PPP Loan Forgiveness

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Hancock Whitney clients may be eligible for the Paycheck Protection Program (PPP) loan forgiveness, and we are here to provide you with the direct access, tools, and resources you need to facilitate your forgiveness application.

We will use this page to share the most frequently asked questions we’re hearing from our clients, and we’ll continue to update it as more information becomes available from the U.S. Small Business Administration (SBA).

Hancock Whitney is in the process of developing the online forgiveness application portal to streamline and simplify the application process.  When the platform is launched, all Hancock Whitney PPP loan recipients will receive an email notifying them that portal is available. Please note, this notification will be sent to the email associated with your PPP loan.

PPP loan recipients may apply for forgiveness at any time post loan-funding and prior to loan maturity to receive forgiveness for expenses that were incurred during the 24 week period after loan disbursement (or first day of the first pay period post loan-funding for those using the Alternative Covered Period). Please note, if PPP loan recipients do not apply for forgiveness, they will begin making payments on the PPP loan 10 months after the end of their Covered Periods.

The SBA has issued forms and instructions for the Forgiveness Application. We will keep you informed of any additional guidance provided by the SBA to assist you in the forgiveness process. We are providing links to these applications as reference to help you get started prior to applying for forgiveness via our online portal.

Please refer to the SBA site for more details. 

Information provided by the Bank, on this website and through other resources, should not be considered a substitute for legal or accounting advice. Borrowers are encouraged and should confirm legal and accounting advice through their consultants and through their own due diligence.*

Understanding the Forgiveness Process

Please note that with the recently passed legislation, borrowers will be able choose to extend the 8-week covered period to a 24-week period. We will provide you with updates once the SBA has issued their official guidance.

 

PPP Step 1

Application

To receive loan forgiveness, a borrower must complete and submit the Loan Forgiveness Application to the Bank.

Once you have met the criteria for forgiveness, you may submit a loan forgiveness application any time between the period starting two weeks after the date of your loan and ending before the maturity date of your loan. You do not need to wait until the end of the 24 -week covered period to apply.

Hancock Whitney customers will soon be provided a link to access our online application portal on this page.

 

PPP Step 2

60
Days

Decision Issued

Within 60 days from receipt of your complete application, we will review the application and issue a decision regarding loan forgiveness to the SBA. If Hancock Whitney determines that you are entitled to forgiveness of some or all of the amount applied for under the state and applicable regulations, we will request payment from the SBA at the time we issue our decision to the SBA.

PPP Step 3

90
Days

 

Forgiveness Amounts Remitted

  1. If the SBA determines the borrower was eligible for full forgiveness:
    Within 90 days after we issue our decision to the SBA, 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; if applicable, the SBA will deduct EIDL Advance Amounts from the forgiveness amount remitted to the Bank;

  2. If the SBA determines that only a portion of the loan is forgiven, or that the borrower was ineligible:

    If only a portion of the loan is forgiven, the forgiveness request is denied, or the SBA determines that the borrower was ineligible for the PPP loan, the SBA will remit only the approved forgiveness amount. Any remaining balance due on the loan after the application of any approved forgiveness amount must be repaid on or before the maturity date of your loan. You will be notified by the Bank of the forgiveness amount and the date on which your first payment is due.

Understanding the Forgiveness Amount

Review our Eligible Expenses Reference Guide.

  • 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;
  • Allowance for separation or dismissal;
  • Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement;
  • 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.

Interest payments on any business mortgage obligation on real or personal property that was incurred 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 interest access for which service began before February 15, 2020.

Documentation Preparation

Review our PPP Loan Forgiveness Application Checklist.

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 (Form 941).

  • 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 included in the forgiveness amount.

The average number of FTE employees on payroll per month employed between:

  • 02/15/2019 – 06/30/2019; or
  • 01/01/2020 – 02/29/2020

In the case of the seasonal employer, the average number of FTE employees on payroll per month employed between:

  • 02/15/2019 – 06/30/2019;
  • 01/01/2020 – 02/29/2020; or
  • Any consecutive 12-week period between 05/01/2019 – 09/15/2019
  • Business mortgage interest payments
  • Business rent or lease payments
  • Business utility payments

 

The verification documents include, but may not limited to:

  • Cancelled checks
  • Payment receipts
  • Accounts transcripts

Frequently Asked Questions

 

Understanding the Terms

  1. What is the “Covered Period”?
  2. What is the "Alternative Payroll Covered Period"?
  3. What are considered eligible "Payroll Costs”?
  4. What are considered eligible “Non-payroll Costs”?
  5. What is the "maturity date" of my PPP loan?

Understanding the Loan Forgiveness Amount

  1. How much of my PPP loan may be forgiven?
  2. Can my PPP loan be forgiven in whole or in part?
  3. Are salary, wages, or commission payments to furloughed employees; bonuses; or hazard pay during the covered period eligible for loan forgiveness?
  4. Will a borrower’s loan forgiveness amount be reduced if the borrower laid-off or reduced the hours of an employee, then offered to rehire the same employee for the same salary and same number of hours, or restore the reduction in hours, but the employee declined the offer?
  5. Will a borrower’s loan forgiveness amount be reduced if an employee is fired for cause, voluntarily resigns, or voluntarily requests a schedule reduction?
  6. Could the SBA reduce the amount of Loan Forgiveness?
  7. What if my loan is not completely forgiven?
  8. When will I have to begin paying principal and interest on my PPP loan?
  9. What can borrowers do if the Bank has issued a decision to the SBA denying the loan forgiveness application?

Understanding the Loan Forgiveness Process

  1. How may I obtain Loan Forgiveness?
  2. When is the deadline to apply for loan forgiveness?
  3. What can I do now to prepare a Loan Forgiveness request?
  4. What payroll documentation should I submit?
  5. What FTE documents need to be submitted with the forgiveness application?
  6. What documentation should borrowers maintain to show compliance with the FTE reduction exemption?
  7. What documentation do I need for non-payroll expenses?
  8. For Borrowers required to use the standard application form, what documentation must the Borrower maintain, even though it is not required to be submitted?
  9. Which Borrowers are eligible to use the EZ version application form?
  10. For Borrowers eligible to use the EZ application form, what payroll documentation must be submitted to support forgiveness of their PPP loans?
  11. For Borrower’s eligible to use the EZ application form, what non-payroll documents must be submitted to support forgiveness of their PPP loans?
  12. For Borrower’s eligible to use the EZ application form, what documentation must the Borrower maintain, even though it is not required to be submitted?
  13. What are the FTE Reduction Safe Harbors?
  14. Could the SBA review my Paycheck Protection Program loan files?
  15. Do you expect the SBA to issue additional program rules or other guidance?

Understanding the Terms

Q: What is the “Covered Period”?
A:

The "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.

For example, if you received PPP loan proceeds on Monday, April 20, the first day of the Covered Period is April 20, 2020 and the last day of the 24-week Covered Period is October 5, 2020. If you choose to elect the 8-week Covered Period the last day would be June 14, 2020.

This choice of covered period may be made at any time.

Q: What is the "Alternative Payroll Covered Period"?
A:

For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the 24-week (168-day) period (or for loans received before June 5, 2020 at the election of the borrower, the eight-week (56-day) period) that begins on the first day of their first pay period following their PPP Loan Disbursement Date.

For example, if the Borrower is using a 24-week Alternative Payroll Covered Period and received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, October 10.

Borrowers that elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered Period wherever there is a reference in the application to “the Covered Period or the Alternative Payroll Covered Period.”

However, Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period) wherever there is a reference in the application to “the Covered Period” only. In no event may the Alternative Payroll Covered Period extend beyond December 31, 2020.

Q: What are considered eligible "Payroll Costs”?
A:

Payroll costs 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;
  • Allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement;
  • 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.         

Q: What are considered eligible “Non-payroll Costs”?
A: Eligible “Non-payroll Costs” are:
  • Interest payments on any business mortgage obligation on real or personal property that was incurred 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; and
  • Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.

Please visit the SBA site for more information.

Q: What is the "maturity date" of my PPP loan?
A:

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, the maturity is five years from the date the loan was made.

Understanding the Loan Forgiveness Amount

Q: How much of my PPP loan may be forgiven?
A:

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, and utilities.

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 uses 59 percent of its PPP loan for payroll costs, it will not receive the full amount of loan forgiveness it might otherwise be eligible to receive. Instead, the borrower will receive partial loan forgiveness, based on the requirement that 60 percent of the forgiveness amount must be attributable to payroll costs. For example, if a borrower receives a $100,000 PPP loan, and during the covered period the borrower spends $54,000 (or 54 percent) of its loan on payroll costs, then because the borrower used less than 60 percent of its loan on payroll costs the maximum amount of loan forgiveness the borrower may receive is $90,000 (with $54,000 in payroll costs constituting 60 percent of the forgiveness amount and $36,000 in nonpayroll 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.

Please visit the SBA site for more information.

Q: Can my PPP loan be forgiven in whole or in part?
A:

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 of the 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 incurred before February 15, 2020,rent payments on leases dated before February 15, 2020, and utility payments for service that began before February 15, 2020, over the loan forgiveness covered period.

However, to receive full loan forgiveness, a borrower must use at least 60% of the PPP loan for payroll costs, and not more than 40% of the loan forgiveness amount may be attributable to nonpayroll costs.

Q: Are salary, wages, or commission payments to furloughed employees; bonuses; or hazard pay during the covered period eligible for loan forgiveness?
A:

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.

Q: Will a borrower’s loan forgiveness amount be reduced if the borrower laid-off or reduced the hours of an employee, then offered to rehire the same employee for the same salary and same number of hours, or restore the reduction in hours, but the employee declined the offer?
A:

No.

In calculating the loan forgiveness amount, a borrower may exclude any reduction in full-time equivalent employee headcount that is attributable to an individual employee if:

  1. The borrower made a good faith, written offer to restore the reduced hours of such employee;
  2. The offer was for the same salary or wages and same number of hours as earned by such employee in the last pay period prior to the reduction in hours;
  3. The offer was rejected by such employee; and
  4. The borrower has maintained records documenting the offer and its rejection;
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.
Q: Will a borrower’s loan forgiveness amount be reduced if an employee is fired for cause, voluntarily resigns, or voluntarily requests a schedule reduction?
A:

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.

Q: Could the SBA reduce the amount of Loan Forgiveness?
A:

Yes.  Forgiveness is based upon maintaining or quickly rehiring employees and salary levels. Your Loan Forgiveness amount may be reduced if your full-time headcount declines or if salaries and wages decrease.

Please visit the SBA site for more information.

Q: What if my loan is not completely forgiven?
A:

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.

Q: When will I have to begin paying principal and interest on my PPP loan?
A:

If you submit a loan forgiveness application to your lender 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 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 to your lender a loan forgiveness application within 10 months after the end of your loan forgiveness covered period, you must begin paying principal and interest after that period.

Q: What can borrowers do if the Bank has issued a decision to the SBA denying the loan forgiveness application?
A:

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.

Understanding the Loan Forgiveness Process

Q: How may I obtain Loan Forgiveness?
A:

You may submit a Loan Forgiveness request to the Bank after the Covered Period. 

Hancock Whitney clients will soon have a dedicated link on this page to apply for PPP Loan Forgiveness, upload documents, and check on the progress of their applications.

To receive loan forgiveness:

  1. A borrower must complete and submit the Loan Forgiveness Application (SBA Form 3508, 3508EZ, 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.
The general loan forgiveness process described above applies only to loan forgiveness applications that are not reviewed by SBA prior to the lender’s decision on the forgiveness application.

The SBA determines the borrower was eligible:
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 the Bank issues its decision to SBA; If applicable, SBA will deduct EIDL Advance Amounts from the forgiveness amount remitted to the Bank;

The SBA determines the borrower was ineligible:
If SBA determines in the course of its review that the borrower was ineligible for the PPP loan based on the provisions of the CARES Act, SBA rules or guidance available at the time of the borrower's loan application, or the terms of the borrower's PPP loan application, the loan will not be eligible for loan forgiveness; The Bank is responsible for notifying the borrower of the forgiveness amount.

If SBA determines only a portion of the loan is forgiven:
If only a portion of the loan is forgiven, or if the forgiveness request is denied, any remaining balance due on the loan must be repaid by the borrower on or before the maturity of the loan.

The Bank is responsible for notifying the borrower of remittance by SBA of the loan forgiveness amount (or that SBA determined that no amount of the loan is eligible for forgiveness) and the date on which the borrower’s first payment is due, if applicable.

Hancock Whitney clients will soon have a dedicated link on this page to apply for PPP Loan Forgiveness, upload documents, and check on the progress of their applications.

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

Q: When is the deadline to apply for loan forgiveness?
A:

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.

Q: What can I do now to prepare a Loan Forgiveness request?
A:

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

  • Read through the regulatory guidance issued by the SBA
  • Continue to gather documentation associated with eligible expenses, including payroll costs, mortgage interests, rent obligations, and utilities expenses
  • 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
Q: What payroll documentation should I submit?
A:

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 (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).
Q: What FTE documents need to be submitted with the forgiveness application?
A: Documentation showing (at the election of the borrower):
  • The average number of FTE employees on payroll per week employed by the Borrower between February 15, 2019 and June 30, 2019;
  • The average number of FTE employees on payroll per week employed by the Borrower between January 1, 2020 and February 29, 2020;
  • In the case of a seasonal employer, the average number of FTE employees on payroll per week employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; 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 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.

Q: What documentation should borrowers maintain to show compliance with the FTE reduction exemption?
A:

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:

  • The written offer to rehire an individual
  • A written record of the offer's rejection
  • A written record of efforts to hire a similarly qualified individual
Qualified documentation that are related to an inability to return to the same level of business activity:
  • Copies of applicable COVID Requirements or Guidance for each business location
  • Relevant borrower financial records
Q: What documentation do I need for non-payroll expenses?
A: 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.
Q: For Borrowers required to use the standard application form, what documentation must the Borrower maintain, even though it is not required to be submitted?
A:

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.”
Q: Which Borrowers are eligible to use the EZ version application form?
A:

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 are self-employed with no employees;
  • You did not reduce salaries / wages by more than 25% AND did not reduce employee 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.

Q: For Borrowers eligible to use the EZ application form, what payroll documentation must be submitted to support forgiveness of their PPP loans?
A:

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.
  • If you checked only the second box on the checklist on page 1 of these instructions, the average number of full-time equivalent employees on payroll employed by the Borrower on January 1, 2020 and at the end of the Covered Period.
Q: For Borrower’s eligible to use the EZ application form, what non-payroll documents must be submitted to support forgiveness of their PPP loans?
A:

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
Q: For Borrower’s eligible to use the EZ application form, what documentation must the Borrower maintain, even though it is not required to be submitted?
A:
  • Documentation supporting the certification that annual salaries or hourly wages were not reduced by more than 25 percent during the Covered Period or the Alternative Payroll 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 or Alternative Payroll 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.
Q: What are the FTE Reduction Safe Harbors?
A:

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.
Q: Could the SBA review my Paycheck Protection Program loan files?
A:

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.

*  Please note that the information provided above is based on guidance provided by the U.S. Treasury and the SBA, including information included as part of the form of Paycheck Protection Program Loan Forgiveness Application currently published by the SBA.  This information is posted here solely for your convenience. It is not intended to be, and should not be considered, comprehensive or definitive. To the extent of any conflict between any information posted below or in any FAQ and the information and guidance issued directly by the SBA and/or the U.S. Treasury, the information provided directly by the SBA and/or U.S. Treasury will control.