As of June 12, the Small Business Administration (SBA) has awarded 186,000 Paycheck Protection Program (PPP) loans to Illinois businesses, totaling $22 billion.
The deadline to apply for the PPP is June 30, and there is still $127 billion in appropriation available.
Borrowers have 10 months from the end of their covered period to request loan forgiveness. Borrowers should complete and submit their loan forgiveness applications to their lender who then has up to 60 days to submit the forgiveness decision to SBA. SBA then has up to 90 days to remit the forgiveness amount to the lender.
Any amount of loan not forgiven must be repaid before the two-year maturity date, or five-year maturity date for newer loans made after the enactment of PPP Flexibility Act.
Loans may also be partially forgiven due to salary or hourly wage reductions, employee head count reductions or incorrect usage of proceeds.
Expenses eligible for forgiveness include certain payroll costs and nonpayroll costs.
To apply for forgiveness, borrowers must submit SBA Form 3508 or SBA Form 3508EZ, or the lender equivalents.
SBA Form 3508EZ is limited to three “use cases.” These include:
- An individual who is self-employed, an independent contractor or a sole proprietor who had no employees at the time of the PPP loan application;
- A borrower who did not reduce annual salary or hourly wages by more than 25% during the covered period as compared to Jan. 1 through March 31 and did not reduce the number of employees or average paid hours between Jan. 1 and end of covered period; or
- A borrower who did not reduce annual salary or hourly wages by more than 25% during the covered period as compared to Jan. 1 through March 31 and was not able to operate during the covered period at the same level as before Feb. 15 due to federal compliance rules.
Borrowers should also provide documents for payroll verifying eligible cash compensation and noncash benefits payments. Documentation demonstrating the average number of full-time employees on payroll during the elected period is also required.
For nonpayroll expenses, documentation is required verifying existence of the obligations and services prior to Feb. 15 and the eligible payments from the covered period.
All documents must be retained for a period of six years after loan forgiveness.