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SBA PPP Forgiveness Application:What to Expect & Best Practices
October 15, 2020
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DisclaimerPPP Forgiveness is an evolving process, subject to change as further guidance comes out from the SBA and US Treasury.
This presentation is for general information purposes only and should not be relied upon as a substitute for obtaining independent advice or undertaking independent research before starting the process to apply for PPP forgiveness. This presentation does not take into account any particular borrower’s situation or needs.
All PPP Borrowers should obtain professional advice based on their unique situation before proceeding with the forgiving process. In addition, any implied projections or views of the hosts are their own personal opinions and are not the official position of Commerce Bank or their respective directors or successors or assigns, and may not prove to be accurate. While the information contained herein is believed to be accurate as of the date of production, the information is subject to change and revision.
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Your Presenters
Adam KirkbrideSBA Advisor
Libby BaneCommercial Strategies
& Lending Programs Manager
Tami NugentDirector of Commercial
& Small Business Marketing
Michael BrueningPortfolio Management
Team Leader
Heather CummingsPortfolio Management
Team Leader
Kevin BarthHead of Commercial Line
of Business
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Agenda
Customer Resources What to Expect Q & ABest Practices &
Timing
CommunicationForgivenessApplication
PortalDocumentation
Forgiveness OverviewWhat to Expect
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What to Expect
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What to Expect
Receive Invitation Email
Submit Application through Portal
Commerce Review (Up to 60
Days)
Receive & Complete E-Signature Request
Commerce Submits Proposed
Forgiveness Amount to SBA
SBA Processing & Review (Up to 90
Days)
Commerce Receives & Applies
Forgiveness Payment
If applicable, Loan Modification
& Repayment Begins
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Communication
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CommunicationYour initial email will contain links to helpful resources as you prepare for your PPP Loan Forgiveness
You will also receive a physical letter as a back up in case you haven’t received our emails
Next you will receive an email invitation containing:
• your unique link to apply for Loan Forgiveness via our portal• a link to our reference guide with step-by-step instructions and screen shots
to guide you through the application
All emails will arrive from:[email protected]
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Forgiveness Application Portal
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Preparing to Apply1. Recommended to utilize Chrome Browser
2. Determine whether you will be applying based on 3508 Forgiveness Application, 3508EZ Forgiveness Application or the 3508S Forgiveness Application
3. Locate your promissory note as you will need your account number and loan number when accessing the portal
4. Have your documents in individual files in electronic form (acceptable file types PDF, PNG, JPEG, DOCX, DOC or XLS)
5. E-Signer must be authorized representative of business
6. Wait for email invitation from us with link to begin application
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Create a Password
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Forgiveness Overview
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Forgiveness Expenses
60%
40%At least 60% of loan proceeds must be used for
payroll costsNo more than 40% of loan proceeds may be used for interest on mortgage payments, rent and utilities
Loan proceeds used for the following purposes are not eligible for forgiveness
Compensation in excess of an annualized salary of $100,000 of individual employees, or self-employment income in excess of $100,000 of sole-proprietors and partners
• Compensation of employees with a principal residence outside of the US
• Employer portion of FICA (Social Security and Medicare) and FUTA taxes
Qualified sick leave or family leave wages for which a credit is allowed under the Families First Coronavirus Response Act
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Covered Period1. Eight weeks (56 days) or 24 weeks (168 days) at election of borrower
2. Begins date PPP loan funds were disbursed
3. Borrowers with bi-weekly or more frequent payroll may elect alternative covered period
4. Eligible expenses must be paid or incurred during covered period or alternative covered period and paid prior to forgiveness application
5. Covered period cannot extend beyond 12/31/2020
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Forgiveness Applications
3508• Can be used by any borrower
• Should be used if the borrower is claiming any FTE Safe Harbor or had FTE employee or salary/wage reductions unless borrower qualifies to use the SBA 3508S
• Can be used if borrower can claim 1 of the 3 certifications listed on the application instructions
• Certifications related to employee wage/salary reductions or the inability to operate due to health and safety guidelines
• May be used by borrowers with a loan amount of $50,000 or less
• Exempt from completing reduction calculations due to reductions in FTE employees or salary/wages
• Borrower still required to submit documentation supporting forgiveness amount calculation
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
3508EZ 3508S – NEW!
Three SBA Forgiveness Applications
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Forgiveness TimelineLoan
Disbursed
8 or 24 week covered period(borrower specific)
Covered period cannot extend beyond 12/31/2020
Up to 10 months to apply for forgiveness after end of borrower’s covered period(borrower specific)
Final application deadline cannot extend beyond 10/31/2021
Borrower applies for forgiveness
Commerce has up to 60 days to review application
SBA has up to 90 days to review application and remit forgiveness
Borrower has 30 days to appeal decision with SBA
Repayment begins on any unforgiven
amount
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Documentation
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DocumentationPayroll – Cash CompensationDocuments required
1. Internal payroll reports with supporting bank account statements OR Third-party payroll service provider reports
❑ Must document the amount of cash compensation paid to employees
❑ Must be incurred or paid during chosen covered period
❑ Must comply with program cash compensation limits
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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DocumentationPayroll - Cash CompensationDocuments required
2. Tax Forms (Both Required)1. Quarterly IRS Forms 941 or
equivalent2. State quarterly business and
individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state
❑ Must document the amount of cash compensation paid to employees
❑ Must overlap chosen covered period– Start with quarter that includes
start of covered period– End with quarter that includes
end of covered period
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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DocumentationPayroll - Non-Cash BenefitsDocuments required
1. Payment Receipts OR2. Cancelled Checks w/ Bank Account
Statements AND3. Service Provider Account
Statements
❑ Must document the amount of employer contributions to employee health insurance and/or retirement plans that were included in forgiveness amount
❑ Must be during chosen covered period
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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DocumentationFTE: Full Time Equivalent EmployeesDocumentation detailing (time period at election of borrower):
1. the average number of FTE employees on payroll per week employed by the Borrower between 2/15/2019 and 6/30/2019; or
2. the average number of FTE employees on payroll per week employed by the Borrower between 1/1/2020 and 2/29/2020; or
3. in the case of a seasonal employer, the average number of FTE employees on payroll per week employed by the Borrower between 2/15/2019 and 6/30/2019; between 1/1/2020 and 2/29/2020; or any consecutive 12-week period between 5/1/2019 and 9/15/2019
Note: FTE supporting documentation must be submitted with full 3508 (not 3508EZ or 3508S). However in all cases, borrower must retain these records.
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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DocumentationNon-Payroll Costs – Business Mortgage Interest PaymentsDocuments required
May pick either:1. Lender Amortization Schedule and
receipts/cancelled checks from eligible period
2. Lender Account Statements from Feb 2020 and the months of the covered period through 1 month after the end of the covered period verifying interest amounts and eligible payments.
❑ Must reflect the mortgage was in place before 2/15/2020 and in the name of borrower
❑ Payments were made from borrower’s business account
❑ Amount of payments is equal/greater than the claimed amount
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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DocumentationNon-Payroll Costs – Business Rent or Lease PaymentsDocuments required
May pick either:1. Copy of current lease agreement
and receipts/cancelled checks
2. Lessor account statements from Feb 2020, the covered period and one month past the covered period
❑ Must reflect the lease was in place before 2/15/2020 and in name of borrower
❑ Payments were made from borrower’s business account
❑ Payments were made during the covered period
❑ Amount of payments is equal/greater than the claimed amount
Note: IFR dated 8/24/2020 states that rent payments to a related party are forgivable for the amount of mortgage interest owed on the property during the covered period that is attributable to the space being rented by the business. As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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DocumentationNon-Payroll Costs – Business Utility PaymentsDocuments required
May pick either:1. Copy of invoices from Feb 2020
and during the covered period
2. Copy of receipts, cancelled checks or account statements showing eligible payments
❑ Must reflect the utility account was in place before 2/15/2020 and in name of borrower
❑ Payments were made from borrower’s business account
❑ Expenses incurred or paid during chosen covered period
❑ Amount of payments is equal/greater than the claimed amount
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Best Practices & Timing
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Best Practices & TimingStreamline your
application
• If eligible, use the 3508EZ Form or 3508S Form
•8-week covered period will require reliance on ancillary expenses, whereas 24-week period generally seeks full forgiveness relying only on payroll with ample coverage.
•24-week period typically reduces documents needed and lessens the time it takes to complete your submission and our review
•When available, use payroll providers custom PPP reports
Wait to apply until all documents are available
•For a covered period extending into Q4, tax documents aren’t available until January. Prior submission creates an incomplete application.
Take note of Compensation Limits
•Owner compensation is limited based on covered period to $15,385 (8-week) or $20,833 (24-week)
•This limit differs from employee compensation limits of $100,000 annually prorated based on payroll period info provided
Upload documents to the correct system placeholder
and ensure legibility
•Reduces potential back and forth with the bank
• Increases speed with which your application can be reviewed
•Only submit requested documentation
Retain supporting documentation
•Two categories of documentation
• 1) Documents borrowers must submit with application
•2) Documents borrowers must maintain, but not submit with application, for six (6) years after the date the loan is forgiven or repaid in full
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Customer Resources
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Resources – commercebank.com/ppp
FAQ’s answered by the SBA and U.S. Department of Treasury
PPP Loan Forgiveness Documentation Checklist
PPP Loan Forgiveness Application & EZ Application
PPP Loan Forgiveness Application Instructions & EZ Application Instructions
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Resources – Quick Reference Guide
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
www.commercebank.com/pppqrg
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Resources – Customer SupportTechnical questions regarding the portal can be directed to:
833-304-0350
Questions specific to your individual loan forgiveness should be directed to your attorney or your accountant or your Commerce Bank representative.
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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What to Expect
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What to Expect
Receive Invitation Email
Submit Application through Portal
Commerce Review (Up to 60
Days)
Receive & Complete E-Signature Request
Commerce Submits Proposed
Forgiveness Amount to SBA
SBA Processing & Review (Up to 90
Days)
Commerce Receives & Applies
Forgiveness Payment
If applicable, Loan Modification
& Repayment Begins
As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.
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Q & A
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Thank You