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Paycheck Protection Program (PPP) – UPDATE
To our Small Business and Non-Profit Partners,

We are pleased that we were able to assist your organization with a PPP loan through the SBA Cares Act.

We will continue to ensure that you have the most up-to-date information on the loan forgiveness component of the program. We are updating this page on a regular basis, so please check here for new information and guidelines.

SBA Guidance on PPP Loan Forgiveness-May 21, 2020

The U.S. Small Business Administration (SBA) & U.S. Department of the Treasury have released the Paycheck Protection Program (PPP) Loan Forgiveness application and related instructions.

With the application and instructions now formalized, you can plan for how much of your loan will be forgiven at the conclusion of the eight-week covered period, which began with the disbursement of your loan and gather the required documentation. Please remember that while PPP loans are eligible for forgiveness by the SBA, any portion of the loan that is not forgiven, must be repaid to Spring Bank by you and it is up to you to take the necessary steps to make sure that your loan is forgiven by the SBA.

Using the SBA link below you will find:

  • Loan Forgiveness Application and Directions
  • Loan Forgiveness Calculation Form
  • List of Documents that Each Borrower Must Submit with its PPP Loan Forgiveness Application

 

There is also important information about:

  • Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
  • Statutory exemptions from loan forgiveness reduction based on rehiring by June 30,2020
  • Exemptions from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined

Click here for application and instructions.

 

SBA Guidance on PPP Loan Forgiveness-May 13, 2020

How is the Maximum Amount Eligible for Forgiveness Calculated?

  • The amount eligible for forgiveness is the amount of costs actually incurred and paid during the 8-week period beginning on the date of disbursement of a PPP loan.
  • At least 75% of the amount eligible for forgiveness must be attributable to payroll costs.

 

What Costs are Included in the Forgiveness Calculation?

  • Payroll costs (as defined in “How is the Maximum Loan Amount Calculated” above) Note: Additional wages paid to tipped employees may be included.
  • Payments of interest on eligible mortgage obligations. A mortgage is eligible if it was incurred before February 15, 2020, is a liability of the Applicant, and is a mortgage on real or personal property. Note: This does not include any prepayment or payment of principal;
  • Rent (including rent under a lease agreement). Eligible rent must be a liability of the Applicant that was obligated under a leasing agreement in force before February 15, 2020; and
  • Utilities. Eligible utility payments are those that are for a service that began before February 15, 2020, and include: electricity, gas, water, telephone, or internet service

 

What Will Reduce the Amount Eligible for Debt Forgiveness?

  • The amount eligible for debt forgiveness will be reduced when a borrower reduces its number of employees or tipped workers or the salaries or wages of employees.

 

How is the Reduction in Debt Forgiveness Calculated?

  • Debt forgiveness is reduced proportional to the reduction in the average number of employees per month during the covered period, when compared to a specified period prior to the effects of COVID-19.

 

What Documents are Required to Request Forgiveness?

  • Verification of the number of full-time equivalent employees on payroll and pay rates, to include payroll tax filings reported to the IRS and state income, payroll, and unemployment insurance filings.
  • Cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered mortgage obligations, lease obligations, and utility payments. o Sole proprietors and independent contractors may not include mortgages, rent or utility in forgiveness unless the Borrower’s 2019 or 2018 IRS Form 1040, Schedule C, documents amounts reported for these categories.
  • A certification from an authorized representative of the Borrower that the documentation provided is true and correct, and the amount requested for forgiveness was used to retain employees, make interest payments on covered mortgage obligations, make payments on covered rent obligations, or make covered utility payments.
  • Any other documentation required by SBA.

 

What happens to the remaining balance after Forgiveness?

  • The loan balance will be repaid by the Borrower in accordance with PPP guidelines.

 

What is the Deadline for Requesting Forgiveness?

  • Borrowers must submit requests for forgiveness to the Lender no later than June 30, 2021. Lenders will have 60 days to approve or decline the request once received from the Borrower.