PPP Loan Forgiveness

The Covered Period begins on the date the loan was originally disbursed. It ends on a date selected by the borrower that is at least 8 weeks following the date of loan disbursement and is not more than 24 weeks after the date of loan disbursement. For example, if the borrower received their PPP loan proceeds on Monday, April 20, 2020, the first day of the Covered Period is Monday, April 20, 2020, and the final day of the Covered Period is any date selected by the borrower between Sunday, June 14, 2020, and Sunday, October 4, 2020.

Payroll costs paid or incurred during the Covered Period and consist of:

• Compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation;
• Cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips);
• Payment for vacation, parental, family, medical, or sick leave (not including leave covered by the Families First Coronavirus Response Act);
• Allowance for separation or dismissal; payment for the provision of group health care benefits paid by EMPLOYER (Not Self-employed or Partnership), including life, disability, medical, dental, and vision;
• Payment of state and local taxes assessed on compensation of employees; and
• For an independent contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or similar compensation.

Please visit the SBA site for more information.         

• Interest payments on any business mortgage obligation on real or personal property that was entered before February 15, 2020 (but not any prepayment or payment of principal);
• Payments on business rent obligations on real or personal property under a lease agreement in force before February 15, 2020; 
• Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020;
• Operational Expenses: Software, cloud computing, and other human resources and accounting needs;
• Property Damage: Property damage due to public disturbances that occurred during 2020 that are not covered by insurance;
• Supplier Cost: Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan; and 
• Worker Protection: Personal protective equipment and adaptive investments made between 3/1/2020 and the end of national emergency declaration.

Please visit the SBA site for more information.

For loans made before June 5, 2020, the maturity is two years from the date the loan was made; however, borrowers and lenders may mutually agree to extend the maturity of such loans to five years.  If after you applied for forgiveness you receive a decision on your application that does not result in full forgiveness, then it may be appropriate to ask the bank to consider a request to extend the term of your PPP loan if such extension is financially necessary.

For loans made on or after June 5, 2020,  the maturity is five years from the date the loan was made.

The amount of your loan that is eligible to be forgiven will be determined based on the total amount of loan proceeds that you spend during the Covered Period to retain employees ("eligible payroll costs" and on certain other non-payroll covered expenses including mortgage interest, rent, utilities, operational expenses, property damage, supplier cost, and worker protection).

At least 60% of the amount forgiven must be attributable to eligible payroll costs while only up to 40% can be used on non-payroll covered expenses. Note: the PPP loan can be forgiven in whole or in part.

For example, if a borrower receives a $100,000 PPP loan and spends $54,000 (or 54 percent) of the loan on payroll costs, the maximum amount of loan forgiveness the borrower may receive is $90,000 because the borrower used less than 60 percent of the loan on payroll costs (with $54,000 in payroll costs constituting 60 percent of the forgiveness amount and $36,000 in non-payroll costs constituting 40 percent of the forgiveness amount).

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. For example, the maximum amount of cash compensation for an individual employee during a 24-week Covered Period is $46,154.

Please visit the SBA site for more information.

Yes. The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. An eligible borrower will not be responsible for any loan payment if the borrower uses all loan proceeds for forgivable purposes as described below and employee and compensation levels are maintained or, if not, an applicable safe harbor applies. The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations entered into before February 15, 2020, rent payments on leases entered into before February 15, 2020, utility payments for service that began before February 15, 2020, and operational expenses, property damage, supplier cost, and worker protection cost over the loan forgiveness Covered Period.

• Borrowers of PPP loans of $150,000 or less, other than any borrower that together with its affiliates received loans totaling $2 million or greater, will be eligible for full forgiveness if at least 60% of the PPP loan was used for payroll costs, and not more than 40% of the loan forgiveness amount is attributable to nonpayroll costs. This group of borrowers may be exempt from any reductions in loan forgiveness amount based on FTE employees or salary reductions.  
• Borrowers of PPP loans of more than $150,000 will be eligible for full forgiveness if (1) at least 60% of the PPP loan was used for payroll costs, and not more than 40% of the loan forgiveness amount is attributable to non-payroll costs; and (2) employee and compensation levels are maintained or, if not, an applicable safe harbor applies.
  
  

Yes. The CARES Act defines the term “payroll costs” broadly to include compensation in the form of salary, wages, commissions, or similar compensation. If a borrower pays furloughed employees their salary, wages, or commissions during the covered period, those payments are eligible for forgiveness as long as they do not exceed an annual salary of $100,000, as prorated for the covered period.

Yes. To receive full forgiveness, at least 60% of the PPP loan must be used for payroll costs, and not more than 40% of the loan forgiveness amount should be attributable to nonpayroll costs. Unless you are a borrower of PPP loans of $50,000 or less, forgiveness is also based upon maintaining or quickly rehiring employees and salary levels. Your Loan Forgiveness amount may be reduced if there is a decrease in the number of your Full-Time Equivalent (FTE) employees or if there is a decrease in salaries and wages.

Please visit the SBA site for more information.

In calculating its loan forgiveness amount, a borrower may exclude any reduction in FTE employees if the borrower is able to document in good faith the following:

1. An inability to rehire individuals who were employees of the borrower on February 15, 2020; and
2. An inability to hire similarly qualified individuals for unfilled positions on or before December 31, 2020.

Borrowers are required to inform the applicable state unemployment insurance office of any employee’s rejected rehire offer within 30 days of the employee’s rejection of the offer.

The documents that borrowers should maintain to show compliance with this exemption include the written offer to rehire an individual, a written record of the offer’s rejection, and a written record of efforts to hire a similarly qualified individual.

Please note that borrowers of PPP loans of $150,000 or less may be exempt from such requirements.

No. When an employee of the borrower is fired for cause, voluntarily resigns, or voluntarily requests a reduced schedule during the covered period or the alternative payroll covered period (FTE reduction event), the borrower may count such employee at the same full-time equivalency level before the FTE reduction event when calculating the FTE employee reduction penalty. Borrowers must submit appropriate documentation regarding employee terminations, resignations and reductions in hours.

Please note that borrowers of PPP loans of $150,000 or less may be exempt from such requirements.

Yes, if the payroll costs are paid on or before the next regular payroll date after the Covered Period.

Yes.

Yes, eligible business mortgage interest costs, eligible business rent or lease costs, eligible business utility costs, operational expenses, property damage, supplier cost, and worker protection cost incurred prior to the Covered Period and paid during the Covered Period are eligible for loan forgiveness.

Nonpayroll costs are eligible for loan forgiveness if they were 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.

You will be responsible for repayment of loan amounts that are not forgiven by making monthly payments to us in accordance with the terms of your note.

Within 30 days of notice from the lender, a borrower may notify the lender that it is requesting that the SBA review the lender's decision by reviewing the loan in accordance with 2.c. below.

Within 5 days of receipt, the lender must notify the SBA of the borrower's request for review. The SBA will notify the lender if the SBA declines a request for review.

If the borrower does not request the SBA review or the SBA declines the request for review, the lender is responsible for notifying the borrower of the date on which the borrower's first payment is due.

If the SBA accepts a borrower's request for review, the SBA will notify the borrower and the lender of the results of the review. If the SBA denies forgiveness in whole or in part, the lender is responsible for notifying the borrower of the date on which the borrower's first payment is due.

Enabling the SBA to use the statutory 90-day period to review the PPP loan and forgiveness documentation is an appropriate procedural protection to prevent fraud or misuse of PPP funds, ensure that recipients of PPP loans are within the scope of entities that the CARES Act is intended to assist, and confirm compliance with the PPP requirements set forth in the statute, rules, and guidance.

If you submit a completed loan forgiveness application to your lender for submission to the SBA within 10 months after the end of your loan forgiveness covered period, you will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to your lender (or notifies your lender that no loan forgiveness is allowed).

The SBA will cover all principal and accrued interest related to the forgiven portion of the loan if the borrower submits their completed forgiveness application prior to the 24-week covered period plus ten months.

Your “loan forgiveness covered period” is the 24-week period beginning on the date your PPP loan is disbursed; however, if your PPP loan was made before June 5, 2020, you may elect to have your loan forgiveness covered period be the eight-week period beginning on the date your PPP loan was disbursed.

Your lender must notify you of remittance by SBA of the loan forgiveness amount (or notify you that SBA determined that no loan forgiveness is allowed) and the date your first payment is due. Interest continues to accrue during the deferment period.

If you do not submit a completed loan forgiveness application to your lender for submission to the SBA within 10 months after the end of your loan forgiveness covered period, you must begin paying principal and interest after that period.

The amounts required to compute gross receipts varies by the entity tax return type:

• For self-employed individuals other than farmers and ranchers (IRS Form 1040 Schedule C): sum of line 4 and line 7
• For self-employed farmers and ranchers (IRS Form 1040 Schedule F): sum of lines 1b and 9
• For partnerships (IRS Form 1065): sum of lines 2 and 8, minus line 6
• For S-Corporations (IRS Form 1120-S): sum of lines 2 and 6, minus line 4
• For C-Corporations (IRS Form 1120): sum of lines 2 and 11, minus the sum of lines 8 and 9
• For nonprofit organizations (IRS Form 990): the sum of lines 6b(i), 6b(ii), 7b(i), 7b(ii), 8b, 9b, 10b, and 12 (column (A)) of Part VIII
• For nonprofit organizations (IRS Form 990-EZ): sum of lines 5b, 6c, 7b, and 9 of Part I
• LLCs should follow the instructions that apply to their tax filing status in the reference periods

Add the gross receipts for your Schedule C business with the gross receipts for your Schedule F business together and compare this sum against the sum of your gross receipts for your Schedule C and Schedule F business gross receipts for the reference period you choose (either quarterly or annually).

For clients who currently have PPP loans, we will invite them directly by email to submit their PPP Forgiveness Application via our online portal. Please note, this invitation to apply will be sent to the email associated with your PPP loan. If you have not received an invitation to apply for forgiveness, please contact us at 877-538-3335.

To receive loan forgiveness:

1. A borrower must complete and submit the Loan Forgiveness Application (SBA Form 3508, 3508EZ, 3508S, or lender equivalent) to its lender (or the lender servicing its loan).
2. 60 days for the bank to make decision - We will review the application and issue a decision regarding loan forgiveness to SBA within 60 days from receipt of a complete application;
3. 90 days for the SBA to remit the forgiveness amount - If we determine that the borrower is entitled to forgiveness of some or all of the amount applied for under the statute and applicable regulations, the Bank will request payment from SBA at the time the Bank issues its decision to SBA.

Please visit the SBA site or the U.S. Department of the Treasury for more information.

You may submit a loan forgiveness application any time on or before the maturity date of the loan - including before the end of the covered period - if you have used all of the loan proceeds for which you are requesting forgiveness.

If the borrower applies for forgiveness before the end of the covered period and has reduced any employee's salaries or wages in excess of 25%, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period.

If the borrower does not apply for loan forgiveness within 10 months after the last day of the covered period, or if SBA determines that the loan is not eligible for forgiveness (in whole or in part), the PPP loan is no longer deferred and the borrower must begin paying principal and interest.

If this occurs, the Bank will notify the borrower of the date the first payment is due.

To help facilitate your loan forgiveness application, we recommend that you:

• Read through the regulatory guidance issued by the SBA
• Gather documentation associated with eligible expenses, including payroll costs, mortgage interest, rent obligations, utility expenses, operational expenses, property damage, supplier cost, and worker protection cost
• Continue to look for our updates and additional resources, including information about our online PPP Forgiveness application portal and specialized client service center to assist with your PPP questions

Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period consisting of each of the following:

• Payroll report demonstrating cash compensation to each individual employee and individual owner so the Bank may ensure SBA compensation limits are enforced
  
  
• Bank account statements, cancelled checks, or third-party payroll service provider reports verifying 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:
  • Payroll tax filings reported, or that will be reported, to the IRS (Form 941);
  • State quarterly business and individual payroll 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, line (6) and (7).

The documentation for FTE is dependent on the application type. 

For the 3508 EZ #1 Forgiveness Application (No Employee Reduction) you must provide documentation showing the average number of FTE employees on payroll as of January 1, 2020 and on payroll at the end of your Covered Period.

For 3508 Standard Forgiveness Applications, you must provide documentation showing the average number of FTE employees during your Covered Period and the average number of FTE employees during one of the following Reference Periods:

•  February 15, 2019 through June 30, 2019;
• January 1, 2020 through February 29, 2020;
• In the case of a seasonal employer, the above periods or any consecutive 12-week period between May 1, 2019 and September 15, 2019.

The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11. Documents may include third-party payroll provider FTE reports, company generated FTE reports (for each employee, enter the average number of hours paid per week, divided by 40, and round to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may also be used at the election of the Borrower),
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.

Please note that borrowers of PPP loans of $150,000 or less may be exempt from such requirements.

Qualified documentation that are related to: (1) an inability to rehire individuals who were employees of the borrower on February 15, 2020; and (2) an inability to hire similarly qualified individuals for unfilled positions on or before December 31, 2020:

• Copies of applicable COVID Requirements or Guidance for each business location
• Relevant borrower financial records

• 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.
  
  
• Documentation related to operational expenses, property damage, supplier cost, and worker protection costs.

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, refusals to accept restoration of reductions in hours, firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and any inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020.
  
  
• Documentation supporting the certification, if applicable, that the borrower was unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19. This documentation must include copies of the applicable requirements for each borrower location and relevant borrower financial records.
  
  
• Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor 2.”

You are eligible to use the SBA Form 3508EZ to apply for forgiveness of your PPP loan if at least one of the following criteria is met:

• You did not reduce salaries / wages by more than 25% AND did not reduce Full-Time Equivalent (FTE) employees hours;
• You did not reduce salaries / wages by more than 25% AND experienced reductions in business due to health directives;

For more information about EZ Form eligibility, please see 3508EZ Form Instructions.

• Documentation supporting the certification that annual salaries or hourly wages were not reduced by more than 25 percent during the Covered Period relative to the period between January 1, 2020 and March 31, 2020. This documentation must include payroll records that separately list each employee and show the amounts paid to each employee during the period between January 1, 2020 and March 31, 2020, and the amounts paid to each employee during the Covered Period.
• Documentation regarding any employee job offers and refusals, refusals to accept restoration of reductions in hours, firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and any inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020.
• Documentation supporting the certification, if applicable, that the borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period (other than any reductions that arose from an inability to rehire individuals who were employees on February 15, 2020, if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020). This documentation must include payroll records that separately list each employee and show the amounts paid to each employee between January 1, 2020 and the end of the Covered Period.
• Documentation supporting the certification, if applicable, that the borrower was unable to operate between February 15, 2020 and the end of the Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19. This documentation must include copies of the applicable requirements for each borrower location and relevant borrower financial records.

You can apply for forgiveness of your Paycheck Protection Program (PPP) loan using SBA Form 3508S only if the total PPP loan amount you received from your Lender was $150,000 or less. However, a borrower that together with its affiliates received PPP loans totaling $2 million or more cannot use this form.

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, cancelled checks, 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.

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.

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 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.

Two separate safe harbors are available to exempt borrowers, who meet the requirements for exemption,  from any reduction in the amount of their loan forgiveness based on a reduction in FTE employee levels:

• The borrower, in good faith, is able to document that it was unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
  
  
• Both of the following conditions are met: (a) the borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and (b) the borrower then restored its FTE employee levels by not later than December 31, 2020 to its FTE employee levels in the borrower’s pay period that included February 15, 2020.

Yes. The SBA may review any PPP loan, as the Administrator deems appropriate. Specifically, the Administrator is authorized to review the (i) borrower eligibility, (ii) loan amounts and use of proceeds, and (iii) loan forgiveness amount. 

For a PPP loan of any size, the SBA may undertake a review at their discretion. As noted on the Loan Forgiveness Application Form, the borrower must retain PPP documentation in its files for six years after the date the loan is forgiven or repaid in full and permit authorized representatives of the SBA to access such files upon request.

Please visit the SBA site for more information.

If the EIDL loan is used for payroll costs and the EIDL loan was funded between January 31, 2020 and April 3, 2020, the PPP loan must be used to refinance the EIDL loan. An EIDL loan may not be refinanced with a PPP loan when the PPP borrower received the EIDL loan before January 31, 2020 or after April 3, 2020; and an EIDL loan is not required to be refinanced with a PPP loan when the PPP borrower used the EIDL loan for purposes other than payroll costs.

An excess loan amount error is a borrower or lender error made in good faith that caused a borrower to receive a PPP loan amount that exceeds the borrower's correct maximum loan amount. An excess loan amount error does not include a knowing misstatement.

These may include:

1. Borrower mistakenly failed to subtract amounts paid to employees in excess of $100,000 from reported payroll costs. As a result, the loan amount approved for the borrower exceeded the borrower's maximum loan amount.
2. Borrower mistakenly included payments to an independent contractor in its calculation of payroll costs on its PPP Borrower Application Form. As a result, the loan amount approved for the borrower exceeded the borrower's correct maximum loan amount.
3. Lender inadvertently approved borrower for an amount higher than borrower's applied loan amount due to a lender employee data input error. As a result, the loan amount approved for the borrower exceeded the borrower's correct maximum loan amount.

A borrower may not receive loan forgiveness for any amount that exceeds the correct maximum loan amount permitted by statute for that borrower.This is true whether the excess loan amount was caused by borrower error or lender error.

The lender must issue a decision to SBA denying forgiveness for the amount that exceeded the borrower’s correct maximum loan amount.

If an excess loan amount error is discovered after the lender has already submitted a forgiveness decision to SBA, the lender should promptly request the withdrawal of the lender loan forgiveness decision by notifying SBA through the SBA Paycheck Protection Platform. The lender may then submit a new lender loan forgiveness decision for the correct amount through the SBA Paycheck Protection Platform. A borrower must repay any unforgiven portion of a PPP loan.

If a lender discovers an excess loan amount error after SBA has issued a final loan forgiveness decision and remitted payment, lender must promptly notify the borrower and SBA through the SBA Paycheck Protection Platform.

Borrower Error
If an excess loan amount error is due solely to the borrower’s error in completing the loan application form, the borrower error does not invalidate the SBA’s guarantee of the PPP loan. However, excessive occurrences or patterns of undetected borrower errors may indicate a lender did not perform a good-faith review of borrowers’ calculations or supporting documents concerning average monthly payroll costs and could be grounds for further review of the lender by the SBA, which could affect the guarantee.

Lender Error
If an excess loan amount error is due in whole or in part to the lender’s failure to satisfy its obligations under PPP rules and the document collection and retention requirements described in the lender application form, the SBA guarantee will not apply to the excess loan amount.

If the lender or SBA, as applicable, determines a borrower was ineligible for any portion of its loan amount, forgiveness will be denied for the ineligible portion and the borrower must begin making payments on the remaining loan amount. Any unforgiven loan amounts remain obligations of the borrower, even if the borrower was ineligible to receive some or all of the loan.

You do not need to provide documentation to substantiate the reduction in gross receipts upon your initial Second Draw PPP Forgiveness Application submission. The Small Business Administration (SBA) released an Interim Final Rule (IFR) on July 28, 2021 outlining a new COVID Revenue Reduction Score that Lenders may use to show that borrowers satisfy the SBA’s revenue reduction requirements, and we have started implementing the COVID Revenue Reduction Score into our processes. However, if during our review it is determined that your COVID Revenue Reduction Score does not meet the value set by the SBA, we will return your application to you and request that you include the appropriate revenue reduction documentation.

The following are the primary sets of documentation you may provide to substantiate your certification of a 25% gross receipts reduction (only one set is required):

• Quarterly financial statements for the entity. If the financial statements are not audited, the Applicant must sign and date the first page of the financial statement and initial all other pages, attesting to their accuracy. If the financial statements do not specifically identify the line item(s) that constitute gross receipts, the Applicant must annotate which line item(s) constitute gross receipts.
• Quarterly or monthly bank statements for the entity showing deposits from the relevant quarters. The Applicant must annotate, if it is not clear, which deposits listed on the bank statement constitute gross receipts (e.g., payments for purchases of goods and services) and which do not (e.g., capital infusions).
• Annual IRS income tax filings of the entity (required if using an annual reference period). If the entity has not yet filed a tax return for 2020, the Applicant must fill out the return forms, compute the relevant gross receipts value (see Question 5), and sign and date the return, attesting that the values entered into the gross receipts computation are the same values that will be filed on the entity’s tax return.

Yes. A borrower that is eligible to use SBA Form 3508S, but applied for loan forgiveness using PPP Loan Forgiveness Application Form 3508EZ or 3508, may resubmit its loan forgiveness application to its lender using SBA Form 3508S at any time until the SBA notifies the lender of a final SBA loan review decision or remits to the lender the PPP loan forgiveness payment.

If a borrower's resubmission of a loan forgiveness application using SBA Form 3508S is timely received, the Bank will request the withdrawal of any lender loan forgiveness decision by notifying the SBA through the SBA Paycheck Protection Platform. Resubmissions after the SBA notifies the Bank of a final SBA review decision or remits to the Bank the PPP loan forgiveness payment are not permitted.

After a borrower's resubmission of a complete loan forgiveness application, the Bank will issue a decision to the SBA on the new loan forgiveness application not later than 60 days after receipt of the complete loan forgiveness application. When we issue a forgiveness decision to the SBA on the new loan forgiveness application, the SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the Bank, plus any interest accrued through the date of payment, not later than 90 days after we issue our forgiveness decision to SBA.

You will receive status updates from the online portal as your application is processed. Please check your email inbox or spam folders to look for the status updates.  In addition to the notifications generated from the online portal, you will also receive periodical communications from the Bank to remind you of any actionable items. Below are a few of the email communications you might receive from us during the application process:

• Missing documentation request
• Application under Bank review
• Request for E-Signature of you completed forgiveness application
• Application completed and under SBA review
• SBA decision

A PPP borrower has the right to appeal to the OHA only if a final SBA loan review decision finds a borrower:

1. Was ineligible for a PPP loan;
2. Was ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses;
3. Is ineligible for PPP loan forgiveness in the amount determined by the lender in its full approval or partial approval decision issued to the SBA; and/or
4. Is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to the SBA.

Here are the latest updates from the SBA:

• Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act (1/6/2021)
• Interim Final Rule on Second Draw Loans (1/6/2021)
• PPP Loan Forgiveness Application Form 3508S (10/8/2020)
  • Form 3508S Application Instructions (10/8/2020)
• Additional Revisions to Loan Forgiveness and Loan Review Procedures Interim Final Rules (10/8/2020)
• PPP Loan Forgiveness Application Form – Revised June 16, 2020
  • Application Instructions (6/16/20)
• PPP Loan Forgiveness Application Form EZ (6/16/20)
  • EZ Application Instructions (6/16/20)
• Interim Final Rule on Loan Forgiveness (4/2/20)
• Interim Final Rule on Revisions to the First Interim Final Rule (6/11/20)
• Interim Final Rule on Additional Revisions to the First Interim Final Rule (6/12/20)
• Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules (6/17/20)
• Interim Final Rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities (5/22/20)

Please visit the SBA site or the U.S. Department of the Treasury for more information.

No. Providing only internal payroll documentation cannot support the borrowers’ cash compensation payments.  Such internal documentation must be provided together with bank statements to fulfill payroll documentation requirements.  Specifically, a borrower must provide each of the following pieces of documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period:

• Bank account statements, cancelled checks, or third-party payroll service provider reports
• Tax forms for the period that overlap with the Covered Period or the Alternative Payroll Covered Period
• Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and / or retirement plans

Borrowers need to provide tax forms that have been reported or will be reported for the entire covered period.  The Bank will need an estimate of the Q3 filings if the covered period extends into Q3.  An example of estimated tax filings is a Form 1040-ES.

Yes.  If a borrower checks only the first set of criteria for the EZ Form, along with the other documentation requirements, the borrower will need to provide documentation verifying average FTE as of January 1, 2020 as well as at the end of the Covered Period. Borrowers who received a PPP loan of $150,000 or less may be exempt from this requirement.

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.  For a 24-week Covered Period, the individual employee compensation limit is $46,154; however the owner compensation limit is $20,833 which is based on two and a half months of an annualized salary of $100,000.

Yes. For example, if a borrower claims an internet bill expense for $50 on a $200,000 forgiveness request they will still need to provide the above referenced documentation for the $50 to count towards the forgiveness request.

Borrowers who received a PPP loan of $150,000 or less may be exempt from this requirement.

A borrower should include their EIDL Advance Amount and EIDL Loan Number if they included their EIDL loan details on their PPP origination application.

Viable examples of FTE documentation include (but are not limited to): third-party payroll provider FTE reports, company generated FTE reports (for each employee, enter the average number of hours paid per week, divided by 40, and round to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may also be used at the election of the borrower), 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.