PPP loan Forgiveness Letter (2 Samples)

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PPP loan Forgiveness Letter (2 Samples)


Loans may be forgiven under the CARES Act's Paycheck Protection Program (PPP) provided borrowers utilize the profits to cover their payroll costs and other predetermined obligations.

The Small Business Administration (SBA) is in charge of updating the loan forgiveness application form and instructions. For debts of up to $150,000, PPP borrowers must submit an application for loan forgiveness to the lender that originated the loan, or they may utilize the SBA's online direct forgiveness site.

This manual is intended to assist borrowers in comprehending how their loan forgiveness amount will be determined as well as the general methodology used in the loan forgiveness procedure.

Loan Amount Forgiven

The least amount of the following will be applied to borrowers' loan forgiveness:
  • Your PPP loan sum
  • The maximum amount of loan forgiveness from Step 1 less any deductions from Step 2
  • The amount of loan forgiveness that can be obtained if eligible payroll costs are greater than or equal to 60% of the overall forgiveness (i.e., 0.60 times your allowable payroll expenses)

How do loan amounts change?

The initial loan conditions called for a maximum two-year loan at a 1% interest rate with payments postponed until the date the amount of forgiveness becomes effective is sent to the lender—will take effect. (The loan term is five years for loans made after June 4, 2020. (5 years.)

There are no fees or penalties for early payments.

Terms of First Draw PPP Loan Forgiveness

First Draw PPP loans granted to qualified borrowers are forgiven in full if, within the covered 8–24 weeks after loan disbursement:
  • Maintaining employee and compensation levels,
  • Payroll costs and other qualified expenses are paid for using the loan proceeds, and
  • Payroll expenses consume at least 60% of the profits.

Terms of Second Draw PPP Loan Forgiveness

In the 8 to 24 weeks following loan disbursement, the following conditions must be met for Second Draw PPP loans granted to qualified borrowers to qualify for full loan forgiveness:

Employee and remuneration levels are upheld by the First Draw PPP loan requirements.
Payroll costs and other qualified expenses are paid for using the loan proceeds, and
Payroll expenses consume at least 60% of the profits.

How to apply for loan forgiveness and when to do so?

Once all loan proceeds for which the borrower is requesting forgiveness have been expended, the borrower may submit an application for forgiveness. Before the loan's maturity date, borrowers may submit a request for forgiveness at any time. 

PPP loan payments are no longer deferred and borrowers must start making loan payments to their PPP lender if they do not apply for forgiveness within 10 months after the final day of the covered period.

1. PPP loan Forgiveness Letter Sample

Dear Customer,

First and foremost, I want to express my gratitude for choosing Citizens National Bank to help you obtain a loan through the Paycheck Protection Program (or "PPP"). It is a privilege for us to support you and your company during this trying time. 

We are writing to you to give you an update on the PPP loan forgiveness process. The forgiveness application and associated instructions collectively referred to as the "Forgiveness Application," have been made available by the Small Business Administration (the "SBA").

As you are aware, if the funds are used appropriately and the borrower submits a Forgiveness Application, all PPP borrowers are eligible to have all or a portion of their PPP loan forgiven. 

You must send us the Loan Forgiveness Calculation Form, Schedule A, and the supporting documents listed in Exhibit "A" below for us to forgive your PPP loan.

Borrowers are required to compile the necessary evidence to back up their request for the forgiveness of their PPP loan, as stated in the Forgiveness Application. The list of supporting documentation for payroll costs, full-time equivalent (FTE) employee calculations, and non-payroll costs for the applicable eight-week period is enclosed.

Additionally, we want you to be aware of the specific certifications that you will need to provide with your Forgiveness Application. Due to the volume of applications for forgiveness, we will be processing, we will ask you to provide additional certifications in addition to those required by the SBA when you submit your application. These certifications will state, among other things, that you are aware that it is your sole responsibility to confirm the accuracy of the information.

The sufficiency of your supporting documents and your application for forgiveness. While we make every effort to help our customers by offering as much information as we can, we are not liable for checking the accuracy of the data on the Forgiveness Application or any supporting records.

We anticipate that the SBA will add new guidelines and FAQs to the Forgiveness Application. We anticipate that more information will be made available soon, and we'll do our best to let our borrower base know as soon as it does. 

Additionally, we are aware that Congress is discussing PPP revisions, including forgiveness. Borrowers can learn more about the paperwork needed to be filed and the procedure for getting forgiveness from the Forgiveness Application until then.

All of our clients are urged to peruse the Forgiveness Application and start assembling the appropriate paperwork before submitting a request for forgiveness. It is crucial to adhere to the current guidelines because, if the SBA judges that you did not use the funds for the acceptable expenses, do not maintain the required number of employees, or are not qualified for a PPP loan, it may tell our bank to deny your Forgiveness 

Application. After your "Covered Period" expires and the SBA releases the complete rules and process, we will be able to accept your forgiveness applications. We understand that completing this Forgiveness Application will likely require additional help from a third party due to its complexity. 

If you hire an accountant, lawyer, or another expert to help you, you will be responsible for paying for their services. Unless you told us about them when you applied for a PPP loan, they won't be regarded as an agent under the PPP.

If you have any queries or if there is anything else we can do for you right now, just let us know.

Best wishes.

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2. Sample PPP Loan Forgiveness Letter

Dear [Name]

We are aware of how significant your application for Paycheck Protection Program (PPP) loan forgiveness is to INPIXON FEDERAL. This message certifies the amount of your PPP loan that has been forgiven or paid in full under the note concerning the above-referenced PPP loan number as of April 2, 2021, subject to the terms below.

Here is a final summary of your PPP loan for your convenience after the application for forgiveness has been handled with the U.S. Small Business Administration (SBA) or has been fully paid:
  • Amount of the first loan principal: $80090
  • Amount of Wells Fargo Forgiveness Approved: 80090
  • The U.S. SBA paid a forgiveness principal amount of $349,693.00.
  • Loan Balance (Including Accrued Interest): $ 0.00

Additionally, the U.S. SBA has paid any interest that arose on the principal sum that was forgiven. Please review your PPP loan in your Wells Fargo Business Online® or Commercial Electronic Office® (CEO®), as appropriate, for more information regarding the accrued interest.

You are accountable for the remaining unforgiven portion of a PPP loan if there is still money owed on it. A monthly statement or invoice will serve as another means of communication. The current & total amount(s) owing, the impending payment due date, the current principal and interest amounts, the expected maturity date, and any other significant information regarding your outstanding loan amount are all included in your statement.

Even if your PPP loan has no outstanding balance, it may still be shown in the Commercial Lines and Loans section of Wells Fargo Business Online® or in the Credit Management feature on Commercial Electronic Office® (CEO®), as appropriate.

Please remember that:

Any agreement or obligation that, by its terms, survives the termination of the note, such as reimbursement obligations under any letter of credit or indemnification obligations under a deed of trust or mortgage, is not terminated or released by the borrower's release from its repayment obligations under the note.

We appreciate the chance to serve you and are grateful that you have put your trust in us to handle your business, especially in these turbulent times.

Sincerely,

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