The SBA Paycheck Protection Program is designed to keep your workers on payroll and your doors open. The program provides access to low interest and partially to fully forgivable loans to small business owners and nonprofit organizations with no personal guarantee or collateral required. Funds may be used to help pay business payroll, utilities, and other operating expenses during the Covid-19 outbreak.
Under the Paycheck Protection Program (PPP) loans may be forgiven if borrowers use the proceeds to maintain their payrolls and pay other specified expenses.
If you received a Paycheck Protection Loan from LISC and immito, we are waiting for additional guidance from SBA and Treasury regarding PPP Loan Forgiveness. We are developing a process for borrowers to submit documentation and communicate with our team, so that we will be ready to accept applications when the guidance is complete.
LISC and immito do not want to accept applications and then ask our borrowers to resubmit them when the guidance changes.Once the portal and supporting documentation are ready, we will organize a walk-through to demonstrate the process.
To prepare yourself for forgiveness please review the following information.
What is the forgiveness timeline and when should I apply?
- If you received your PPP funds prior to June 5th we recommend applying for forgiveness using the 8-week covered period. The covered period begins on the date you received your PPP funds. If you are unable to use all of your funds during the 8-week covered period, we will work with you to extend your covered period to the 24-week period.
- If you received your PPP funds after June 5th your covered period is automatically 24-weeks. The covered period begins on the date you received your PPP funds. You have 10 months after the last day of the covered period to apply for loan forgiveness without paying principal or interest. If you do not apply for forgiveness within 10 months of the last day of the covered period, the PPP loan is no longer deferred, and you must begin paying principal and interest. We recommend you apply for forgiveness as soon as you have used all of the loan proceeds for which you are requesting forgiveness. If you apply for forgiveness before the end of your covered period and have reduced any employee's salaries or wages in excess of 25 percent, you must account for the excess salary reduction for the full 8-week or 24-week covered period.
- immito has 60 days from receipt of complete forgiveness application to issue a decision to the SBA on forgiveness.
- SBA will remit the appropriate forgiveness amount, plus any interest accrued through the date of payment, to immito. If applicable, SBA will deduct EIDL Advance Amounts from the forgiveness amount remitted to immito.
- immito is responsible for notifying the borrower of remittance by SBA of the loan forgiveness amount and the date on which the borrower’s first payment is due, if applicable.
Which loan forgiveness application should I use?
- SBA Form 3508EZ. You can use the EZ App if you meet one of the following three boxes:
- You are a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in your application.
- You did not reduce annual salary or hourly wages of any employee by more than 25 percent during the covered period AND did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the covered period.
- You did not reduce annual salary or hourly wages of any employee by more than 25 percent during the covered period AND was unable to operate during the covered period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.
- Click here for the loan forgiveness application form and here for the instructions
- SBA Form 3508. If you do not meet any of the EZ App requirements, you must submit the full SBA Form 3508. Click here for the loan forgiveness application form and here for the instructions.
What else should I pay attention to as I prepare for forgiveness?
- Understand eligible expenses. At least 60% of your PPP loan must be used for payroll expenses to achieve maximum forgiveness.
- Eligible payroll costs may include compensation to employees whose principal place of residence is the United States in the form of:
- And for an independent contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or similar compensation
- Payment of state and local taxes assessed on compensation of employees
- Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retiremenT
- Payment for vacation, parental, family, medical, or sick leave
- Salary, wages, commissions, or similar compensation that don’t exceed $100,000 per year
- Excluded payroll costs may include
- Income over $100,000 per year for sole proprietors, independent contractors, and self-employed workers.
- Individual employee compensation over $100,000 per year.
- Compensation for employees who live outside the U.S.
- Qualified sick leave under the Families First Coronavirus Response Act
- Other eligible expenses may include payments of interest on mortgage obligations, rent payments and utility payments under agreements in place on or before February 15, 2020. The covered period can include payments for interest on mortgage obligations, rent payments and utility payments.
- Understand factors that may affect your forgiveness amount. The amount of loan forgiveness, if any, a PPP loan recipient may receive will depend on a variety of factors discussed below but will not exceed the loan principal amount plus accrued interest.
- Only loan proceeds spent on covered uses during the covered period following disbursement of your PPP loan are forgivable. The covered period begins on the date immito makes the disbursement of the PPP loan to the borrower.
- Reductions in staffing may impact your forgivable amount. Your loan forgiveness may be reduced if you decrease your full-time equivalent employee headcount. You have until December 31, 2020 to restore your full-time equivalent employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. If you offer to rehire an employee (for the same salary/wages and same number of hours) and they decline the offer, forgiveness may not be affected. You must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented. Employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.
- Reductions in employee salary or wages may impact your forgivable amount. Your loan forgiveness will be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
- Your forgivable amount also may be reduced because:
- More than 40% of the loan amount was attributable to non-payroll costs
- You received an advance through the Economic Disaster Injury Loan (EIDL) program
- To apply for loan forgiveness, recipients of PPP loans will need to organize documentation of:
- The number of employees on the payroll and hours worked
- Evidence of written offer to re-hire employs and / or orders Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration that may affect staffing levels
- Employee pay rates
- Payroll tax filings
- Payroll costs paid in the eight weeks or 24 weeks following disbursement of the loan
- If PPP funds were used for eligible non-payroll costs:
- Mortgage interest payments in the eight weeks or 24 weeks following disbursement of the loan
- Rent or lease payments in the eight weeks or 24 weeks following disbursement of the loan
- Utility payments in the eight weeks or 24 weeks following disbursement of the loan
- Any advance received under the CARES Act EIDL loan advance Grant program
- Familiarize yourself with the SBA Rules on Forgiveness. There are multiple final rules on forgiveness posted to the SBA website. While we will do our best to provide guidance based on the information, we are not able to provide advice on how to manage your loan proceeds.
For any questions, email us at email@example.com.