Paycheck Protection Program
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We are currently not accepting Paycheck Protection Program (PPP) forgiveness applications.
On Thursday, Oct. 8, 2020, the Small Business Administration released PPP Loan Forgiveness Application Form 3508S and instructions, which is available for borrowers meeting criteria listed on the top of the application. In general, if you received a PPP loan of $50,000 or less and have not, together with your affiliates, received PPP loans totaling $2 million or greater, you may use the new streamlined form once notified that the Bank of Delight is accepting applications.
We understand your desire to begin the forgiveness process. We will send you an invitation to apply once we begin accepting forgiveness applications. Please note that no payments are due until the end of your deferral period, which is 10 months after the end of the 24 weeks (or 8 weeks if you so choose) covered period (or 10 months after the end of 2020, whichever occurs first). Once you apply for forgiveness, payments on any unforgiven portion of your loan will be due in the first month after the SBA remits a forgiveness payment to the Bank of Delight.
One of the main reasons the Bank of Delight is not accepting forgiveness applications is the bank is hoping for further Congressional action in streamlining the forgiveness process. There are bills in Congress that would streamline the process, which would be beneficial to the borrowers and the bank.
Additional Considerations
- Your covered period for forgivable expenses is 24 weeks, but if you received your loan prior to June 5, you have the option to choose an 8-week covered period. The covered period is timeframe you have to spend your PPP funds appropriately in order to have your loan forgiven.
- If your payroll expenses for the covered period are greater than your loan forgiveness amount, you do not have to provide documentation related to non-payroll expenses.
- If you do not apply for forgiveness, or if there is a balance remaining after SBA remits its forgiveness payment, you will be required to begin making payments on the balance due in accordance with the terms of your loan documents.
Loan Forgiveness
The Paycheck Protection Program Flexibility Act of 2020 (‘PPP Flexibility Act’), which was signed into law on June 5, 2020, modifies the loan forgiveness process and provides significant benefits to PPP loan borrowers.
On June 17, 2020, the SBA published updated forgiveness forms aligned with the PPP Flexibility Act. To ensure consistency and clarity for our clients. We will only be accepting applications based on the newest form published by the SBA. You can reference the SBA Loan Forgiveness Application and Instructions and the SBA Loan Forgiveness Form EZ and Instructions on the Treasury site. Remember, if you meet the $50,000 or less limit on the borrowing amount and the affiliate limits, you would use the SBA PPP Loan Forgiveness Application Form 3508S and instructions.
The SBA launched its PPP Forgiveness Platform on Monday, Aug. 10. This platform allows the Bank of Delight and other lenders to submit completed PPP loan forgiveness applications to the SBA for its review. At this time, the Bank of Delight is continuing to develop its forgiveness process and await further action from Congress concerning the forgiveness of PPP loans.
What You Need to Know Before Applying
If you used PPP loan proceeds for qualified expenses, PPP loans are eligible for forgiveness up to 100% of the loan amount.
PPP borrowers are responsible for understanding the SBA’s rules. We are providing this information based on the text of current laws and regulations, and guidance from the SBA (and other regulatory authorities). The information that we have provided is subject to modification based on any future rules or guidance issued by the SBA or other relevant regulatory authorities, as well as any new U.S. federal government laws, regulations, or programs.
Recommended Supporting Documents
The information contained in this document is based on laws, rules, regulations, and related guidance with respect to the Paycheck Protection Program (PPP), including guidance issued by the U.S. Small Business Administration (SBA) on August 24, 2020. We will notify you of any updates when needed. In the event of any discrepancies between the information on this site and the SBA’s site, please follow official SBA guidance.
Eligible Cost
Recommended Supporting Documents
information is not included in the third-party payroll reports, see below for what is to be provided.
Or
Bank account statements and payroll tax forms (e.g. form 941) and state quarterly wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
Note: If providing self-prepared payroll report or schedule, please provide a consolidated payroll register with summary figures from all paycheck dates in the covered period. Reports must include company totals and clearly list employer-paid state and local taxes.
Employer contributions for employee health insurance and employee retirement plans
Account statements, payment receipts or cancelled checks documenting the amount of any employer contributions to employee health insurance and retirement plans included in the forgiveness amount, unless details are included in the third-party payroll service report (if applicable).
Average full-time equivalency (FTE) for Form 3508
FTE report showing average number of FTE employees per week during one of these periods:
February 15, 2019 to June 30, 2019; or
January 1, 2020 to February 29, 2020; or
For a seasonal employer, one of the periods above or any consecutive 12-week period May 1, 2019 to September 15, 2019
Documents may include payroll reports, or payroll tax forms (e.g. form 941) and state quarterly wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
Average full-time equivalency (FTE) for Form 3508EZ
If using Form 3508EZ and you meet the conditions related to reduction of salaries, number of employees and hours, you will need to document the average number of FTE employees on payroll employed on January 1, 2020 and at the end of the covered period.
Business Mortgage Interest Payments, and Business Debt Interest Payments
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.
Or
Copy of lender amortization schedule and receipts, or cancelled checks verifying eligible payments from the covered period.
Business Rent or Lease Payments
Lessor account statements, from February 2020 and from the covered period through one month after the end of the covered period, verifying eligible payments.
Or
Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the covered period.
Business Utility Payments
Account statements or a summary page as long as it contains account owner and address, date of service and amount paid.
Or
Invoices from February 2020 and invoices paid during the covered period and receipts and cancelled checks.
Documents submitted should include all periods overlapping the 24-week covered period (or 8-weeks if selected).
While the bank may have some of these documents on file, the SBA requires you, as the borrower, to supply the documents to validate your expenses.
Notes on payroll documents:
Payroll Reports should include all periods overlapping the 24-week covered period (or 8-weeks if selected), and show figures for each of the following eligible costs:
- Cash compensation;
- Employer contributions for employee health insurance;
- Employer contributions to employee retirement plans; and
- Employer state and local taxes assessed on employee compensation.
It is preferred if the report shows separate cash compensation figures for:
- Employees who received compensation at an annualized rate <=$100,000 for all pay periods in 2019; and
- Employees who received compensation at an annualized rate >$100,000 for all pay periods in 2019.
[For Form 3508EZ, there is no need to separate employees by 2019 compensation level.]
If you have completed the PPP Schedule A Worksheet, we suggest you provide it when you submit your application.
This detail helps us validate the line item figures shown on the forgiveness application forms.
Cash compensation:
- Eligible cash compensation includes: gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or sick leave), and allowances for dismissal or separation. This may include bonus, hazard pay, and salaries to furloughed employees.
- Do not include compensation in excess of an annual salary of $100,000 annualized, as prorated for the covered period. Therefore, the payroll schedule should show no employee with more than $46,154 in compensation if selecting the 24-week period (or $15,385 for the 8-week period, if eligible and selected).
- Do not include payments to independent contractors, or compensation to employees whose principal place of residence is outside the US; or qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.
Compensation to owners:
- Owner-employees, self-employed individuals and partners are eligible for loan forgiveness on the basis of their 2019 compensation. The maximum amount of loan forgiveness you can claim as compensation per individual owner or partner is $20,833 (which is 2.5 months equivalent of $100,000 per year). Note that if you select the 8-week covered period, the maximum claim is set at $15,385 (or 8 weeks equivalent of $100,000).
- Self-employed Schedule C (or Schedule F) filers. If you did not submit 2019 IRS Form 1040 Schedule C (or F) when you initially applied for the PPP loan, include it with your forgiveness application.
- General Partners. If you are a partnership and did not submit 2019 IRS Form 1065 K-1s when you initially applied for the PPP loan, include it with the partnership’s forgiveness application.
- For owner-employees of C-corps & S-corps, to claim forgiveness, you must submit payroll documents detailing cash compensation paid to owner-employee(s) during the covered period selected, up to the eligible amount stated previously.
Note on full-time equivalency (FTE):
FTE counts both full-time (FT) and part-time (PT) employees. An FT employee is counted as 1.0 FTE, and a PT employee is counted by average number of hours per week divided by 40. For example, a PT employee working 32 hours would count as 0.8 FTE. The SBA also offers a simplified method that assigns all PT employees as 0.5, if that is preferable.
Additional information on PPP loan forgiveness:
More information on SBA PPP loan forgiveness can be found on the SBA site. Instructions for PPP Loan Forgiveness Application Form 3508, Form 3508EZ, and Form 3508S, including details on required documents, can be found on the following pages: