Paycheck Protection Program Loan Forgiveness

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VCC is now accepting PPP Loan Forgiveness Applications.

Virginia Community Capital (VCC) is here to help you understand Paycheck Protection Program (PPP) loan forgiveness eligibility requirements and get the process started. The information below is based on current PPP Forgiveness Guidelines and they are subject to change.

Important: Where there is money, there are scammers. Paycheck Protection Program (PPP) borrowers should be aware of the fraudsters attempting to take advantage of the pandemic and the hundreds of thousands of small businesses that received these loans. VCC does communicate via email to our PPP borrowers, and most recipients will know the message is from our team or their lender. Still, if you have questions, never hesitate to reach out to us at (804) 344-5484 or [email protected].

How does PPP loan forgiveness work?

First, it is important to review how PPP loans can be used. A summary of acceptable uses of PPP loan proceeds is below. Please check your PPP loan forgiveness application instructions for more detailed information about acceptable uses of PPP loan proceeds.

  • Payroll costs (as defined in the CARES Act)
  • Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
  • Mortgage interest payments (but not mortgage prepayments or principal payments)
  • Rent payments
  • Utility payments
  • Interest payments on any other debt obligations that were incurred before February 15, 2020; and/or refinancing an SBA EIDL loan made between January 31, 2020, and April 3, 2020
  • Covered operations expenditures
  • Covered property damage costs
  • Covered supplier costs
  • Covered worker protection expenditures

Both nonprofit and for-profit PPP loan recipients may be eligible for loan forgiveness, including the full principal amount of the loan and any accrued interest if certain criteria are met. The amount of loan forgiveness will depend, in part, on the total amount spent over the covered period on the costs listed above. Additional guidelines can be found here.

Flexibility for Forgiveness

In early June 2020, the Paycheck Protection Program Flexibility Act (PPPFA) was signed into law. On June 10, 2020, the Small Business Administration and Treasury Department released an interim final rule to reflect changes made by the PPPFA (H.R. 7010). This rule codified several program changes:

  • Confirms that borrowers who use less than 60 percent of their PPP loan amount for payroll costs during the covered period for forgiveness still will be eligible for partial loan forgiveness.
  • Provides a five-year maturity for loans made on or after June 5, 2020, and provides an option for loans made prior to that date to extend maturity from two years to five years at the mutual agreement of the borrower and lender.
  • Extends the loan forgiveness period from eight weeks to 24 weeks. (For loans made prior to June 5, 2020, borrowers may opt to keep the forgiveness period at eight weeks.)
  • Clarifies that if a borrower submits its forgiveness application within 10 months of the end of the loan forgiveness period, the borrower will not have to make any payments on the loan before the date SBA remits the forgiven amount to the lender.

SBA also released a three-page “EZ” and a one-page “Simplified” PPP loan forgiveness applications requiring less documentation and fewer calculations than previously required.

  • Form 3508S applies to borrowers whose PPP Loan Amount is $150,000 or less.
  • Form 3508EZ applies to borrowers whose PPP Loan amount is more than $150,000 and meet one of the following criteria:
    • Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number of hours of their employees (excepting laid-off employees who refused an offer to return).
    • Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.

Where do I start?

Similar to our PPP application process, VCC will require all of our PPP borrowers to submit a complete document package. Required documentation is listed below.

  • Borrowers who received a PPP loan greater than $150,000 can use Form 3508EZ or Form 3508. (If filling out Form 3508, include the representations and certifications and Schedule A.)
  • Borrowers who received a PPP loan of $150,000 or less can use Form 3508S.
  • Signed and checked VCC Bank checklist of supporting documents.
  • All required supporting documentation pertaining to your small business.
  • SECOND DRAW BORROWERS: If not supplied with your PPP loan application, second draw borrowers must provide documentation supporting the 25% revenue reduction requirement with their forgiveness application.

Acceptable applications can be found on VCC’s website or the SBA’s website. Any other SBA-compliant form is also acceptable. Please send all loan forgiveness packages and questions to [email protected].

If you need one-on-one technical assistance in completing the application or you have additional questions regarding PPP forgiveness, we recommend you contact your local Small Business Development Center to set up an appointment.

Please note: The SBA puts the onus on the Borrower to determine eligible use of proceeds, and to document them accordingly. For this reason, VCC is only able to direct the Borrower to guidelines issued by the SBA.

PPP Loan Forgiveness Resources

NOTE: Please download and save documents prior to filling them out and signing. This applies to the following: 3508, 3508EZ, 3508S, and VCC PPP Forgiveness Checklist.