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If You Received Funds in the First Draw of PPP Loans, It’s Time to Apply for Forgiveness

Many small businesses benefited from Paycheck Protection Program (PPP) loans to keep their business afloat during Covid-19 shut downs. Hawaii has a total of 34,976 businesses that received PPP loans from the Small Business Administration (SBA), with an average loan of $92,178 and an average company size of 10.


The top five industries to receive PPP loans in Hawaii were:

  • Full-service restaurants

  • Offices of real estate agents and brokers

  • Limited-service restaurants

  • Offices of physicians

  • Offices of dentists

All along, businesses were told that at least a portion of the PPP loan would be forgivable but there was a long wait for the forgiveness application. Now the wait is over!

If You Received Funds in the First Draw of PPP Loans, It’s Time to Apply for Forgiveness


Businesses who received funds from the first round of PPP loans are being encouraged to apply for PPP loan forgiveness as soon as possible. The PPP forgiveness process may take several months to complete, which could mean a payment coming due before the SBA has approved your forgiveness application and paid off your loan. If a borrower does not apply for forgiveness within 10 months from the last day of the covered period, then the deferment period ends and the borrower is expected to begin making loan payments to their PPP lender. First draw PPP loan forgiveness terms


First draw PPP loans made to eligible borrowers will qualify for full loan forgiveness if the following things were true during the eight to 24-week covered period following the disbursement of the loan:

  • Employee and compensation levels were maintained

  • The loan proceeds were spent on payroll costs and other qualifying expenses; and

  • At least 60% of the loan was spent on payroll costs.

What you need to know about applying for PPP loan forgiveness

  • Borrowers can apply for loan forgiveness once all funds are used.

  • Borrowers can apply for loan forgiveness up to the maturity date of the loan.

  • Businesses who received loans under $150,000 will not need to submit documents with the loan forgiveness application.

How to apply for PPP loan forgiveness


1. Contact your PPP lender and complete the correct form following the forgiveness application instructions provided by your loan provider. Your lender will know which form to provide you with: the SBA Form 3508, SBA Form 3508EZ, SBA Form 3508S, or a comparable form specific to your lender.


2. If your loan was greater than $150,000, you will need to gather appropriate documents to upload with your forgiveness application, including:


a. Payroll documentation

b. Bank account statements or third-party payroll service provider reports

c. Tax forms

d. Payroll tax filings reported (or that will be reported) to the IRS

e. Hawaii quarterly business and individual employee wage reporting

f. Unemployment insurance tax filings that have been reported or that will be reported

g. Non-payroll expenses

h. All documents showing the amount of any employer contributions to employee health insurance and retirement plans that the borrower counted in the forgiveness amount

i. Business mortgage interest payments

j. Business rent or lease payments

k. Business utility payments


3. Keep the dialog open with your lender to make sure they have received your application and any supporting documents and that they have everything they need from you to submit the application to the SBA.


Your lender will notify you if the SBA decides to review your loan. They are also required to let you know the review decision and to notify you of the forgiveness amount paid by SBA and the date that your first loan repayment will be due, if applicable.


For additional PPP forgiveness information, please visit the SBA Website.


Partnering with Makai HR


Need HR support? We’ve got you covered through HR outsourcing! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long). When choosing a PEO to partner with, there are many things to consider including cost, services and technology solutions.


With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet or phone. We can truly improve your employees work benefits while freeing you up to run your business.


What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!

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