Loan Forgiveness Information
SBA Paycheck Protection Loan Forgiveness Information.
UPDATE DECEMBER 21st
The stimulus bill passed by Congress on December 21st has now been signed into law. We are happy to report that the bill contains many provisions beneficial to PPP borrowers, including:
- A streamlined process for loans of $150,000 or less, and
- Repeal of the rule requiring the SBA to deduct any EIDL advance amounts from PPP loan forgiveness.
- Favorable tax treatment of PPP proceeds/expenses (consult a tax advisor for clarification).
- PPP second draw for the hardest hit businesses.
Implications by forgiveness status:
- Applications decisioned by the SBA:
- If you received full forgiveness or the full amount of forgiveness requested, no further action is needed.
- If your forgiveness amount was reduced by the amount of an EIDL advance, we expect the balance to repaid by the SBA in full. Details on the process to request repayment have not yet been released by the SBA. If you have already made a loan payment, it is expected to be recovered in full upon repayment of the EIDL balance by the SBA. We will send further communication as soon we receive guidance from the SBA.
- Applications submitted to the bank:
- We will continue to review and process the applications and communicate throughout each step of the process.
- Applications in progress (not yet submitted):
- You can either complete the existing application or cancel your application and reapply when the new streamlined form is released. To cancel your application, please send your request through the contact us link below.
- Application not yet started:
- The bank will temporarily halt the forgiveness application process while we await further guidance from the SBA and the release of the streamlined application. It is our hope that all the details will become clear over the next four weeks at which time we will re-open the forgiveness process.
PPP Second Draw
The legislation also includes the allocation of approximately $285 billion for another round of PPP. Eligible borrowers must have fewer than 300 employees and a reduction in quarterly revenues of at least 25% compared to the same quarter of 2019. The loan amounts will be limited to 3.5 times average monthly payroll for businesses in the restaurant and hospitality industries and 2.5 times payroll for all other eligible industries. The maximum loan amount is $2 million. Additional eligibility restrictions may apply. The bank intends to participate in the second round of PPP funding. We will be in touch with application instructions as soon as we receive further guidance from the SBA.
UPDATE June 26, 2020
The Treasury recently released the latest Paycheck Protection Program Forgiveness Applications. The updated applications take into account changes enacted in the PPP Flexibility Act. Primarily; giving borrowers the option to extend the covered period from 8 to 24 weeks, and reducing the payroll cost requirement from 75% to 60%.
Additionally, a short form application, known as Form EZ, has been provided for Borrowers that meet any one of the following three criteria;
- The Borrower is self-employed, independent contractor or sole-proprietorship with no employees.
- The Borrower did not reduce annual salary or hourly wages of any employee by more than 25% AND did not reduce the number of Full Time Equivalent employees (FTE’s)
- The Borrower did not reduce annual salary or hourly wages of any employee by more than 25% AND The Borrower was unable to operate at the same level during the covered period due to compliance with COVID related regulatory requirements.
Forms - NOTE: These are for REFERENCE ONLY. We are currently not accepting forms.
- PPP Forgiveness Application Form 3508EZ Fillable
- PPP Loan Forgiveness Application Form EZ Instructions
- PPP Loan Forgiveness Application Form Fillable
- PPP Loan Forgiveness Application Form Instructions
Further communications will be sent by email as soon as we are ready to begin accepting forgiveness applications.
UPDATE June 5, 2020 - Congress passed the Paycheck Protection Program Flexibility Act of 2020, with changes to PPP forgiveness that will greatly benefit borrowers.
- The forgiveness period has been extended to 24 weeks,
- the minimum payroll requirement has been reduced from 75% to 60%, and
- the deferral period has been extended and the safe harbor for rehiring employees has been updated.
Review our FAQs below for details and other updates.
The SBA released the PPP loan forgiveness application late Friday, May 15th. Following is a summary of the application and instructions. Please follow this link to familiarize yourself with the full contents of the application and corresponding requirements.
In order to assist you with the loan forgiveness process, we are currently creating a fillable application form. In addition, we’re creating a website instruction page that will provide an overview of documents you’ll need to supply and the steps on how to submit them. We recommend that you consult with your financial advisor or accountant for assistance in completing the application and worksheets.
Borrowers are eligible for forgiveness of “Eligible Costs” during the “Covered Period”.
8 weeks beginning on the PPP disbursement date, or as an alternative, 8 weeks beginning on the first day of the first pay period following the PPP disbursement date.
- Eligible payroll costs. Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the eight-week (56-day) Covered Period (or Alternative Payroll Covered Period) (“payroll costs”). Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period). For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period. Count payroll costs that were both paid and incurred only once. For information on what qualifies as payroll costs, see Interim Final Rule on Paycheck Protection Program posted on April 2, 2020 (85 FR 20811).
NOTE: For information on how to calculate eligible payroll costs for self-employed, sole-proprietorships and independent contractors see page 5, line 9 of the Payment Protections Program Loan Forgiveness Application.
- Eligible nonpayroll costs. Nonpayroll costs eligible for forgiveness consist of:
- covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 (“business mortgage interest payments”);
- covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (“business rent or lease payments”); and
- covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 (“business utility payments”).
NOTE: An eligible nonpayroll cost 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. Eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount. Count nonpayroll costs that were both paid and incurred only once.
The borrower will be required to submit the following application documents:
- PPP Loan Forgiveness Calculation Form
- PPP Schedule A
To support the calculations shown on the application the borrower will be required to submit the following:
- Payroll: Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:
- Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
- Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
- Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
- State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
- Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount (PPP Schedule A, lines (6) and (7)).
- FTE: Documentation showing (at the election of the Borrower):
- the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019;
- the average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020 and February 29, 2020; or
- in the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive twelve week period between May 1, 2019 and September 15, 2019.
NOTE: The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11. Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. Documents submitted may cover periods longer than the specific time period.
- Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.
- Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
- Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
- Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
Documents that each borrower must maintain but is not required to submit include:
- PPP Schedule A Worksheet or its equivalent and the following:
- Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.
- Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.
- Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.
- Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”
- All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements. The Borrower must retain all such documentation in its files 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 files upon request.
We look forward to working with you throughout the process and will continue to provide additional information as it becomes available.
If you are looking form more information about the SBA Paycheck Protection program please visit our FAQ page. If you're interested in applying for a Paycheck Protection Loan while funds continue to be available please send us your information via the Contact Us link below.