Paycheck Protection Program Loan Forgiveness
PAYCHECK PROTECTION PROGRAM - FREQUENTLY ASKED QUESTIONS (FAQs) ON PPP LOAN FORGIVENESS
CLICK HERE TO ENTER THE FARMERS PPP FORGIVENESS PORTAL
This Portal is also referenced in the Loan Forgiveness Preparedness and Important Information to Keep in Mind sections below.
GENERAL INFORMATION TO KNOW
Recently, the Small Business Association (SBA) announced how businesses can request Paycheck Protection Program (PPP) Loan Forgiveness with both a new 3508EZ application form and a revised 3508 application form.
- A new PPP Loan Forgiveness Application Form (3508EZ) published by the SBA for Borrowers that:
- Did not reduce the number or hours of your employees, and did not reduce the salaries or wages of your employees by more than 25%
- Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of your employees by more than 25%
- Have no employees and are self-employed
- We suggest that you review the SBA Checklist for and Instructions for Using SBA Form 3508EZ.
- If Borrowers don’t meet the 3508EZ criteria, please use the updated PPP Loan Forgiveness Application Form 3508, along with these PPP Loan Forgiveness Application Instructions.
ADDITIONAL UPDATES FROM THE SBA
- The following bullet points apply to both PPP Loan Forgiveness Application Forms:
- Borrowers now have a 24-week Covered Period (if you were funded prior to June 5, 2020, you can still use the 8-week period and Alternative Payroll Covered Period) to spend loan funds starting the date loan funds were deposited into your Farmers Business Checking Account.
- At least 60% of funds must be used for eligible payroll costs to qualify for full Loan Forgiveness, which is down from 75%.
- Borrowers can use up to 40% of funds for eligible non-payroll costs, up from 25%.
- If Forgiveness is sought, you won't have to start making payments until the SBA makes a decision or remits the funds.
- If you don’t request Forgiveness, payments will start within 10 months after the end of Covered Period.
BEFORE YOU REQUEST LOAN FORGIVENESS
Before you request Loan Forgiveness, it is recommended that you document your eligible payroll and non-payroll costs. This documentation should include and encompass your payroll and non-payroll costs incurred or paid during your Covered Period or your Alternative Payroll Covered Period.
DOCUMENTS REQUIRED WHEN REQUESTING FORGIVENESS THROUGH FARMERS NATIONAL BANK:
- Business Mortgage Interest Documents - Include obligations/services prior to February 15, 2020
- Bank statements that show payments to the payee listed on the mortgage statement
- Mortgage statements where the payee is identified
- Business Rent/Lease Documents - Include rent/lease obligations prior to February 15, 2020
- Bank statements that list the payee on the rent/lease agreement
- Rent/lease agreement where the payee is identified
- Business Utility Documents - Include utility services prior to February 15, 2020
- Copies of invoices
- Cancelled checks or bank statements to verify utility payments
- Payroll Documents - Cash compensation and non-cash benefits
- State quarterly tax forms
- Payroll tax forms (typically IRS Form 941) showing employee wages, tips, and other compensation
- Bank statements or third-party payroll provider reports noting cash compensation paid to employees
- Cancelled checks or bank statements verifying employer contributions to health insurance and retirement plans
- Full-Time Employees (FTE) documents - Documents supporting the average number of FTE employees (If you don’t have employees, this is not required.)
- State quarterly tax forms
- Payroll tax forms (typically IRS Form 941) showing employee wages, tips and other compensation
LOAN FORGIVENESS PREPAREDNESS
- You’ll need to be enrolled in the Farmers PPP Forgiveness Portal.
- Please review and familiarize yourself with the SBA’s Checklist for Using SBA Form 3508EZ to understand which form applies to your Forgiveness request.
- Borrowers are not required to complete the 3508EZ or 3508 form before starting your online Forgiveness request. This information will be provided when requesting Forgiveness through Farmers PPP Forgiveness Portal.
- If the 3508 form applies, then you must complete the PPP Schedule A Worksheet before requesting Forgiveness.
- Request a payroll report from your payroll provider (if applicable).
HOW TO ACCOUNT FOR PAYMENTS TO FURLOUGHED EMPLOYEES DURING THE COVERED PERIOD (ACCORDING TO THE SBA, WWW.SBA.GOV)
Are salary, wages, or commission payments to furloughed employees; bonuses; or hazard pay during the covered period eligible for loan forgiveness?
Yes. The CARES Act defines the term "payroll costs" broadly to include compensation in the form of salary, wages, commissions, or similar compensation. If a Borrower pays furloughed employees their salary, wages, or commissions during the covered period, those payments are eligible for forgiveness as long as they do not exceed an annual salary of $100,000, as prorated for the covered period. The Administrator, in consultation with the Secretary, has determined that this interpretation is consistent with the text of the statute and advances the paycheck protection purposes of the statute by enabling Borrowers to continue paying their employees even if those employees are not able to perform their day-to-day duties, whether due to lack of economic demand or public health considerations. This intent is reflected throughout the statute, including in section 1106(d)(4) of the Act, which provides that additional wages paid to tipped employees are eligible for forgiveness. The Administrator, in consultation with the Secretary, has also determined that, if an employee’s total compensation does not exceed $100,000 on an annualized basis, the employee’s hazard pay and bonuses are eligible for loan forgiveness because they constitute a supplement to salary or wages, and are thus a similar form of compensation
IMPORTANT INFORMATION TO KEEP IN MIND:
- Forgiveness must be requested through Farmers. It is not automatic.
- Make sure you are enrolled in the Farmers PPP Forgiveness Portal.
- Standard business information will be pre-filled on your Forgiveness request, along with:
- SBA PPP Loan Number
- Farmers PPP Loan Number
- Funded PPP Loan Amount
- PPP Loan Disbursement Date
- All other applicable sections requiring input are the responsibility of the Borrower.
- Borrowers need to certify and document that the loan funds were used for SBA-eligible purposes.
- Payments will not be required until the SBA provides a decision on your request or remits the funds. This could take up to five months for Farmers and the SBA to review most complete applications. (Actual times will vary.)
- After you submit your request, you’ll be able to check your Forgiveness status online.
- Once the SBA makes a decision, you will be notified.
As the Borrower, it is your obligation to understand the SBA's rules. Other SBA eligibility requirements may apply. Farmers National Bank and its affiliates do not provide tax or legal advice. Please consult tax and legal advisors to determine how this information may apply to your own situation.
For questions regarding your PPP Loan Forgiveness Application Request, please contact your Farmers National Bank lender directly.