SBA Paycheck Protection Program
The Small Business Administration (SBA) has informed trade associations that Paycheck Protection Program (PPP) funding has been exhausted and that the PPP application portal has stopped accepting applications for loans.
Forgiveness of Paycheck Protection Program Funding
Peoples Bank is now accepting PPP forgiveness applications for all First and Second Draw Loan requests. We are processing these requests through our online portal. You must wait at least 8 weeks from your loan funding date before you can apply for forgiveness.
To begin your application, please click on this link: https://peoplesbank-wa.expressbankloan.com/2/#/match.
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.
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.
Documentation Required to Apply for Forgiveness
Below are links to the required documents needed to apply for forgiveness. For PPP borrowers with loan amounts of $150,000 or less, no initial documentation will be required to submit at the time of your forgiveness application; however, the SBA still reserves the right to ask for documentation later.
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.
Please note, 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.
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, and no less than 8-weeks, which begins the date the loan proceeds are disbursed to the customer.
Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, covered utilities, and was also updated to include property damage, supplier costs, PPE, and other costs for adapting to COVID. Not more than 40% of the forgiven amount may be for non-payroll costs, however.
Paycheck Protection Program FAQs
- The Paycheck Protection Program provides small businesses with funds to pay up to 24-weeks of payroll costs, 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.
Health Directive Safe Harbor
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…"