Loan Forgiveness Updates
PPP Loan Payments
Some of you may recall that your PPP loan documents may have shown a payment date as early as November 2020. This payment date was based on the original guidelines of the program, which were later changed by the PPP Flexibility Act of 2020. Please Note: Payments on any outstanding balances will NOT begin until the earlier of 10 months after the end of your covered period or actual receipt of loan forgiveness funds from the SBA.
- The earliest possible payment date for a business that received PPP funds on April 15, 2020 and chose not to apply for loan forgiveness would be August 2021 (if they chose the 24-week covered period).
- If a business applies for loan forgiveness in January 2021, and the loan is fully forgiven in March 2021, the only payment ever made for the loan is the one for principal and interest made by the SBA in March.
- If a business applies for loan forgiveness in January 2021, and the loan is only partially forgiven in March 2021, payments on the remaining balance will begin in April 2021.
We shared with you in several past communications that Congress is considering legislation that could greatly simplify the forgiveness application process, especially for those borrowers with loans under $150,000. This legislation is still tied up in the negotiations for the next COVID-19 relief package, but we remain optimistic that these changes will be implemented. More recently, it has been reported that a simplified process for loans under $50K may be possible without legislative action. For those of you who fall into the $150,000 and under category, it may still be beneficial to wait; however, we are happy to consider your forgiveness application at this time and process it for SBA review.
Most of our PPP borrowers should qualify to fill out Form 3508EZ (the simplified application). Please see below for 3508EZ qualification criteria. If you do not believe that you qualify for the 3508EZ, or you have any questions regarding these qualifications, please contact your lender.
24-Week Covered Period
During the first two months of the forgiveness process, it has become clear that the easiest cost to document, by far, is payroll. Many of our borrowers have found that by selecting the 24-week covered period, they have enough eligible payroll costs that they do not need to include or document mortgage interest, rent, or utilities to qualify for full forgiveness.
In general, to document payroll for Form 3508EZ, borrowers need to provide each of the following:
- Third-party payroll service reports or bank statements showing the eligible expenses (if you provide bank statements, please indicate all payroll related transactions).
- IRS Form 941 for the second and third quarter of 2020.
- State unemployment insurance reports for the second and third quarter of 2020.
Note that if you are including health insurance or retirement contributions made by the business, you will also need to provide payment receipts, cancelled checks, or account statements detailing those expenses.
Sole Proprietors & Other Schedule C Businesses
In general, Schedule C borrowers with no employees who choose the 24-week covered period are eligible to claim the full loan amount as payroll expense. In this case, the 2019 Schedule C will need to be uploaded as documentation.
3508EZ Qualification Criteria
In order to qualify for the 3508EZ Form (the simplified application), you need to be able to certify one of the following:
- You are a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the forgiveness application.
- You were unable to operate during 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 and you did not reduce annual salary or hourly wages of any employee by more than 25% during the covered period (compared to the period between January 1, 2020 and March 31, 2020).
- You 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 and you did not reduce annual salary or hourly wages of any employee by more than 25% during the covered period (compared to the period between January 1, 2020 and March 31, 2020).
Still have questions?
Contact your lender. He or she will be happy to assist you.
If you are a borrower who received an SBA Paycheck Protection Program (PPP) loan, you are aware that your business may qualify for forgiveness up to the full principal amount of your loan. As of August 10, 2020, the SBA is accepting loan forgiveness applications.
Following is important information about the application process. A link to WGSB's borrower portal is also below.
When Do I Apply?
You have until 10 months from the end of your covered period (the 8-week or 24-week period from the date of loan disbursement) to apply for loan forgiveness, but you can also apply before the end of the covered period if you have used all of the loan proceeds for which you are requesting forgiveness.
However, there are a few considerations to keep in mind as you decide when to submit your application:
- The Federal Government is currently negotiating an additional stimulus bill, which includes proposed changes to the PPP forgiveness process. If approved, this could include a one-page attestation form for borrowers with loan amounts under $150,000, which would simply require you to attest to a good faith effort to comply with the requirements of the program. While supporting documentation would still need to be maintained, it would not need to be submitted with the application. The bill also includes a proposal that would provide considerable relief in the forgiveness process for borrowers with loan amounts between $150,000 and $2,000,000. There are no guarantees that either proposal will be included in the final bill; however, if approved, the process would be tangibly simpler than the current requirements.
- While the PPP program initially required an eight-week covered period, legislation was subsequently passed that (a) increases the covered period to 24 weeks for borrowers who applied after June 5 and (b) allows borrowers who applied before June 5 to choose between the two covered periods. The 24-week covered period may provide borrowers with a higher level of forgiveness and may allow them to qualify based solely on payroll expense, which is often easier to document than non-payroll expense (based on the current guidelines). In most cases, the timing of applying for forgiveness will depend on the date of your loan documents and the length of your covered period, but borrowers that select a 24-week covered period will need to wait at least until tax forms for the quarter ending on September 30, 2020 are prepared and can be included with the application.
How Do I Apply?
For your convenience, WGSB has invested in an online borrower portal to help facilitate your application for PPP loan forgiveness. This web-based application is user-friendly, will simplify how you navigate the process, and will include much of your specific loan information pre-filled. It will also allow for easy upload of your required documentation.
WGSB's Borrower Portal
Login Credentials - To login, you will need your Tax Identification Number (TIN) or Social Security Number (SSN) – whichever you use to file your taxes – and your business name, exactly as it is shown in the email you received from Fiserv.com on Monday, August 10. If you need assistance with your login credentials, please contact your lender.
One-Time PIN (OTP) – For security reasons, a one-time PIN will be emailed to you each time you login. Enter the PIN as instructed to access the borrower portal.
Once you have accessed the portal, follow the instructions to complete your application. We highly recommend clicking the “Save” button often as you work your way through the process. We understand that you may not be able to complete all the requirements in one sitting and we do not want you to waste any of your valuable time by losing previously entered information.
The portal also includes a Knowledge Resource Center that you should find very helpful in answering most questions on loan forgiveness. This resource was created and is maintained by the national accounting firm Ernst & Young and will be updated regularly as future changes occur.
How Does the Process Work?
Once you have reviewed the instructions and collected all your documentation, use the borrower portal to submit your application. After submission, WGSB will review your application and follow-up with you as needed to ensure it is complete. Once confirmed, your application will be submitted to the SBA for final approval. Note that the SBA has up to 90 days to make a decision.
Still have questions?
Contact your lender. He or she will be happy to assist you.