Paycheck Protection Program (PPP) Loan Forgiveness
Frequently Asked Questions

The term or period of the PPP loan is stated in your promissory note and is either two or five years. 

The PPP loan will accrue interest at an annual rate of 1%.

No payment is due during the deferral period, which ends:

1. On the date when the SBA makes a decision on your application for forgiveness, or;
2. 10 months after the last day of the covered period, if you have not applied for forgiveness.

If your loan is forgiven, any interest accrued during the deferral period is eligible for forgiveness.

There is no penalty for loan pre-payment, however partial or full pre-payment may impact forgiveness.

After the deferral period, any balance that is not forgiven (including any accrued interest on the unforgiven portion) will become a term loan with monthly payments due up to the maturity date and with an annual interest rate of 1%.

For each payment of principal, interest, and/or fees that has not been paid in full within 15 (fifteen) days after its due date, you will be assessed a late charge of $15 or five percent (5%) of the amount due, whichever is greater.

There are no annual or documentation fees associated with the loan. However, if you are late on payments after the deferral period, you may be liable for late fees for any portion of the loan that is not forgiven.

You will receive a loan statement before any payment is due, so you can plan accordingly.

Please refer to the SBA site for more details on the covered period, the term of the loan and other loan forgiveness details.

Your deferral period ends: 

1. On the date when the SBA makes a decision on your application for forgiveness, or;
2. 10 months after the last day of the covered period, if you have not applied for forgiveness.

No payment of PPP loan principal, interest, and fees is due during the deferral period. 

If you received your promissory note before June 5, 2020, it may indicate that your first payment is due 6 months from the date of the note. The PPP Flexibility Act (signed on June 5, 2020) extended the deferral period, so you can disregard the original 6 month period referenced in the promissory note.

You will receive a loan statement before any payment is due, so you can plan accordingly.

Economic Injury Disaster Loans (EIDL) are direct loans, while EIDL advances are grants. The SBA set the maximum EIDL advance at $10,000. EIDL advances will no longer be deducted by the SBA from forgiveness amounts. You may be able to refinance EIDL loans funded between 1/31/2020 and 4/3/2020 with your first PPP loan. You cannot refinance an EIDL loan with a Second Draw PPP Loan. For any questions related to the SBA EIDL program, or to obtain an EIDL loan payoff amount, contact the SBA Disaster Loan Servicing Center at (800) 736-6048 or refer to the SBA.

PPP loans, in whole or in part, are eligible for loan forgiveness if funds were used for certain eligible business expenses. However, if you pay off your loan in full before you apply for forgiveness, you are no longer eligible for loan forgiveness. If part of the loan is not forgiven, you will be responsible to repay the amount not forgiven plus any accrued interest.

If you are considering a change of ownership for your business, which could include a merger, asset sale, stock sale or transfer due to the death of a business owner, please notify Wells Fargo as far in advance of the change of ownership transaction as possible. You will need to request prior approval from Wells Fargo before you initiate the change of ownership and provide a copy of the proposed change of ownership agreement and other relevant documents. If you do not obtain prior approval of any change of ownership, it will be considered a default event and may affect your ability to apply for PPP loan forgiveness.

To contact us about a change in ownership if you are a Wells Fargo Business Online^® user or a Wealth & Investment Management customer, please call 1-844-304-8911. We will work with you to complete the process as quickly as possible, but we cannot make any assurances regarding the exact timing for completion of your request, due to the many variables involved.

Providing the requested documentation and responding to questions quickly ensures the best outcome. We anticipate that it will likely take a minimum of 30 days to fully complete the request. The timeframe will depend on our evaluation, your responsiveness during each step of the process, and applicable SBA requirements.

To be eligible for loan forgiveness, the funds must be used for eligible costs incurred or paid during the covered period. You can choose a covered period of any length between 8-weeks (56 days) and 24-weeks (168 days), beginning on the date you received the loan proceeds.

Cost include:

• Eligible payroll costs, including compensation to owners and employee benefits
• Interest payments on business mortgage obligations on real or personal property, where the mortgage originated before February 15, 2020, (but not any payment of principal or prepayment of interest)
• Business rent or lease payments for real or personal property, where the rent or lease agreement was in force before February 15, 2020
• Business utility payments for a service such as electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020

Additional eligible costs were added as part of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, signed into law on December 27, 2020. These eligible costs are retroactive to any previous unforgiven PPP loans and include:

• Covered operations expenditure. Payment for any software or cloud computing service that facilitates business operations, product or service delivery, human resources, or accounting, among other things.
• Covered property damage cost. Cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance.
• Covered supplier cost. Expenditure to a supplier of goods for the supply of goods that are essential to operations when the expenditure is made and is made pursuant to a contract, order, or purchase order in effect prior to taking out the loan. With respect to perishable goods, the contract, order, or purchase order must be in effect at any time during the covered period.
• Covered worker protection expenditure. Operating or capital expenditure to facilitate the adaptation of business activities to comply with requirements or guidance issued by federal, state, or local authorities in relation to COVID-19, including personal protective equipment.

At least 60% of your total forgivable amount must be used for allowable payroll costs.

Refer to the SBA for a full list of eligible costs that can be forgiven under a PPP loan.

The covered period is the period in which loan funds must be used to qualify for loan forgiveness. You can choose a covered period of any length between 8-weeks (56 days) and 24-weeks (168 days), beginning on the date you received the loan proceeds.

Funds must be used for eligible costs incurred during the covered period. 

Payroll costs for the covered period must be paid or incurred during the period to be eligible. If payroll costs are incurred during the last pay period within the covered period selected, but paid after the end of the covered period selected (but on or before the next regular payroll date), these payroll costs will still be eligible for forgiveness. (For example, this may happen when your pay cycle ended on the payday of Friday, October 2, but the covered period selected ended on October 1.)

Eligible payroll costs include the following, if paid or incurred during the covered period:

• Gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or sick leave, not including leave covered by the Families First Coronavirus Response Act), and allowances for dismissal or separation;
• Payments for employer contributions for employee health insurance, including employer contributions to a self-insured, employer-sponsored group health plan, but excluding any pre-tax or after-tax contributions by employees;
• Payments for employer contributions to employee retirement plans, excluding any pre-tax or after-tax contributions by employees;
• Payments for employer state and local taxes assessed on employee compensation (such as state unemployment insurance tax), excluding any taxes withheld from employee earnings;
• Payroll costs may include bonus and hazard pay, and may include salaries paid to furloughed employees.

Limitations for individual employees

The total amount of cash compensation eligible for forgiveness may not exceed a pro-rated annual salary of $100,000. This means the maximum you can claim for cash compensation is $46,154 for any individual employee during a 24-week covered period - the maximums are lower for periods of less than 24 weeks.

Eligible payroll costs are limited to employees whose principal place of residence is the United States. Payments to independent contractors are not eligible. 

These caps relate to maximums that you can claim for cash compensation. In addition, borrowers may claim non-cash compensation for employer contributions for employee health insurance; employer contributions to employee retirement plans; and state and local taxes assessed on employee compensation, as explained in these FAQs.

Limitations for owner-employees, self-employed, and general partners 

Compensation for owner-employees, self-employed individuals and general partners are also eligible for loan forgiveness based on certain PPP compensation formulas, and based on their business type. 

For PPP, an owner-employee is defined as an owner who is also an employee (including where the owner is the only employee). Owner-employees with a less than 5% ownership stake in a C-corps or S-corps are not subject to the owner-employee compensation limitation. 

Owner compensation falls under “Payroll costs”, and for a 24-week covered period it is capped at the lesser of 2.5 months of $100,000 annualized ($20,833) or 2.5 months of compensation, in the year that was used to calculate the loan amount (2019 or 2020) across all businesses in which they have an ownership stake - the maximums are lower for periods of less than 24 weeks. The PPP compensation formulas varies based on business type, as explained: 

For self-employed individuals

If filing IRS 1040 Schedule C (or Schedule F), forgiveness is capped at 2.5 times the monthly net profit/loss in the year that was used to calculate the loan amount (2019 or 2020), as shown on Schedule C, line 31 (or Schedule F, line 34). Note that if your net profit in the year that was used to calculate the loan amount (2019 or 2020) was a net loss, the forgiveness amount will be zero.

For general partners

Forgiveness is capped at 2.5 months x the monthly self-employment earnings in the year that was used to calculate the loan amount (2019 or 2020) and as shown on IRS 1065 Schedule K-1 line 14a (reduced by Sec. 179 deduction, unreimbursed partnership expenses, and depletion from oil and gas properties) and multiplied by 0.9235, subject to a maximum of $20,833 per owner for a 24-week covered period - the maximums are lower for periods of less than 24 weeks. Only compensation paid during the covered period is eligible for loan forgiveness. Documentation of such payments do not need to be provided to the lender.

No additional forgiveness is available for retirement or health insurance contributions for self-employed individuals or general partners. 

If you are in a general partnership and did not submit 2019 IRS Form 1065 K-1s when you initially applied for the PPP loan, you will need to include it with your forgiveness application. 

For owner-employees of S-corps

The employee cash compensation of an S-corp owner-employee, defined as an owner who is also an employee, is also eligible for loan forgiveness up to a maximum of 2.5 months x their monthly employee cash compensation in the year that was used to calculate the loan amount (2019 or 2020). As explained previously, for a 24-week covered period the maximum forgiveness is $20,833 per owner - the maximums are lower for periods of less than 24 weeks.

You can also claim forgiveness for payments for employer state and local taxes paid by the borrower and assessed on the owner-employee’s compensation, and for employer retirement contributions to owner-employee retirement plan capped at the amount of 2.5x their monthly employer retirement contribution in the year that was used to calculate the loan amount (2019 or 2020). 

These eligible non-cash compensation payments should be included on lines 7 and 8 of PPP Schedule A, Form 3508 or line 1 of Form 3508EZ, and do not count toward the $20,833 cap per individual owner. If you use Form 3508S, you will enter all eligible payroll and nonpayroll costs on a single line. 

Employer contributions for health insurance are not eligible for additional forgiveness for S-corp employees having at least a 2% stake in the business. 

To claim forgiveness, you must submit payroll documents detailing cash compensation paid to owner-employee(s) during the covered period selected, up to the eligible amount stated previously. Payments other than for cash compensation should be included on lines 6 through 8 of PPP Schedule A of the loan forgiveness application and do not count toward the $20,833 cap per individual. 

For owner-employees of C-corps

The employee cash compensation of a C-corp owner-employee, defined as an owner who is also an employee, is eligible for loan forgiveness up a maximum of 2.5 x their monthly employee cash compensation in the year that was used to calculate the loan amount (2019 or 2020). For a 24-week covered period the maximum forgiveness is $20,833 per owner - the maximums are lower for periods of less than 24 weeks.

You can also claim forgiveness for payments for employer state and local taxes paid by the borrower and assessed on owner-employee compensation, for the amount paid by the borrower for employer contributions for owner-employee health insurance, and for employer retirement contributions to owner-employee retirement plan capped at the amount of 2.5x their monthly employer retirement contribution in the year that was used to calculate the loan amount (2019 or 2020). 

To claim forgiveness, you must submit payroll documents detailing cash compensation paid to owner-employee(s) during the covered period selected, up to the eligible amount stated previously. Payments other than for cash compensation should be included on lines 6 through 8 of PPP Schedule A, of Form 3508 or line 1 of Form 3508EZ, and do not count toward the $20,833 cap per individual. If you use Form 3508S, you will enter all eligible payroll and nonpayroll costs on a single line.

In all cases

Owner compensation for a 24-week covered period is capped $20,833 (not to exceed 2.5 months of compensation in the year that was used to calculate the loan amount (2019 or 2020) across all businesses in which they have an ownership stake - the maximums are lower for periods of less than 24 weeks. Note that owner-employees with less than 5% ownership stake in C-or S-corps are not subject to these caps, but are still subject to the general employee limitation of $46,154 per employee during a 24-week covered period - the maximums are lower for periods of less than 24 weeks.

These caps relate to maximums that you can claim for cash compensation. In addition, borrowers may claim non-cash compensation for employer contributions for employee health insurance; employer contributions to employee retirement plans; and state and local taxes assessed on employee compensation, as explained in these FAQs.

For employees

Health care and retirement benefits paid or incurred during the covered period are eligible for forgiveness as payroll costs. Expenses paid by employees for such benefits are not eligible for forgiveness. Expenses for future periods that are accelerated into the covered period are also not eligible for forgiveness.

For self-employed individuals and general partners

Employer health insurance contributions and employer retirement contributions made on behalf of self-employed individuals or general partners are not eligible expenses.

For owner-employees of S-corps

Employer health insurance contributions are not included for owners (and their family members) having at least a 2% stake of an S-corp. Employer retirement contributions made on behalf of an owner-employee of an S-corp are eligible and do not count toward the cash compensation cap of $20,833 per individual, and are capped at the amount of 2.5x their monthly employer retirement contribution in the year that was used to calculate the loan amount (2019 or 2020).

For owner-employees of C-corps

Employer health insurance contributions and retirement contributions are eligible expenses. Retirement costs are capped at 2.5 x monthly employer retirement contribution in the year that was used to calculate the loan amount (2019 or 2020). These payments do not count toward the $20,833 cap per individual.

Yes.

If you are not able to operate or are operating at a limited capacity when the PPP loan proceeds are received, you may choose to pay employees who are not able to work. This may help you maximize loan forgiveness, as current SBA guidance states that at least 60% of loan forgiveness must be attributable to payroll costs.

You must exclude the following:

• Compensation to an employee whose principal place of residence is outside of the United States
• Compensation to an independent contractor (1099). Independent contractors do not count as employees within PPP.
• Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116–127)

Also, the compensation of any individual employee is capped at an annual salary of $100,000, which translates to $46,154 per employee during a 24-week covered period - the maximums are lower for periods of less than 24 weeks. 

For a 24-week covered period, the maximum amount of loan forgiveness you can claim as compensation for owner-employees, self-employed individuals and general partners is the lower of 2.5 months of compensation earned in the year that was used to calculate the loan amount (2019 or 2020) or $20,833, which is the 2.5-month equivalent of $100,000 per year - the maximums are lower for periods of less than 24 weeks. 

For other limitations, please see what types of payroll costs are eligible for loan forgiveness.

Remember, in order to be eligible for 100% loan forgiveness, at least 60% of the PPP loan must be used for eligible payroll costs.

If you apply early, before the end of the covered period, the same pro-rated maximum applies. This means if you apply after the 16th week (as an example), the maximum you can claim for cash compensation for any individual employee will be $100,000/52 x 16 weeks = $30,769.

These caps relate to maximums that you can claim for cash compensation. In addition, borrowers may claim non-cash compensation for employer contributions for employee health insurance; employer contributions to employee retirement plans; and state and local taxes assessed on employee compensation, as explained in the FAQs.

Eligible nonpayroll costs include:

• Interest payments on business mortgage obligations on real or personal property, where the mortgage originated before February 15, 2020, (but not any payment of principal or prepayment of interest)
• Business rent or lease payments for real or personal property, where the rent or lease agreement was in force before February 15, 2020
• Business utility payments for a service such as electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020

Additional eligible costs were added as part of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, signed into law on December 27, 2020. These eligible costs are retroactive to any previous unforgiven PPP loans and include:

• Covered operations expenditure. Payment for any software or cloud computing service that facilitates business operations, product or service delivery, human resources, or accounting, among other things.
• Covered property damage cost. Cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance.
• Covered supplier cost. Expenditure to a supplier of goods for the supply of goods that are essential to operations when the expenditure is made and is made pursuant to a contract, order, or purchase order in effect prior to taking out the loan. With respect to perishable goods, the contract, order, or purchase order must be in effect at any time during the covered period.
• Covered worker protection expenditure. Operating or capital expenditure to facilitate the adaptation of business activities to comply with requirements or guidance issued by federal, state, or local authorities in relation to COVID-19, including personal protective equipment.

To be eligible, nonpayroll costs must be paid during the covered period, or incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period.

Self-employed individuals must have claimed or be entitled to claim a deduction for these nonpayroll expenses on your Form 1040 Schedule C (or Schedule F) in order to claim them as expenses eligible for loan forgiveness.

Rent payments to a related party are eligible for loan forgiveness, but limited to no more than the amount of mortgage interest owed on the property during the Covered Period that is attributable to the space being rented by the business. 

While rent or lease payments to a related party may be eligible for forgiveness, mortgage interest payments to a related party are not eligible for forgiveness.

For home-based businesses, you may only include the share of covered nonpayroll expenses that were deductible on your tax filings in the year that was used to calculate the loan amount (2019 or 2020).

Forgiveness is based in part on maintaining employees and maintaining wages paid, or rehiring and reinstating employee wage levels, if previously reduced. To maximize forgiveness, you may choose to rehire and restore wages sooner to increase eligible payroll costs that fall into the covered period. 

If you had a reduction in full-time equivalency (FTE) or wage level, your forgiveness amount may be reduced. You may be exempt from these reductions if you restored FTE and wage levels on or before December 31, 2020 (or, for a PPP loan made after December 27, 2020, the last day of the Covered Period). These two types of reductions and exemptions, including Safe Harbors are explained in the Safe Harbor FAQ.

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID related safety requirements.

Loan forgiveness may be reduced if the number of average weekly FTE employees during the covered period was less than during the FTE reduction reference period selected.  

You can select an FTE reduction reference period of either: 

• February 15, 2019 to June 30, 2019; or 
• January 1, 2020 to February 29, 2020; or 
• For seasonal employers, either of the preceding periods or a consecutive 12-week period between May 1, 2019 and September 15, 2019

You are exempt from such a reduction if the FTE Reduction Safe Harbor applies. Safe Harbors are explained in the Safe Harbor FAQ.

You may be exempt from these reductions if you restored FTE on or before December 31, 2020 (or, for a PPP loan made after December 27, 2020, the last day of the Covered Period).

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID related safety requirements.

Full-time equivalency (FTE) employee generally means an employee who works 40 hours or more, on average, each week. For part-time employees who work less than 40 hours, calculate their FTE as a proportion of 40 hours. For example, if an employee worked 32 hours per week on average, the employee should be counted as 0.8 FTE. Alternatively, SBA offers a simplified method that assigns all part-time employee as 0.5, if that is preferable.

Only employees whose place of residence is in the United States should be included.

When counting FTE reductions, you will not be penalized for: 

• A position for which you made a good-faith, written offer to rehire an employee during the covered period selected and the offer was rejected – subject to certain requirements
• An employee who was fired for cause, voluntarily resigned, or voluntarily requested a reduction of their hours, during the covered period selected
• A documented inability to rehire particular employees or hire replacement employees for unfilled positions
• A documented inability to return to normal business activities because of COVID related safety requirements

In these cases, loan forgiveness will not be reduced.

In general, your loan forgiveness is reduced by the same percentage as the percentage reduction in FTE employees. This is calculated by comparing the average weekly FTE employees during the covered period with the FTE reduction reference period selected. 

For example, if you had 10.0 FTE employees during the FTE reduction reference period and this declined to 8.0 FTE employees during the covered period, the percentage of FTE employees declined by 20%, and therefore only 80% of otherwise eligible expenses will be forgiven.

You are exempt from such a reduction if the FTE Reduction Safe Harbor applies. Safe Harbors are explained in the Safe Harbor FAQ. 

You may be exempt from these reductions if you restored FTE on or before December 31, 2020 (or, for a PPP loan made after December 27, 2020, the last day of the Covered Period). These types of reductions and exemptions, including Safe Harbors are explained in the Safe Harbor FAQ.

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions, as explained in the Safe Harbor FAQ.

When calculating FTE reduction, you must include all employees (including those earning more than $100,000).

If you've terminated an employee during the covered period, your FTE count will be impacted if you don’t rehire them or don’t have an exemption reason. If an employee was terminated for cause, voluntarily resigned, or voluntarily requested a reduction of hours, you may count that employee at the same FTE level as before.

The Safe Harbor exempts or protects you from the reduction in loan forgiveness due to decrease in FTE employee levels. You are exempt from the reduction in loan forgiveness if both of the following conditions are met:

• You reduced FTE employee levels between February 15, 2020, and ending April 26, 2020; and 
• You then restored FTE employee levels on or before December 31, 2020 (or, for a PPP loan made after December 27, 2020, the last day of the Covered Period).
  

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID related safety requirements.

No. If you offered to rehire or offered to restore the employee’s hours at the same salary or wages, you will not have an FTE reduction for that employee.

In calculating your PPP loan forgiveness amount, you may exclude any reduction in FTE employee headcount attributable to a particular employee if:

• You made a good faith, written offer to rehire or restore hours (as applicable) during the covered period;
• The offer was for the same salary or wages and the same number of hours;
• The offer was rejected;
• You maintain records documenting the offer and rejection; and
• You inform the state unemployment insurance office of the rejected offer within 30 days

You may also be exempt from these reductions if you can document that you are not able to rehire employees or hire replacement employees for unfilled positions or cannot return to normal business activities because of COVID related safety requirements.

Loan forgiveness may be reduced when there was a reduction in an employee’s salary or wages from January 1, 2020 to March 31, 2020, (the salary reduction reference period) in excess of 25%, unless an exception applies. There is a salary or hourly wage reduction safe harbor if you restored salary/wage levels on or before December 31, 2020 (or, for a PPP loan made after December 27, 2020, the last day of the Covered Period).

For each person employed during the covered period selected, start with the employee’s average annual salary or hourly wage during the covered period selected, and calculate whether that employee had a reduction in excess of 25% compared to the salary reduction reference period. Do not count the salary reduction for employees who were already counted in the FTE reduction.

For more details on the salary reduction calculations, please refer to the directions on page 4 of Form 3508 Loan Forgiveness Application Instructions. No salary reduction calculations are required if you’re using Form 3508S or Form 3508EZ.

This salary reduction penalty does not apply for any employee who was paid more than an annualized equivalent of $100,000 in any pay period in the year that was used to calculate the loan amount (2019 or 2020). 

In summary, if the average annual salary or hourly wage for each employee working during the covered period selected was at least 75% of their average annual salary or hourly wage in the salary reduction reference period, there is no salary/hourly wage reduction.

No. If certain employee salaries and wages were reduced between February 15, 2020 and April 26, 2020, (the Safe Harbor period), but those reductions were eliminated on or before December 31, 2020 (or, for a PPP loan made after December 27, 2020, the last day of the Covered Period), you are exempt from any reduction in loan forgiveness due to those reductions in salaries and wages.

On the PPP forgiveness application, you or an authorized representative must certify to all of the following:

• The dollar amount for which forgiveness is requested was used for eligible expenses;
• Understanding the consequences of knowingly using funds for unauthorized purposes;
• Payments for eligible costs for which forgiveness is being requested have been verified;
• The recommended supporting documents have been submitted;
• The information provided in the application and supporting documentation is true and correct in all material respects;
• Tax documents submitted are consistent with those that have been or will be submitted to the IRS; and
• Failure to provide additional information requested by the SBA may result in a determination of loan ineligibility or denial of forgiveness.

For a full description of the certifications, please refer to Form 3508S, Form 3508EZ, or Form 3508 found on the SBA site.

PPP Loan Forgiveness Application Form 3508S (for loans of $150,000 or less) 

SBA 3508S PPP Loan Forgiveness Application and Instructions  

PPP Loan Forgiveness Application Form 3508EZ 

PPP Loan Forgiveness Application Form 3508 

SBA 3508 PPP Loan Forgiveness Application and Instructions

Within the covered period

To be eligible for loan forgiveness, the funds must be used for eligible costs incurred or paid during the covered period. You can choose a covered period of any length between 8-weeks (56 days) and 24-weeks (168 days), beginning on the date you received the loan proceeds. 

Safe harbor

The safe harbor FTE provision gives you until the end of the year to restore employee headcount and wages to February 15, 2020 levels in order to avoid FTE penalties during the forgiveness process. Safe Harbors are explained in the Safe Harbor FAQ.

Deferral period

The deferral period ends: 

1. On the date when the SBA makes a decision on your application for forgiveness, or;
2. 10 months after the last day of the covered period, if you have not applied for forgiveness.

No payment of PPP loan principal, interest, and fees is due during the deferral period. 

If you received your promissory note before June 5, 2020, it may indicate that your first payment is due 6 months from the date of the note. The PPP Flexibility Act (signed on June 5, 2020) extended the deferral period, so you can disregard the original 6 month period referenced in the promissory note.

You will receive a loan statement before any payment is due, so you can plan accordingly.

Once the Wells Fargo PPP loan forgiveness online application is available

Eligible customers will be able to start their loan forgiveness application online and upload the recommended supporting documents.

The only way to apply for forgiveness for a PPP loan from Wells Fargo is either by using the Wells Fargo online forgiveness application (accessible through Wells Fargo Business Online^®) or through the SBA PPP Direct Forgiveness Portal. To facilitate the forgiveness process, the SBA has developed a suite of resources available on their website, including instructional videos designed to guide borrowers through each step of the forgiveness application process. 

Although you can apply for forgiveness at any time, to maximize PPP loan forgiveness, you'll want to make sure you have utilized the funds for eligible costs within the covered period. You'll need to calculate salary reduction conditions for the entire covered period, and should be ready to provide documentation for all your eligible expenses when you complete your application.

Be prepared to provide documentation for all your eligible expenses when you complete your application.

You have until the maturity date of the loan to apply for loan forgiveness. However, there are things you may want to consider before deciding when to apply:

• To get full forgiveness, make sure you have used all your PPP funds for eligible costs. You have up to 24 weeks to do so.
• When you submit a loan forgiveness application and the SBA notifies Wells Fargo of the loan forgiveness amount, or that the loan is not eligible for forgiveness, your payment deferral period will end. At that point, loan payments on any amount not forgiven, including any interest, will become due and you will need to start making monthly payments, if applicable. You will receive a loan statement before any payment is due, so you can plan accordingly.
• If you have repaid your loan in full before submitting a loan forgiveness application, you will not be eligible for forgiveness. Partial repayment may also affect forgiveness.

We will continue to keep you updated on key dates by email and on this site, as you continue through the forgiveness process. If you applied on the SBA's Direct Forgiveness Portal, you can see the status of your forgiveness application through their portal.

The Gross Receipts Reduction Calculation is used to determine whether your business experienced a reduction in gross receipts of at least 25%. This is a requirement for all Second Draw PPP Loans.

If you did not provide this information when you applied for your Second Draw PPP Loan, you will be asked to provide details and supporting documentation when you apply for forgiveness.

To calculate Gross Receipts Reduction, you will be asked to select the Time Period you experienced the 25% reduction in gross receipts in 2020 and identify the corresponding Reference Time Period you wish to use as a comparison. You will need to state the gross receipts amounts for both time periods, as well as provide supporting documentation. Your supporting documentation must match both time periods you chose and substantiate the 25% gross receipts reduction.

For all loans, the appropriate Reference Time Period depends on how long you have been in operation: 

• Unless you meet one of the conditions below, you must demonstrate that gross receipts in any calendar quarter of 2020 were at least 25 percent lower than the same quarter of 2019 OR you may compare annual gross receipts in 2020 with annual gross receipts in 2019 if you were in business in 2019.
• If you were not in business during the first and second quarters of 2019 but were in operation during the third and fourth quarters of 2019, you must demonstrate that gross receipts in any quarter of 2020 were at least 25 percent lower than during either the third or fourth quarters of 2019. 
• If you were not in business during the first, second, and third quarters of 2019 but were in operation during the fourth quarter of 2019, you must demonstrate that gross receipts in any quarter of 2020 were at least 25 percent lower than the fourth quarter of 2019. 
• If you were not in business during 2019 but were in operation on February 15, 2020, you must demonstrate that gross receipts in the second, third, or fourth quarter of 2020 were at least 25 percent lower than the first quarter of 2020. 

Gross receipts are generally defined as:

For a for-profit business, all revenue in whatever form received or accrued (in accordance with the entity’s accounting method, i.e., accrual or cash) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances but excluding net capital gains and losses. These terms carry the definitions used and reported on IRS tax return forms.

Gross receipts do not include the following: 

• taxes collected for and remitted to a taxing authority if included in gross or total income, such as sales or other taxes collected from customers (this does not include taxes levied on the concern or its employees); 
• proceeds from transactions between a concern and its domestic or foreign affiliates; and 
• amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker. 

All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer’s request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts. 

For a nonprofit 501(c)(3) organization, a 501(c)(19) veterans organization, an eligible nonprofit news organization, an eligible 501(c)(6) organization, or an eligible destination marketing organization, gross receipts means gross receipts within the meaning of section 6033 of the Internal Revenue Code of 1986, which is the gross amount received by the organization during its annual accounting period from all sources without reduction for any costs or expenses including, for example, cost of goods or assets sold, cost of operations, or expenses of earning, raising, or collecting such amounts. Thus “gross receipts” includes, but is not limited to: 

• the gross amount received as contributions, gifts, grants, and similar amounts without reduction for the expenses of raising and collecting such amounts, 
• the gross amount received as dues or assessments from members or affiliated organizations without reduction for expenses attributable to the receipt of such amounts, 
• gross sales or receipts from business activities (including business activities unrelated to the purpose for which the organization qualifies for exemption, the net income or loss from which may be required to be reported on Form 990-T), 
• the gross amount received from the sale of assets without reduction for cost or other basis and expenses of sale, and 
• the gross amount received as investment income, such as interest, dividends, rents, and royalties.

Gross receipts of an affiliate (unless a waiver of affiliation applies) are calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate.

There are three PPP loan forgiveness applications, Form 3508S, Form 3508EZ, and Form 3508. You should use the form that best meets your circumstances. 

If you have a loan of $150,000 or less, consider using Form 3508S, this simple form requires you to provide less information and the processing time may also be shorter than other forms.

If you are not eligible for Form 3508S, consider using Form 3508EZ, this form requires fewer calculations, may call for less documentation than Form 3508, and does not require you to reduce your loan forgiveness calculations if you have reduced FTE or salaries. Only consider using Form 3508EZ if you meet one of the following conditions:

Salaries and the number of employees and hours were not reduced during the covered period

You did not reduce annual salary or hourly wages of any employee by more than 25 percent during the covered period compared to the most recent full quarter before the Covered Period. (For purposes of this statement, “employees” means only those employees that did not receive, during any single period during the year that was used to calculate the loan amount (2019 or 2020), wages or salary at an annualized rate of pay in an amount more than $100,000); 

AND

You 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. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if you were unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020 (or for a PPP loan made after December 27, 2020, the last day of the Covered Period). Also, ignore reductions in an employee’s hours that you offered to restore and the employee refused). See 85 FR 33004, 33007 (June 1, 2020) for more details. 

Or 

Salaries were not reduced and unable to return to same level of business activity during the covered period

You did not reduce annual salary or hourly wages of any employee by more than 25 percent during the covered period compared to the most recent full quarter before the Covered Period. (For purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000.);

AND 

You were unable to operate during the covered period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 (or, for a PPP loan made after December 27, 2020, requirements established or guidance issued between March 1, 2020 and the last day of the Covered Period) by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

For further guidance, please refer to the SBA site.

The only way to apply for forgiveness for a PPP loan from Wells Fargo is either by using the Wells Fargo online forgiveness application (accessible through Wells Fargo Business Online^®) or through the SBA PPP Direct Forgiveness Portal. To facilitate the forgiveness process, the SBA has developed a suite of resources available on their website, including instructional videos designed to guide borrowers through each step of the forgiveness application process. You can see the status of your forgiveness application through the SBA's Direct Forgiveness portal if submitted this way.

To help you prepare for the PPP loan forgiveness application, you may want to review the recommended supporting documents. You can also view the latest versions of the PPP loan forgiveness applications, Form 3508S, Form 3508EZ, and Form 3508 on the SBA site.

PPP Loan Forgiveness Application Form 3508S (for loans of $150,000 or less) 

SBA 3508S PPP Loan Forgiveness Application & Instructions 

PPP Loan Forgiveness Application Form 3508EZ 

SBA 3508EZ PPP Loan Forgiveness Application & Instructions

PPP Loan Forgiveness Application Form 3508 

SBA 3508 PPP Loan Forgiveness Application & Instructions

Some of the information, including your Wells Fargo and SBA loan numbers, will be automatically pre-filled in your Wells Fargo PPP loan forgiveness online application.

The only way to apply for forgiveness for a PPP loan from Wells Fargo is either by using the Wells Fargo online forgiveness application (accessible through Wells Fargo Business Online^®) or through the SBA PPP Direct Forgiveness Portal. To facilitate the forgiveness process, the SBA has developed a suite of resources available on their website, including instructional videos designed to guide borrowers through each step of the forgiveness application process. You can see the status of your forgiveness application through the SBA's Direct Forgiveness portal if submitted this way.

There are different documentation requirements for Form 3508S, Form 3508EZ, and Form 3508.

Form 3508S:

If you use Form 3508S, you do not need to submit any documentation in support of PPP loan forgiveness. However, if you are applying for forgiveness for a Second Draw PPP loan, you will be required to provide documentation on your revenue reduction (i.e. reduction in gross receipts), if you did not provide it at the time of your Second Draw PPP loan application. In addition, even if you are not required to submit any documents, you must retain all documents for the required periods and provide them upon request.

Form 3508EZ: 

The documents required with Form 3508EZ are the same as Form 3508, except for the following differences:

• Form 3508EZ does not have a Schedule A.
• The FTE report is not required, unless you checked the second eligibility box on the SBA Checklist for Using SBA Form 3508EZ which can be found on page 1 of the EZ Loan Forgiveness Application & Instructions.

If you submit Form 3508S you must retain all employment records/payroll documentation for four years and all other documentation for three years after the date the loan forgiveness application is submitted to the lender.

If you submit Form 3508EZ or Form 3508, you must retain all such documentation for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such documents upon request. 

In either case, you must also provide documentation independently to a lender to satisfy relevant Federal, State, local or other statutory or regulatory requirements or in connection with an SBA loan review or audit.

You can view the latest versions of the PPP loan forgiveness application on the SBA site. This form will guide you through the information and documentation required for loan forgiveness and will help you estimate your loan forgiveness amount.

The only way to apply for forgiveness for a PPP loan from Wells Fargo is either by using the Wells Fargo online forgiveness application (accessible through Wells Fargo Business Online^®) or through the SBA PPP Direct Forgiveness Portal. To facilitate the forgiveness process, the SBA has developed a suite of resources available on their website, including instructional videos designed to guide borrowers through each step of the forgiveness application process. You can see the status of your forgiveness application through the SBA’s Direct Forgiveness portal if submitted this way.

Although you have until the maturity date of the loan to apply for loan forgiveness, we encourage you to complete your PPP forgiveness application as soon as you are able, as principal and interest will become due when your deferral period ends. If you submit your loan forgiveness application within 10 months of the end of the covered period, you will not have to make any payments of principal or interest on your loan before the date on which the SBA makes a final decision on the loan forgiveness amount.

We will continue to keep you updated on key dates by email and on this site, as you continue through the forgiveness process.

No, PPP Loan forgiveness is not automatic. You will need to apply for forgiveness through Wells Fargo or the SBA PPP Direct Forgiveness Portal. Although you have until the maturity date of the loan to apply for loan forgiveness, we encourage you to complete your PPP forgiveness application as soon as you are able, as principal and interest will become due when your deferral period ends. If you submit your loan forgiveness application within 10 months of the end of the covered period, you will not have to make any payments of principal or interest on your loan before the date on which the SBA makes a final decision on the loan forgiveness amount.

We will continue to keep you updated on key dates by email and on this site, as you continue through the forgiveness process.

Once the application becomes available, Wells Fargo Business Online^® users will see the application link in Account Summary after signing on and expanding each eligible PPP loan account. We will also notify you by email when you are eligible to apply. Be prepared to provide documentation for all your eligible expenses when you complete your application.

Alternatively, you can submit a Forgiveness application through the SBA PPP Direct Forgiveness Portal. To facilitate the forgiveness process, the SBA has developed a suite of resources available on their website, including instructional videos designed to guide borrowers through each step of the forgiveness application process. You can see the status of your forgiveness application through the SBA's Direct Forgiveness portal if submitted this way.

You must apply for PPP loan forgiveness through your PPP lender or the SBA's Direct Forgivenes portal. If you received a PPP loan through Wells Fargo, please do not attempt to submit the application downloaded from the SBA site. Once the application becomes available, Wells Fargo Business Online^® users will see the application link in Account Summary after signing on and expanding each eligible PPP loan account. We will also notify you by email when you are eligible to apply.

Although you have until the maturity date of the loan to apply for loan forgiveness, we encourage you to complete your PPP forgiveness application as soon as you are able, as principal and interest will become due when your deferral period ends. However, there are things you may want to consider before deciding when to apply:

• To get full forgiveness, make sure you have used all your PPP funds for eligible costs. You have up to 24 weeks to do so.
• When you submit a loan forgiveness application and the SBA notifies Wells Fargo of the loan forgiveness amount, or that the loan is not eligible for forgiveness, your payment deferral period will end. At that point, loan payments on any amount not forgiven, including any interest, will become due and you will need to start making monthly payments, if applicable. 
• If you have repaid your loan in full before submitting a loan forgiveness application, you will not be eligible for forgiveness. Partial repayment may also affect forgiveness.

The Wells Fargo PPP loan forgiveness online application includes additional details on the information and documents required for loan forgiveness and will help guide you through the forgiveness application process. Some of the information, including your Wells Fargo and SBA loan numbers, will be pre-filled within your online application. We have created a Loan Forgiveness Preparation Checklist to help you prepare. You’ll want to have all of your recommended supporting documents ready to upload online when you apply.

You can also view the latest version of the PPP loan forgiveness application, on the SBA site.

If you apply for forgiveness for a PPP loan from Wells Fargo by using the Wells Fargo online forgiveness application (accessible through Wells Fargo Business Online^®) your loan numbers will be automatically pre-filled for you in the application. You will not need to have them ahead of time to be able to apply for forgiveness.

If you apply for forgiveness for a PPP loan from Wells Fargo through the SBA PPP Direct Forgiveness Portal you will not need your Wells Fargo loan number nor your SBA loan number to apply.

We will notify you once the online application becomes available and will continue to keep you updated on key dates by email and on this site, as you continue through the forgiveness process.

If you need to make a change, add or replace a document, contact your dedicated associate or relationship manager and they will work with you to complete the necessary updates. Once we submit it to the SBA, you are no longer able to make any changes to your application, including adding or replacing documents. If you want to withdraw your application, you will also need to contact your dedicated associate or relationship manager and they can initiate the process to withdraw your forgiveness application. You will receive an email asking you to sign on to Wells Fargo Business Online^® to access your forgiveness application and confirm your request to withdraw. Your forgiveness application is not considered withdrawn until you confirm online the request to withdraw.

If the SBA asks for additional documents as part of its review, we will notify you and you will be allowed to add additional documents at that time.

If you submitted via the SBA's Direct Forgiveness portal, you can contact the SBA's Direct Forgiveness portal hotline for assistance. You can also withdraw your loan forgiveness application on the SBA Direct Forgiveness portal.

PPP loan forgiveness will be based on your ability to meet the eligibility requirements for loan forgiveness, which includes, but is not limited to:

• Using the funds for eligible business expenses (examples include mortgage interest, rent, lease payments, utilities, covered operations expenditures, property damage costs, supplier costs and worker protection expenditures) during the covered period you selected.
• Submitting a completed PPP loan forgiveness application, including all the recommended supporting documents before the maturity date of your loan.

Once you submit your Wells Fargo PPP loan forgiveness online application, you will receive an email confirmation. For 3508 or 3508EZ applications, a dedicated associate or relationship manager will review your application and work with you to ensure everything is complete and processed efficiently.

Once your application is considered complete, Wells Fargo has 60 days to review your application, including documents, and submit your loan forgiveness application to the SBA. After Wells Fargo submits your loan forgiveness application to the SBA, you will receive an email confirmation. The SBA has up to 90 days to review the application. Wells Fargo will notify you within five business days of receiving any loan forgiveness amount from the SBA, or if the SBA determines that your loan is not eligible for forgiveness. You may appeal the SBA's decision within 30 days.

The amount of loan forgiveness may be up to 100% of the principal amount of your PPP loan, plus accrued interest, if the funds were used for eligible expenses.

For any amounts that are not forgiven, you will be required to begin paying back that amount, plus accrued interest, over the remaining course of the PPP loan (with a loan term of either 2 years or 5 years based on your PPP origination date).

You will receive a loan statement before any payment is due, so you can plan accordingly. 

If you submitted your application through the SBA's Direct Forgiveness portal, you can see the status of your forgiveness application through their portal.

If your application for PPP loan forgiveness is denied, your PPP loan will automatically receive an SBA Loan Review.

If your application for PPP loan forgiveness is only partially approved, an email will be sent to you with instructions on how to request a SBA Loan Review of your Partial Forgiveness decision if you are eligible. It is at your discretion if you want to request a SBA Loan Review of your Partial Forgiveness decision. The SBA reserves the right to review the partial approval decision in its sole discretion.

If you plan to request a SBA Loan Review, you must do so within 30 calendar days of receiving the email or you will not be eligible.

Please note that the SBA Loan Review may determine that you are entitled to forgiveness in an amount less than what Wells Fargo decided (including zero if, for example, it is determined you are ineligible for the PPP loan), an amount more than what Wells Fargo decided, or the same amount as Wells Fargo decided.

If the SBA selects your loan for an SBA Loan Review as a result of your request, please continue to make payments on the remaining balance of your loan. Your loan payments will not be deferred during the SBA Loan Review.

If you are not satisfied with the findings of an SBA Loan Review decision, you may be able to appeal that decision to the SBA Office of Hearings and Appeals (OHA). If your loan is eligible for an appeal, details on how to appeal will be included with the SBA Loan Review decision. For additional details on the SBA Loan Review & Appeal process, please refer to the SBA guidance on Appeals of SBA Loan Review Decisions Under the Paycheck Protection Program.

If you submit your loan forgiveness application within 10 months of the end of the covered period, you will not have to make any payments of principal or interest on your loan before the date on which the SBA makes a final decision on the loan forgiveness amount. Once the SBA makes a final decision, your deferral period is over and you will be required to repay any unforgiven portion of the loan, plus any accrued interest on that portion. You will not be required to pay back any of the forgiven amount and associated interest. Once you are required to start making payments, you will receive a monthly statement, which includes details on when your payment is due and how to make the payment.

If you’d like to make a complete payoff of your PPP loan and are using Wells Fargo Business Online^® or you are a Wealth & Investment Management customer, please call 1-844-304-8911. If you would like a letter confirming the payoff of your loan, you may request one at the time of payment or afterwards using the same contact numbers provided. Customers requesting a complete payoff of their PPP loan will be responsible for paying all outstanding principal as well as any accrued interest. If you pay off your loan in full, before you apply for forgiveness, you are no longer eligible for loan forgiveness.

If you have started making payments towards your PPP loan, but have an outstanding balance, you are still eligible to apply for PPP loan forgiveness. Additionally, any payments made towards your PPP loan balance prior to the date you submit your loan forgiveness application may be returned to you, if loan forgiveness is approved, up to the approved loan forgiveness amount.

More information on SBA PPP loan forgiveness can be found on the SBA site and on the following pages.

PPP Loan Forgiveness Application Form 3508S (for loans of $150,000 or less) 

SBA 3508S PPP Loan Forgiveness Application & Instructions 

PPP Loan Forgiveness Application Form 3508EZ 

SBA 3508EZ PPP Loan Forgiveness Application & Instructions

PPP Loan Forgiveness Application Form 3508 

SBA 3508 PPP Loan Forgiveness Application & Instructions

The only way to apply for forgiveness for a PPP loan from Wells Fargo is either by using the Wells Fargo online forgiveness application (accessible through Wells Fargo Business Online^®) or through the SBA PPP Direct Forgiveness Portal. To facilitate the forgiveness process, the SBA has developed a suite of resources available on their website, including instructional videos designed to guide borrowers through each step of the forgiveness application process. You can see the status of your forgiveness application through the SBA's Direct Forgiveness portal if submitted this way.

Wells Fargo Business Online^® users will see the application link in Account Summary after signing on and expanding each eligible PPP loan account. We will also notify you by email when you are eligible to apply.