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People’s Bank PPP Loan Forgiveness

NOTE: We are only accepting Forgiveness Applications for $350,000 or greater at this time.  

Since the inception of the SBA Paycheck Protection Program (PPP), there has been a lot of communication from the US Treasury Department with updates and ongoing clarification to the program.

While the details related to the forgiveness portion are still evolving, we encourage customers to visit their website  US Treasury Website - Borrower Forgiveness Information   for the most recent information and to review instructions and other information contained in the forgiveness application.

People’s Bank Forgiveness Process

In order to make the forgiveness process as smooth as possible for our customers, you can find all of the forms and tools you need right here on our website. 

The basic steps are summarized below.

  1. Determine via borrower instructions which application form can be used
    1. 3508EZ
    2. 3508
  2. Complete and sign your 3508 or 3508EZ application form
  3. Gather required supporting documentation
  4. Send or email completed application and required documentation to PBOC. 
  5. People’s Bank conducts good faith review of the 3508 or 3508EZ form and supporting documents
  6. People’s Bank submits application to SBA thru the secure SBA Forgiveness Portal
  7. Upon SBA notification People’s Bank will contact you as to the status of your forgiveness application

PPP Loan Forgiveness Application Form 3508EZ

PPP Loan Forgiveness Application Form 3508EZ Instructions for Borrowers

OR

PPP Loan Forgiveness Application Form 3508 (revised 6/16/20)

PPP Loan Forgiveness Application Form 3508 Instructions for Borrowers (edited 6/16/20)

PPP Frequently Asked Questions on PPP Loan Forgiveness

Eligible Expenses for Forgiveness

What business expenses qualify for loan forgiveness?

To qualify for loan forgiveness, the funds must be used for eligible costs incurred or paid during a 24-week (168 day) covered period (ending December 31, 2020, at the latest); if you received your loan before June 5, 2020, then you can choose an 8-week (56 day) or 24-week (168 day) covered period. Costs include: 

  • Eligible payroll costs, including compensation to owners and employee benefits
  • Interest payments on business mortgage obligations on real or personal property, where the mortgage originated before February 15, 2020, (but not any payment of principal or prepayment of interest)
  • Business rent or lease payments for real or personal property, where the rent or lease agreement was in force before February 15, 2020
  • Business utility payments for a service such as electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020

At least 60% of your total forgivable amount must be used for allowable payroll costs, and a maximum of 40% can be used for allowable nonpayroll costs

The amount of forgiveness cannot exceed the original principal amount of the loan. Loan forgiveness is intended to encourage employers to retain employees. Therefore, the loan forgiveness amount will be reduced proportionally by the reduction in employees during the covered/alternative covered period.

Loan Forgiveness Checklist

The SBA PPP loan forgiveness application outlines what is needed for loan forgiveness.

General Information Needed for PPP Loan Forgiveness Application

  • Business Legal Name, Address, and Contact Information (Same as Borrower Application Form)
  • SBA PPP Loan Number (E- Tran number assigned by SBA)
  • Lender PPP Loan Number (Loan number assigned to PPP loan by Lender)
  • PPP Loan Amount
  • Employees at Time of Loan Application and at Time of Forgiveness
  • PPP Loan Disbursement Date (First date of PPP loan proceeds)
  • EIDL Advance Amount and Application Number (if applicable)
  • Payroll Schedule
  • Covered Period (Same as PPP loan disbursement date)
  • Alternative Payroll Covered Period

FTE Documentation

  • Payroll tax filings reported (Form 941)
  • State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported

Payroll Documentation

  • Bank account statements
  • Payroll tax filings (Form 941)
  • State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported
  • Payment receipts, canceled checks, account statements documenting amount of any employer contributions to employee health insurance, retirement plans, etc.
  • If borrower applied to PPP as a contractor, sole proprietor, or partnership: 2019 1099-MISC forms OR Schedule C OR Schedule K-1 to verify owner compensation replacement

Nonpayroll Documentation

  • Rent: Copy of lease agreement (must be in effect before Feb. 15, 2020); copies of account statements from lessor to show payments
  • Mortgage interest: Lender amortization schedule, receipt of payments and statements (mortgage must be signed before Feb. 15, 2020)
  • Utilities: Utility invoices and account statements showing payments made during eight-week period (must be in service before Feb. 15, 2020) 

Please be sure to let us know if you have any questions with this process.

 
 
 
 
Accordion 1
EMAIL 9/25/2020:  PPP Loan - Important Update

Dear PPP Borrowers,

People’s Bank is working toward the best possible approach in helping you navigate through the SBA PPP loan and loan forgiveness process.  Below are some important items we want you to be aware of:

PPP Loan

Coming Soon – Extension of Payment Deferral via Change in Terms Documentation

People’s Bank will be emailing your “Change in Terms” document in the coming weeks.  This document, once executed, will defer all principal and interest payments on your PPP loan for an additional six months (total of 12 months no principal or interest payments from the date of your promissory note).  Be sure to watch for this email, then review and sign at your earliest convenience.

PPP Loan Forgiveness

SBA Process Delayed

We have learned that PPP Loan Forgiveness applications that have been submitted to SBA by various lenders have not yet been reviewed by SBA as they continue to work on establishing procedures.  It is anticipated SBA will fully utilize their 90-day window to make a loan forgiveness decision. This delay makes action on your extended payment deferral (referenced above) important. 

Likelihood of Simpler/Faster Application Process - Loans $150,000 and Under    

Support continues to grow for the approval of streamlined PPP loan forgiveness legislation. Proposed bill would allow for a quick one-page forgiveness application on loans of $150,000 or less.

Be sure to watch our website for update to date information.

People’s Bank Team

Accordion 6
EMAIL 9/17/2020:  PPP Loan Payment Extension

Dear PPP Borrowers,

People’s Bank will provide an additional 6 months of no payments on your PPP loan.  

The PPP loan program under the initial Cares Act allowed a deferment period of up to 6-months. The PPP Flexibility Act amended this rule allowing Lenders to extend the deferred payment period. 

In the coming weeks, the Bank will prepare a change in terms on your note to document this added deferment period. Once complete, it will be sent to you for your review, acknowledgment, and electronic signature.

This extension will allow you more time to:

  • Plan and talk to your advisor strategizing the best way to achieve maximum loan forgiveness and prevent tax events.
  • Gather documentation, prepare application, and submit for loan forgiveness.

As a reminder, upon loan forgiveness approval, SBA will pay off your principal and satisfy all accrued interest due. Keep watch for information and documentation regarding your loan’s deferred payment extension. 

People’s Bank Team

Accordion 7
EMAIL 8/31/2020: PPP Loan Forgiveness - Be Prepared
Dear PPP Borrowers,
 

Even though anticipated PPP program changes are forthcoming, People’s Bank is working behind the scenes to provide our borrowers with a user-friendly online portal for submitting PPP Loan Forgiveness applications.

While our forgiveness application portal is not yet available, we know you want to be informed and prepared.  See the below resources available on our website that are designed to help you plan for loan forgiveness, aid in determining your business’s best approach for receiving full loan forgiveness, and provide help on all documentation requirements.

Here is what you will find on our People’s Bank website:

  • Link to “PPP Forgiveness Tool” sponsored by the Association of Independent CPAs. This is a free online tool for businesses designed to walk you through the current forgiveness process.  It helps with preparation, calculations, and planning.
  • Link to Journal of Accountancy’s “PPP Loan Forgiveness Tips.”
  • SBA 3508 EZ Loan Forgiveness Application Form, instructions with checklist. TIP: Go to the EZ application first.  Page one has a quick guide to determine if you can use the EZ form or the full 3508 form.
  • SBA 3508 Loan Forgiveness Application form, instructions with checklist.
  • List of “Frequently Asked Questions” (FAQs) on PPP Loan Forgiveness.
  • Archived People’s Bank PPP email correspondence.

While the above tools and resources are designed to make this process easier, it is recommended you work closely with your CPA and/or tax consultant to determine the best possible strategy for you and your business.

People's Bank Team

Accordion 8
EMAIL 8/21/2020: Weighing the Benefits of Waiting

Dear PPP Borrowers,

People’s Bank has carefully weighed the potential benefits and risks of submitting PPP loan forgiveness applications too soon. As you know, proposed legislation is still in play.  There is momentum behind substantial changes to the forgiveness process.

There may be benefits to waiting to apply.  These benefits could include:

  • The potential for minimal paperwork for loans under $150,000 and the potential for reduced paperwork for loans between $150,000 and $2,000,000
  • New and better guidance
    • Clear rules from IRS on 1099 reporting
    • SBA and the US Treasury are "changing" interpretations and working on clarification in several areas of confusion (utility expenses, exceptions to full-time equivalent rules, self-employed borrowers, payments to related parties)
  • Time is on your side
    • The alternate covered period of PPP loans was extended to 24 weeks. Taking advantage of this may give you more time to take steps to help qualify for FULL loan forgiveness
    • Changes to the program allow for 10 months of deferred payments
    • You have 10 months from the last day of your "covered period" to apply for forgiveness
  • Submitting earlier could potentially take longer to get full forgiveness
    • SBA's PPP Forgiveness Submission Portal is a brand-new online system that may likely need some kinks worked out
    • Current rules state Lender has 60 days from acceptance of a complete loan forgiveness application to submit. Once submitted SBA has 90 days to process. If SBA requires additional information (even due to newly released guidance), that 90 days starts all over again! 

We encourage you to consider all of this information and to develop an effective plan with your accountant.

For the reasons above, we are not yet accepting forgiveness applications under $350,000.

Please visit our website for updates, new tools, forms, and new SBA guidance as the forgiveness process continues to unfold. 

Your People’s Bank Team