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Paycheck Protection Program

This page is a resource for businesses who received a PPP loan. We will update this page as new information becomes available. Check out our latest updates below.


 

7/30/2020

The SBA has announced that the PPP Forgiveness Platform is expected to go live and begin accepting submissions August 10, 2020. They also released more instruction for how lenders and borrowers should submit these applications. Please refer to the flowchart below for details.

 

PPP forgiveness process borrower to lender to SBA


You may also be aware of legislation in congress known as the 'Continuing Small Business Recovery and Paycheck Protection Program Act". The most significant proposed provisions include:

  • Allowing a second loan to PPP recipients who qualify
  • Expanding the expenses allowed to be covered for forgiveness
  • Allowing any 8-week period of the borrowers choice to use with their forgiveness calculation
  • Allowing an affidavit-type forgiveness process for loans under $150,000
  • Expanding eligibility to certain 501(c)(6) entities such as chambers of commerce.

7/21/2020
2 quick updates to inform you of:

  1. Key SBA administrators said it will likely be August before the official portal will be ready to process PPP forgiveness applications. If you have completed your forgiveness application you may turn it into us at any time, however we will not be able to turn it into the SBA for an official forgiveness determination until the portal is up and running.
  2. The affidavit-type forgiveness process for PPP loans under $150,000 is gaining support in congress. Nothing is final yet or even being voted on, but this could potentially mean that if your loan is under $150,000, no application will be necessary. Instead you would sign an affidavit saying all the funds were used according to PPP terms and acknowledging you may be audited in the future.

The possibility of a simplified affidavit process is exciting, but we still are advising borrowers to gather all the necessary documents and begin working on the application. Please reach out to your lender if you would like additional information or have any questions.


7/3/2020

Last week the SBA issued yet another Interim Final Rule. Below are the key takeaways:

  • A borrower 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 as long as all loan proceeds were used.*
  • If the borrower does not apply for loan forgiveness within 10 months after the last day of the covered period, or if the 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.
  • Limitation on owner employees and self-employed individuals:
    • 8-week period – Lesser of $15,385 or 8-weeks’ worth (8/52) of 2019 compensation in total across all businesses.
    • 24-week period – Lesser of $20,833 or 2.5-months’ worth (2.5/12) of 2019 compensation in total across all businesses.
  • Reductions in loan forgiveness:
    • If the borrower applies for forgiveness before the end of the covered period, it must account for the salary reduction for the full 8 or 24 week period (whichever they chose).
    • Borrowers that can prove the reduction in business activity during the 8 or 24 week period stems directly OR indirectly from complying with COVID requirements/guidance are exempt from any reduction in forgiveness amount stemming from a reduction in FTE employees during the covered period.

*Please note, lenders continue to await for instructions on how to process a borrowers forgiveness application. If you have completed your forgiveness application and would like to submit it you may. From that point SunMark has 60 days to process and determine the forgiveness amount.


6/19/2020

What Has Been Released?

  • 2 new SBA forgiveness forms were released Wednesday, June 17th. The forms are referred to as form 3508EZ and form 3508. We will explain the differences below.
  • Updated SBA Interim Final Rule that provides guidance on the updates

SBA Forgiveness Forms

  • 3508EZ Forgiveness Application
    • Use this application if at least 1 of the following applies to you/your business
      1. Applied for a PPP loan as a self-employed individual, an independent contractor, or a sole proprietor with no employees.
      2. Did not reduce salary or wages for any employee by more than 25% AND did not reduce number or hours of your employees. (NOTE: this excludes laid-off employees who refused your offer to return).
      3. Did not reduce salary or wages for any employee more than 25% during the covered period AND experienced reductions in business activity because of health directives related to COVID-19.
    • Simpler form with less calculations.
    • Must certify funds were used correctly.
    • Your lender (SunMark) will provide the SBA PPP Loan Number and the Lender PPP Loan Number required on application.

 
EZ Forgiveness Form: https://sunmarkbank.sharefile.com/d-s39e14ef505b4b9ab
EZ Forgiveness Form Instructions:
https://sunmarkbank.sharefile.com/d-s31699181dc34c1b9

 

  • 3508 Forgiveness Application
    • Use this application if the above stipulations did not apply to you/ your business.
    • Requires calculation to determine full-time equivalency and salary/hourly wage reductions.
    • Must certify funds were used correctly.
    • Your lender (SunMark) will provide the SBA PPP Loan Number and the Lender PPP Loan Number required on application.

 
Revised Forgiveness Form: https://sunmarkbank.sharefile.com/d-s2c7347c842842928
Revised Forgiveness Form Instructions:
https://sunmarkbank.sharefile.com/d-s6aeb1c416a3460eb

 
Both Forgiveness Applications Are Subject to These Terms:

  • Must be submitted to your lender (SunMark) within 10 months after the end of your covered loan forgiveness period ( Note: due to the Flex Act, that covered period may be 8 weeks or 24 weeks depending on what you choose)
  • If you do not submit a forgiveness application in that time frame you must begin making payments.
  • Once the application is submitted, your lender (SunMark) has 60 days to determine your forgiveness amount.  Once the forgiveness amount is determined, SBA has 90 days to review the lender’s determination of forgiveness eligibility. Once the forgiveness amount is determined payments must begin being made. (obviously, no payment required if forgiveness is determined to be 100% of PPP loan)

Terms of Portion of Loan NOT Forgiven

  • 1% interest rate
  • 2 to 5-year length depending on terms negotiated with your lender.
  • The amount of the loan can be given back to the lender (SunMark) if you do not want the remaining unforgiven portion converted to a loan.

SBA Interim Final Rule

  • Important clarifications
    • If you used less than 60% of funds for payroll it will affect your forgiveness amount, but will not make you ineligible for forgiveness
      • Pro tip: divide the amount of the loan you used on payroll by 60% to determine the amount of the loan that can be forgiven
    • 5-year maturity terms only apply to loan made on or after June 5th, 2020, but maturity terms may be negotiated with your lender.

Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules 

Important Update for Sole Proprietors, Self-employed Individuals, and Independent Contractors

  • Due to the option to now use a 24 week loan forgiveness covered period those listed above can now have their entire PPP loan forgiven even if they did not have non-payroll expenses such as rent, utilities, or mortgage interest. See new formula below:

Net Profit = Line 31 of your 2019 schedule C / 12 x 2.5 = PPP Loan Amount
Net Profit= Line 31 of your 2019 schedule C / 12 x 2.5 = PPP Forgiven Amount as Owner Comp.

As always, we are standing by to answer all questions. We will continue to provide updates in an organized and timely fashion as changes are made. Thank you so much for allowing SunMark to be your trusted source of information during this time.


6/4/2020

On 6/3/2020 the Paycheck Protection Program Flexibility Act (Flex Act) was passed through congress and is now awaiting a signature from the President. It is expected to be signed sometime Friday. The Flex Act eases burdens placed on the borrower and clarifies some stipulations of the PPP. Details are outlined below.

Flex Act Changes

  • Reduce the amount of the loan needed to be spent on payroll from 75% to 60%, thus increasing the amount of funds available for other expenses from 25% to 40%.
  • Extend the window businesses must use the funds from eight weeks to 24 weeks
  • Allow companies with a PPP loan to delay payment of employer portion of Social Security taxes for all payroll paid beginning March 27th, 2020 and ending December 31st, 2020
  • Provide more leeway on loan forgiveness for business owners who show they could not rehire workers or reopen due to safety standards related to Covid-19.
  • Extended payment deferral period from 6 months to 11 months. This means that the borrower will not have to make a payment until forgiveness determination is granted by the SBA.

There are expected to be even more changes and clarifications in the coming weeks. Please continue to stay updated as independent groups work to push for more lenient requirements for businesses. Especially those who received a loan less than $1,000,000. As always, we will continue to be an advocate and advisor for our small business’ customers. Please reach out to your personal community lender with any questions or concerns. We thank you for banking with SunMark!


5/21/2020

On 5/15/2020, the Small Business Administration and Treasury Department released the Paycheck Protection Program Loan Forgiveness Application and instructions. Those can be found at the link below.

Paycheck Protection Program Loan Forgiveness Application and instructions

The form and instructions include:

  • Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles.
  • Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after borrowers received their PPP loan.
  • Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
  • Statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
  • The new exemption for borrowers whose good-faith, written offers to rehire workers were declined.

As of this time, the information surrounding specifics of the forgiveness application is limited. However, the SBA said it will soon issue regulations and guidance to help borrowers complete this application. Some important things to remember that we know now is:

  • This application is a requirement of the borrower to receive loan forgiveness
  • For guidance with this application, we recommend consulting with your CPA or Financial Advisor
  • There is no information yet on when this application will be due or who is should be turned in to.

SunMark Community Bank will continue to keep you informed of the latest updates on the PPP. Thank you for your continued patience during this time. We appreciate your support and we thank you for being a SunMark customer!