Paycheck Protection Program (PPP) Loan Forgiveness
Paycheck Protection Program (PPP) loans are forgivable loans that allow business owners to continue paying their employees during the COVID-19 crisis.
The CARES Act provides for forgiveness of qualified PPP loans, up to the full principal amount of the loan.
If you are a current PPP borrower, please read this important information regarding loan forgiveness. If you have further questions, your loan officer would be happy to guide you through this process.
When can I apply for loan forgiveness?
You may submit a loan forgiveness application any time on or before the maturity date of the loan - including before the end of the covered period - if your business has used all of the loan proceeds for which you are requesting forgiveness.
If you do not apply for loan forgiveness within 10 months after the last day of the covered period, or if the SBA determines the loan is not eligible for forgiveness (in whole or in part), the PPP loan is no longer deferred and you must begin paying principal and interest on the loan. Hawthorn Bank will notify you if this occurs.
How do I apply for loan forgiveness?
Borrowers may apply for loan forgiveness by completing and submitting a Loan Forgiveness Application to Hawthorn Bank. You may need to use one of two forms - the SBA Form 3508 or SBA Form 3508EZ.
Which form should I use?
The shorter 3508 “EZ Form” should typically be used by:
- Borrowers who are self-employed, independent contractors, or sole proprietors who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form
- Borrowers who did not reduce annual salary or hourly wages of any employee by more than 25% during the Covered Period or the Alternative Covered Period AND did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period
If the above qualifications do not apply to you, please use the standard 3508 form.