it was important that the government step in to protect American citizens and businesses.

The Paycheck Protection Program or PPP loans were first announced in April 2020 at the U.S. Senate and House. They kicked off with $349 billion in association with the Coronavirus Aid, Relief, and Economic Security Act, or CARES. The PPP loans came as a lifesaver to many businesses, just in time to provide assistance to people from all sectors and industries.

The first-draw PPP loans will be forgiven, assuming they qualify under the following terms:

  • The business that accepted the loan maintained employees and their compensation amounts.
  • The loans were spent on payroll and other eligible costs.
  • A minimum of 60% of the amount of the loan was spent on payroll.
The second draw of PPP loans will also qualify for forgiveness assuming the business also meets these criteria:

  • Employees and their compensation were maintained in the same way they were for the first-draw PPP loans.
  • The loans were spent on payroll and related expenditures.
  • At least 60% of the loan amount had to be allocated to meeting payroll.
Borrowers can ask for loan forgiveness once the loan proceeds have been completely spent and at any time until the loan matures. PPP loan recipients have up to 10 months from the last day of their covered period to apply for loan forgiveness. For some of the program’s earliest loan applicants in April 2020, an eight-week covered period applies, so the forgiveness deadline comes in mid-July.

To apply for loan forgiveness


Contact your PPP lender for the correct form

There will be many forms for loan forgiveness, so make sure to fill the correct one. Accept the help of your lender to obtain the right one.

Collate your documents

Payroll: Provide all payroll documents from the loan’s covered period. This includes receipts, tax forms, your contributions to health and retirement plans and any other documentation.

Nonpayroll: Gather proof of payment for all debt obligations that existed before the advent of Covid-19 and before you applied for the PPP loan. This includes mortgage payments, rent or lease payments, utility payments and the like.

Submit the documents to your lender

Submit everything to your lender and follow up to see whether additional documents are required.

Stay in touch with your lending partner

Remain in touch with your lending partner during the process to stay on top of your application. The Small Business Administration will review your case and apprise your lender of developments. If you want to contest the SBA’s decision, there is a process you can follow. Note that your lending partner is responsible for notifying you of developments in your PPP loan forgiveness application.


Tasnim Ahmed
Tasnim Ahmed

Tasnim Ahmed is a content writer at Escalon Business Services who enjoys writing on a multitude of subjects that include finops, peopleops, risk management, entrepreneurship, VC and startup culture. Based in Delhi NCR, she previously contributed to ANI, Qatar Tribune, Marhaba, Havas Worldwide, and curated content for top-notch brands in the PR sphere. On weekends, she loves to explore the city on a motorcycle and binge watch new OTT releases with a plateful of piping hot dumplings!

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