Paycheck Protection Program Loan Forgiveness Application
Small Business Administration Paycheck Protection Program (PPP) Second Draw loans made to eligible borrowers qualify for full loan forgiveness if, during the 24 week covered period following loan disbursement:
- Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are spent on payroll costs
A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.
The Small Business Administration released a streamlined loan forgiveness application for Paycheck Protection Program loans of $150,000 or less. Under the simplified process, borrowers with these loans are exempt from reductions in the forgiveness amount based on reductions in full-time equivalent employees, salary, or wages. These borrowers are not required to submit documentation to lenders supporting the amounts they paid for payroll costs or other forgivable expenses.
If you received a Paycheck Protection Program loan greater than $150,000, you can submit your Loan Forgiveness Application using Form 3508EZ. Form 3508EZ applies to borrowers who meet at least one of these following two criteria:
- 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 (or, for a PPP loan made after December 27, 2020, before the last day of the Covered Period), and reductions in an employee’s hours that a borrower offered to restore and were refused).
- 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 (or, for a PPP loan made after December 27, 2020, requirements established or guidance issued before the last day of the Covered Period), 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.
The streamlined forgiveness form is expected to smooth the forgiveness application process for a substantial portion of PPP borrowers. Verification of expenses paid with PPP loan funds must be submitted with your application. For instructions on completing this form, please click here.
PPP Borrowers that do not meet the criteria for Form 3508EZ must submit Form 3508. For instructions on completing this form, please click here.
We have established a dedicated PPP Rapid Response Team that is ready to assist you in submitting your application. Please contact us with any questions:
Lee Boyle at 571-523-4465
Bruce Wilmarth at 571-523-4457
Steve Collatie at 571-523-4458
Chris Broad at 571-523-4459
Most Recent Amendments to the Paycheck Protection Program
The Paycheck Protection Program Flexibility Act of 2020 was signed into law on June 5, 2020. H.R. 7010 provides additional guidance related to deferral and maturity timeframes and provides greater clarification to several key terms stated within the original CARES Act. Trustar Bank will continue to update our clients as guidance is provided by the SBA as to how they will implement the defined changes under the new law.
SBA & Treasury have recently released additional guidance:
- Frequently Asked Questions For Loan Forgiveness (Released 3/12/21)
- Summary of PPP lending as of 7/31/20 (Released 8/3/20)
Paycheck Protection Program Presentation
As your bank, we recognize that you may have questions about the Paycheck Protection Program (PPP). To further our commitment to you during these difficult times, we recently conducted a webinar for you to hear from PPP experts. This resource was an opportunity for clients to ask questions specific to their businesses regarding PPP eligibility and the forgiveness process.
Topic: SBA PPP Loan Eligibility and Forgiveness Process
To view the Meeting Recording, please click here.
Access Password: 3D+e+#5*
Thank you to our presenters!
Jeremy Tomes of Troutman Sanders
Mr. Tomes joined us to review PPP eligibility requirements. Mr. Tomes has established a reputation as an SBA lending expert and steadfast source of knowledge for his clients. He helps clients understand and comply with complex regulatory and legislative policies, including the CARES Act, SBA SOPs and related reporting and compliance issues for both borrowers and lenders.
Wesley Allen of Dixon Hughes Goodman
Mr. Allen joined us to discuss the forgiveness calculation of the PPP. Mr. Allen’s 13 years of experience includes working with financial institutions in the areas of process and control evaluation, external financial reporting to regulatory agencies and investors, and compliance with laws and regulations. In addition, Mr. Allen has experience in providing loan policy consulting and derivative accounting consulting.
Additional resources are included below for convenient reference.
Full Text of the CARES Act
- Key provisions relating to small business loans are contained in Division A of the Act (Sections 1101 through 1109).
Summaries of the CARES Act
- American Bankers Association
- National Association of Government Guaranteed Lenders
- U.S. Chamber of Commerce
- U.S. Senate Committee on Small Business & Entrepreneurship
Small Business Administration Resources
- Paycheck Protection Program (check for updates): https://www.sba.gov/funding-programs/loans/paycheck-protection-program
- Small Business Size Regulations
- Use of Proceeds in SBA Loan Programs