On December 21, 2020, Congress authorized another round of Paycheck Protection Program (PPP) funding as part of the COVID relief bill. Peoples Bank is now accepting PPP first and second draw loan applications.
For information on eligibility, documention required, or to apply for either program, please choose from the selections below:
In January 2021, the U.S. Small Business Administration (SBA) released updates to all PPP forgiveness forms (Form 3508, 3508EZ, and 3508S), which includes new language to match the changes to the program that were enacted when the new stimulus bill passed Congress on December 21st, 2020.
Peoples Bank is in the process of transitioning submitted forgiveness applications to the new form. We will not be processing applications using the old forms due to disclosure changes on the new forms.
The SBA will begin accepting the new forms on March 5th. Peoples Bank will submit forgiveness applications via the updated Form 3508 then. Customer's should receive a DocuSign email to sign the new forgiveness application within a week of March 5th. The updated form requires fewer calculations and less documentation allowing for a much quicker review. Borrowers will still be required to keep the documentation for four years, and the SBA may still audit any loan.
Customers who have received a Paycheck Protection Program loan should ensure they understand which expenses are eligible for forgiveness and should continue to document expenses as evidence of how the funds are used. The expenses should be tracked for a 24-week period (not to extend beyond 12/31/2020), which begins the date the loan proceeds are disbursed to the customer. The 24-week period applies to all loans made on or after June 5. If you received your PPP loan before June 5, you can choose between the original 8-week covered period or the 24-week covered period.
Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Not more than 40% of the forgiven amount may be for non-payroll costs. Please note that pending the new legislation, the list of eligible expenses for forgiveness will be updated to include property damage, supplier costs, PPE, and other costs for adapting to COVID.
If you do not apply for forgiveness within 10 months after the last day of your covered period, then PPP loan payments will no longer be deferred. If you have not started the forgiveness process by that date, Peoples Bank will convert your note and you will need to begin making loan payments.
Terms of the Paycheck Protection Program, including forgiveness, are subject to legislative and regulatory change at any time. Additionally, the SBA may issue further clarifying guidance to borrowers and lenders. Peoples Bank will endeavor in good faith to process forgiveness applications based upon the program terms and guidance available at the time your forgiveness application is reviewed. Borrowers are reminded that the SBA, and not Peoples Bank, has final authority in approving or denying forgiveness applications.
No payments are required from the borrower until either the loan forgiveness application period has ended or a decision on the forgiveness amount has been determined.
Below are links to the required documents needed to apply for forgiveness. Please note that with the new legislation, businesses that took PPP loans $150,000 and under are not required to submit additional supporting documentation beyond the forgiveness application.
The SBA set the proportion of PPP funding that must be used on payroll cost to qualify for full forgiveness at 60%. This means to qualify for full loan forgiveness, you must use at least 60% of your loan funds for eligible payroll costs. You can use up to 40% of your loan funds for eligible non–payroll costs. To prepare for loan forgiveness, it’s important to track and retain all documentation to support payments made with your PPP loan funds.
We have encountered some common documentation errors that we would like you to be aware of:
- EIDL advances: There is a section of the application to list any EIDL advances. This section is used for advances only, and borrowers should not list any EIDL grants or loans. We will contact you if we see amounts in this section to confirm that it is an advance and to ensure borrowers understand that this will leave a gap in forgiveness, resulting in a loan that will require payments after forgiveness is finalized. Please note, the new legislation repeals the requirement to deduct EIDL advances from your forgiveness application. The SBA will be required to provide forgiveness for any amounts disallowed because of EIDL advances when that legislation is passed.
- Proof of use of funds: We are seeing common errors in documentation submitted to show proof of use of funds. Please double-check the instructions for the 3508 Form you are using and note the following:
- If relying on IRS Form 941, please remember that it must justify 8-weeks of payroll at the submitted amount.
- For leased spaces, both proof of payments and leases are required for documentation.
- For utilities, both invoices and proof of payment are required for documentation.
- Documentation must come from an approved source. While Excel spreadsheets are helpful for us to calculate total forgiveness, they are not adequate for providing proof that the funds were used appropriately.
- The Paycheck Protection Program provides small businesses with funds to pay up to 24-weeks of payroll costs (not to extend beyond 12/31/2020), including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.
- Funds are provided in the form of loans that may be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (at least 60% of the forgiven amount must be used for payroll).
- All loans issued on or before June 4, 2020, will have a two year term (6-months deferred interest with any balance not forgiven amortized over 18-months). All loans issued after June 4, 2020, will have a five year term (6-months deferred interest with any balance not forgiven amortized over remaining 54-months).
- Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
- On December 21, 2020, Congress authorized another round of Paycheck Protection Program (PPP) funding as part of the COVID relief bill.
On June 22, the SBA issued revisions to the Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule. The guidance clarified the Safe Harbor FTE exemption as it relates to reductions in staff related to mandated closures or social distancing requirements.
"…borrowers that can certify that they have documented in good faith that their reduction in business activity during the covered period stems directly or indirectly from compliance with such COVID Requirements or Guidance are exempt from any reduction in their forgiveness amount stemming from a reduction in FTE employees during the covered period. Such documentation must include copies of applicable COVID Requirements or Guidance for each business location…"
If all funds have been used and you wish to apply for forgiveness, the Bank can accept forgiveness applications even if the 8 or 24-week covered period has not been completed (i.e., if you have used all PPP funds on eligible expenses in 16 weeks, borrowers can apply at that time instead of having to wait until the 24-week covered period is over to apply).
The SBA clarified that partial loan forgiveness will also be available under the 60% threshold. Specifically, if a borrower uses less than 60% of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs. Non-payroll expenses may be up to 40% of the forgiven amount.
With the new legislation, the list of eligible expenses for forgiveness will be expanded to include property damage, supplier costs, PPE, and other costs for adapting to COVID.