PPP Update: Loan Waiver and Loan Repayment | Wendel Rosen LLP


Quick recap: 100% of PPP loans (principal and interest) can be canceled, as long as borrowers have used the money to keep their payrolls at roughly the same levels as before the COVID-19 outbreak and spend their PPP loan in within the framework of the PPP directives.[1]

Forgiveness period

You can submit a loan forgiveness request any time before your PPP loan maturity date, either 2 or 5 years from the date of the loan, depending on the agreement with your lender.

Extended deferral period

The Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”) extended the deferral period for the borrower’s payments of principal, interest and charges on all 6 month PPP loans on the date the rebate amount is remitted by the SBA to the lender. The new guideline, found in SBA FAQ # 52, clarifies that the deferral period extension automatically applies to all loans, without the SBA requiring a formal amendment to the promissory note. .

Note that if you do not apply for a loan forgiveness within 10 months of the last day of your loan forgiveness period, your PPP loan payments are no longer deferred and you must start making payments on your loan forgiveness. your PPP loan.[2]

Loan forgiveness request

You must file a forgiveness request with your lender. The SBA and the Treasury Department have issued three different application forms: Form 3508, Form 3508EZ, and Form 3508S. Choosing the right form will depend on the nature of your business, the amount of the loan, and the downsizing or wages and salaries.[3] Your lender can provide you with any of the three forms, or a lender can use their own equivalent form.

Please check with your lender if they are accepting requests. Some accept requests in batches, others by invitation only, and some lenders do not allow rebate requests until the end of the period covered.

The lender has 60 days to review the borrower’s documentation before submitting it to the SBA for approval. The SBA then has 90 days to review the request and make a decision.

ASB review

The SBA review will include, without limitation, eligibility, need, calculation of loan amount, use of loan proceeds, and calculation of loan forgiveness amount. The SBA said it will automatically review PPP loans over $ 2 million and may reassess its forgiveness of any PPP loan over the next 5 years.

ASB questionnaires

Those with PPP loans in excess of $ 2 million should be aware that the SBA requires certain borrowers to complete questionnaires on the need for PPP loans; see Form 3509 for profit borrowers and Form 3510 for non-profit borrowers. The forms are divided into (i) business (for-profit) or non-profit assessment, and (ii) liquidity assessment. These forms will be administered by the PPP lenders and focus on the good faith certification of the borrower regarding the borrower’s economic need for PPP financing.


[1] See previous articles New Law – Risks, Opportunities and Major Changes to Paycheck Protection Program and New Changes Call for Further Clarifications – SBA & Treasury Issue Guidance on PPP for more information.

[2] The Flexibility Act extended the period covered by 8 weeks at the earliest (i) December 31, 2020, or (ii) 24 weeks from the date of the loan. If you received your PPP loan before June 5, 2020, the Flexibility Act allows the borrower to choose to use a covered period of 8 weeks.

[3] The 3508EZ and the 3508S are shortened versions of the app for borrowers who meet specific requirements.

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