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The CARES Act established the Paycheck Protection Program (PPP), that was implemented by the U.S. Small Business Administration (SBA) with support from the Department of Treasury. The program provides loans to qualifying small businesses to pay wages to the employees or make payments towards rent, mortgage, and utilities.

With the PPP Loan intake phase complete, borrowers and lenders need to think about PPP loan forgiveness and/or repayment as applicable. Under the Act, a PPP covered loan is eligible for forgiveness provided the small businesses utilize the stated proportions of loan toward qualifying payroll costs, mortgage payments, rent and utility charges. The borrowers must spend 75% of the loan proceeds toward payroll costs and 25% toward non-payroll expenses for a covered period (or alternate covered period) of 8 weeks. The usage of funds, covered period, and FTE count play a major role in determining the PPP loan forgiveness amount. Just like the program, the PPP Loan Forgiveness Application form went through few revisions since it was first launched.

The original loan forgiveness application (Form 3508) has four parts to it — a) the PPP Loan Forgiveness Calculation form; b) PPP Schedule A; c) PPP Schedule A Worksheet; and d) PPP Borrower Demographic Information form (optional). PPP Schedule A has two complex tables and an FTE Reduction Safe Harbor section (FTE Reduction Exemption), which are used to calculate the PPP Loan Forgiveness amount.

Download this whitepaper to know more about the PPP Loan Forgiveness and how HCL can help banks through the HCL PPP Loan forgiveness Solution.