PPP (Paycheck Protection Program) Loan Forgiveness Information
March 3, 2021 UPDATE: SBA Releases IFR On PPP Changes, New FAQs, Forms
The Small Business Administration released an interim final rule on changes to the Paycheck Protection Program recently announced by President Biden. The rule addresses expanded aid for sole proprietors, independent contractors, and the self-employed. The IFR:
- allows individuals who file an IRS Form 1040, Schedule C to calculate their maximum loan amount using gross income
- removes the eligibility restriction that prevents businesses with owners who have nonfinancial fraud felony convictions in the last year from obtaining PPP loans
- removes the eligibility restriction that prevents businesses with owners who are delinquent or in default on their federal student loans from obtaining PPP loans
SBA has updated its frequently asked questions to provide additional detail on these and other changes (borrower bankruptcy, partial first draw borrowers, size requirements, etc.). SBA has also provided new forms for borrowers and lenders.
Updated SBA PPP Loan applications are below. One form (First Draw) is for those businesses that have not received a PPP loan as of yet, and another form (Second Draw) for those businesses that have received a prior PPP loan.
First Draw PPP Loan Application :
First Draw PPP Loan Application: Schedule C Filers Using Gross Income :
Revised March 18, 2021 (For businesses that have not received a PPP loan.)
- The Callaway Bank PPP Loan Agreement : Required for first PPP loan with the bank.
- First Draw FAQ How to Calc Max Loan Amounts (1.17.2021)
Second Draw PPP Loan Application :
Second Draw PPP Loan Application: Schedule C Filers Using Gross Income :
Revised March 18, 2021 (For businesses that have received a PPP loan.)
Eligibility for Second PPP Loan Includes:
- Maximum of 300 employees.
- Must demonstrate at least a 25% drop in quarterly gross receipts in any quarter of 2020 compared to the same quarter in 2019.
- A business must have used the full amount of their first PPP loan.
- The maximum loan amount is 2.5 times the average monthly payroll. Some businesses in the hospitality or food industry may qualify for up to 3.5 times the average monthly payroll based on a 14-week period.
- All loans will be capped at $2 million.
Eligibility Clarifications for All PPP Loans:
- Businesses which were not in operation on February 20, 2020 are NOT eligible.
- Entities that receive a grant under the Shuttered Venue Operator Grant Program are NOT eligible.
- Ineligible entities include those entities listed in 13 CFR 120.110 except for those otherwise made eligible by statute or guidance.
- Specifically excluded are entities involved in political and lobbying activities including advocacy such as public policy and political strategy, entities affiliated with the Peoples Republic of China, registrants under the Foreign Agents Registration Act and entities receiving a grant under the Shuttered Venue Operator Grant Program.
New Eligible Expenses: (Retroactive unless forgiveness funds have already been received.)
- Covered Operations Expenditure: defined as a payment for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records, and expenses.
- Covered Property Damage Cost: defined as a cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.
- Covered Supplier Cost: defined as an expenditure made by an entity to a supplier of goods for the supply of goods that are essential to the operations of the entity at the time at which the expenditure is made and is made pursuant to a contract, order or purchase order in effect at any time before the covered period with the respect to the applicable covered loan; or with respect to perishable goods, in effect before or at any time during the covered period with respect to the applicable covered loan.
- Covered Worker Protection Expenditure: defined as an operating or a capital expenditure to facilitate the adaptation of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government, during the period beginning on March 1, 2020 and ending on the date on which the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the Coronavirus Disease 2019 (COVID–19) expires related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19. May include—the purchase, maintenance, or renovation of assets that create or expand a drive-through window facility; an indoor, outdoor, or combined air or air pressure ventilation or filtration system; a physical barrier such as a sneeze guard; an indoor, outdoor, or combined business space; an onsite or offsite health screening capability; or other assets relating to the compliance with the requirements or guidance described above. Other kinds of personal protective equipment, as determined by the Administrator in consultation with the Secretary of Health and Human Services. Does not include residential real property or intangible property.
- Eligible Group Insurance Costs: insurance costs included in payroll is updated by clarifying that group life, disability, vision, or dental insurance can be considered.
December 28, 2020, UPDATE: Washington has approved a new $900 billion coronavirus relief package and we are keeping a close eye on this. The indications are that a new Paycheck Protection Program is included, along with a second draw option for prior PPP borrowers. However, details specifically related to PPP loans will take a few days, if not a couple of weeks, to be understood because the bill was 5,000 pages long. Once we have full information about the updated program, we will share this information with you.
PPP Loan Forgiveness
You have up to 10 months from the end of your covered period to submit your forgiveness application to meet the SBA’s deadline. The bank has 60 days to review your forgiveness application and submit it to the SBA, and the SBA has 90 days to review the request. We encourage you to review the application forms and instructions and submit your application for forgiveness when you’re sure you’ve met the requirements.
These FAQ’s were released by the SBA on Aug. 4, 2020. The document includes sections addressing general questions on loan forgiveness, questions related to forgiveness of payroll and nonpayroll costs and questions on forgiveness reductions.
Forgiveness Application: Loans $150,000 or Less
You may use Form 3508S (below) to apply for forgiveness of your Paycheck Protection Program (PPP) loan if the total PPP loan amount you received from your Lender was $150,000 or less.
HOW THIS FORM IS DIFFERENT THAN THE OTHER TWO FORMS: This form (SBA Form 3508S) requires fewer calculations and less documentation for eligible borrowers. Borrowers that use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, SBA may request information and documents to review those calculations as part of its loan review process. See the full instructions below for complete details.
Forgiveness Application: EZ Form
To use the EZ form the business needs to meet the following requirements:
- Self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives from the CDC, OSHA, HHS, State, or local agencies related to COVID-19 (ie: required to close as a non-essential business), AND did not reduce the salaries or wages of their employees by more than 25%.
Forgiveness Application: Standard Form
If your business does not meet the criteria listed above you will likely need to fill out the standard form below.
We have developed several options for both personal and business clients who have been economically affected by the coronavirus outbreak. Some of these options include special loan arrangements, waiving fees, skip-a-pay arrangements, and extending credit lines. But, we’ll customize the solution to your situation. If you are experiencing financial challenges due to this situation, please reach out to your lender or personal banker. You can also text or call our Customer Care Department 7-days a week to learn more at 573-642-3322 or go here to send them a message.
Our Commitment To You
We take our position as a community bank seriously, and that means helping our clients and neighbors through challenges like this. Over our 163 years as a mid-Missouri bank, we have experienced many tough times. We’re here for challenges and moments like this.
Additional COVID-19 Relief for Businesses:
Employer Payroll Taxes. Employers and self-employed individuals may delay the payment of the employer portion of payroll taxes due between March 27 and December 31, 2020. 50% of any payroll taxes deferred under this provision must be paid by December 31, 2021, with the remaining 50% paid by December 31, 2022.
Employee Retention Credit. Employers whose operations were fully or partially suspended due to a coronavirus- related shut-down order or whose gross receipts declined by more than 50% (compared to the same quarter in the prior year) have a new tax benefit if they continue to pay employees. The above employers will receive a refundable quarterly payroll tax credit equal to 50% of qualified wages paid to an employee from March 13 through December 31, 2020. For purposes of the credit, up to $10,000 of qualified wages paid per employee during this period is taken into account. Excess credits are refundable.
Retirement Plan Funding & Documentation. The deadline for employers to make contributions to certain workplace-based retirement plans has been extended. In addition, employers sponsoring retirement plans may immediately adopt provisions allowing coronavirus related distributions and plan loans based on the CARES Act but formally amend the plan at a later date.
Net operating losses (NOLs). Generally, a NOL means deductions (for expenses from operating a business) are greater than the income generated from operating a business. A NOL incurred in one tax year generally may be used to reduce taxable income in a future tax year. The Tax Cuts and Jobs Act of 2017 significantly pared back the ability of businesses to carry forward/carry back NOLs, but the CARES Act substantially liberalizes the NOL rules – please consult a tax professional to learn more.
Business Interest Deduction. The CARES Act temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30- percent limitation to 50 percent of taxable income (with adjustments) for 2019 and 2020.
Small Business Administration (SBA) loans. To assist small businesses, the CARES Act greatly expands the availability and features of loans under the SBA’s Section 7(a) loan program. Businesses with 500 or fewer employees are eligible for the expanded loan program, as are sole proprietors, independent contractors, and self-employed individuals. There are many important details and benefits, including potential forgiveness. To learn more, please visit the SBA website at www.sba.gov or U.S. Chamber of Commerce website at www.uschamber.com.
The Families First Coronavirus Response Act
The U.S. Department of Labor’s Wage and Hour Division (WHD) published guidance to provide information to employees and employers about how each will be able to take advantage of the protections and relief offered by the Families First Coronavirus Response Act (FFCRA) when it took effect on April 1, 2020.
For more details including links to Employer and Employee Guides, and FAQs please click the following link: https://www.dol.gov/newsroom/releases/whd/whd20200324
The IRS has an overview of this act, as well as more information about how the employer will get reimbursed for the mandated sick leave. Please click on the following link:
Links to Additional Business Resources:
- Missouri Stay At Home Order: Business Guidance: Additional guidelines for business and waiver request form
- Missouri State resources for businesses can be found at ded.mo.gov/coronavirus
- The Missouri Small Business Development Center offers resources at https://sbdc.missouri.edu/sbdc-covid-19-resources
- United States Department of Agriculture: Outlines immediate relief opportunities for rural residents, businesses, and communities impacted by COVID-19
All employers should be implementing strategies to protect their workforce from the coronavirus while ensuring continuity of operations. Created by the U.S. Chamber of Commerce Foundation, these guides are based on information provided by the CDC, to help employers and employees prepare for and address the effects of the coronavirus.
- Coronavirus (COVID-19) Workplace Tips for Employees (PDF)
- Guidance For Employers To Plan and Respond To Coronavirus (PDF)
- Interactive Workplace Flyer Builder