(Information as of 7/8/2020)*
At this time, we are not accepting PPP Forgiveness Applications
The SBA PPP Loan Forgiveness program continues to be in flux with changes occurring often. SBA continues to provide additional guidance in an effort to simplify the forgiveness process. Because of this, we are postponing taking PPP Forgiveness Applications until final guidance is issued. Please use this site as a resource. Additional questions can be sent to PPPForgiveness at ffnwb dot com. Thank you for your patience during this time.
- From 75% to 60%
- From 25% to 40%
- Qualifying Expenses from 8 to 24 weeks
- Borrowers can restore previous staffing or salary levels and still qualify for loan forgiveness from June 30, 2020 to December 31, 2020
- Repayment amount of a PPP loan that is not forgiven from 2 to 5 years
- Defer principal and interest payments on loan proceeds after the covered period.
- To the reduction to PPP loan forgiveness based on employee staffing levels
- The CARES Act restriction that made borrowers with forgiven PPP loan proceeds ineligible to defer payroll tax payments
1. Submit the PPP Loan Forgiveness Application to Lender with supporting documentation (we are not accepting applications at this time).
2. Lender has 60 days from receipt of a complete application to issue a decision to SBA
- Lender must request payment from SBA
3. SBA will remit the appropriate forgiveness amount to the lender within 90 days
- If applicable, SBA will deduct EIDL Advance Amounts from the forgiveness amount
- SBA will determine in the course of its review that the borrower is eligible for forgiveness
4. Lender is responsible for notifying the borrower of the forgiveness amount
- 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 five-year maturity of the loan
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. In a separate interim final rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities, SBA will describe its procedures for reviewing PPP loan applications and loan forgiveness applications
- Mortgage interest on real or personal property
- Leasing agreement for real or personal property
- Covered utility payment (Electricity, gas, water, transportation, telephone or internet access)
- PPE expenses
Covered Period:The Covered Period is either: (1) the 24-week (168-day) period beginning on the PPP loan Disbursement Date, or (2) if the borrower received it’s PPP loan before June 5, 2020, the Borrower may elect to use an eight-week (56-day) Covered Period. For example, if the borrower is using a 24-week Covered Period and received its’ PPP loan proceeds on Monday, April 20, the first day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, October 4. In no event may the Covered Period extend beyond December 31, 2020.
Alternative Payroll Covered Period: 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 of 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 it’s 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 is, 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 this 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 this application to “the Covered Period” only. In no Event may the Alternative Payroll Covered Period extend beyond December 31, 2020.
*From Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules 6/17/2020
The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. The actual amount of loan forgiveness will depend in part, on the total amount spent over the 24-week period beginning on the date your PPP loan is disbursed (“covered period”) on:
Forgiveness has been limited for owner compensation for individuals with self-employment income who file a Schedule C or F to either eight (8) weeks’ worth (8/52) of 2019 net profit (up to $15,385) for an eight-week covered period or 2.5 months’ worth (2.5/12) of 2019 net profit (up to $20,833) for a 24-week covered period per owner in total across all businesses.
This approach is consistent with the CARES Act and its focus on keeping workers paid.
A borrower with one other employee would receive a maximum loan amount equal to five months or payroll (2.5 months of payroll for the owner plus 2.5 months of payroll for the employee). If the owner laid off the employee and availed itself of the safe harbor in the Flexibility Act from reductions in loan forgiveness for a borrower that is unable to return to the same level of business activity the business was operating at before February 15, 2020, the owner could treat the entire amount of the PPP loan as payroll, with the entire loan being forgiven. This would not only result in a windfall for the owner, by providing the owner five months of payroll instead of 2.5 months, but also defeats the purpose of the CARES ACT of protecting the paycheck employee. *For borrowers with no employees, this limitation will have no effect, because the maximum loan amount for such borrowers already includes only 2.5 months of payroll.
From Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules 6/17/2020
Identify each employee — But, do not include Independent Contractor, Self-Employed Individuals, or Owner Employees or Partners.
The CARES Act provides that the amounts spent on “payroll costs” during the 24*-week covered period are eligible for forgiveness. Cash Compensation costs include:
*S-Corps will not incur benefits
Compensation does not include:
A borrower is using a 24-week covered period. This borrower reduced a full-time employees weekly salary from $1,000 per week during the reference period to $700 per week during the covered period. The employee continued to work on a full-time basis during the covered period, with FTE of 1.0. In this case, the first $250 (25% of $1000) is exempted from the loan forgiveness reduction. The borrower seeking forgiveness would list $1,200 as the salary/hourly wage reduction for that employee (the extra $50 weekly reduction multiplied by 24 weeks). If the borrower applies for forgiveness before the end of the covered period, it must account for the salary reduction for the full 24-week covered period (totaling $1,200).
(FTE = Employees that work 40 hours or more on average per week)
ABC Co. borrowed a $100,000 PPP loan on April 10, 2020. ABC Co. incurred $100,000 of costs eligible for forgiveness over the next 24 weeks.
For the 24-week period beginning April 20, ABC Co. Had the following employees:
A: who averaged 45 hours per week during the period,
B: who averaged 40 hours per week during the period,
C: who averaged 28 hours per week, and
D and E: who averaged 20 hours per week.
For the 24-week covered period, ABC Co. had 3.7 FTEs:
A: 45/40 capped at 1.0
B: 40/40 = 1.0
C: 28/40 = 0.7
D and E: 20/40 = 0.5 each (multiply by 2 employees)
If ABC Co. chose instead to use the simplified method, it would have 3.5 FTEs:
A: 45/40 capped at 1.0
B: 40/40 = 1.0
C: 28/40 = 0.5
D and E: 20/40 = 0.5 each (multiply by 2 employees)
The SBA will ignore a reduction in salary during the covered period relative to the 1st quarter of 2020, but ONLY IF that salary is restored to what it was on February 15, 2020 by December 31, 2020.
FTE Reduction Safe Harbor
The amount of loan forgiveness may ALSO be reduced if the borrower reduces headcount during the covered period. Just as we saw with the reduction resulting from reduced salary, however, the reduction may be ignored if a safe harbor is satisfied.
Your forgiveness is reduced if your average number of full-time equivalent employees (FTEs) during the covered period is less than the average number of FTEs for any of the following periods, at your election:
A borrower may ignore the required reduction if a safe harbor is met. To satisfy the safe harbor, the borrower must first use the methodology described above to determine FTEs for two additional periods:
If the average FTEs for the first period is less than the FTEs for the second period, the borrower must then compare the average FTEs for the second period to the total FTEs as of December 31, 2020. If the FTEs on December 31, 2020 are greater than the FTEs on February 15, 2020 the safe harbor is met and no reduction is required.
SBA and Treasury are adopting a regulatory exemption to the reduction rules for borrowers who have offered to rehire employees or restore employee hours, even if the employees have not accepted.
The borrower’s loan forgiveness amount will not 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 borrower may exclude any reduction in full-time equivalent employee headcount that is attributable to an individual employee if: