Q: If my loan is less than $50K using the 3508S form is my loan automatically forgiven?

A: Form 3508S is NOT automatic approval process, nor automatic forgiveness for borrowers under $50,000. Borrowers are still required to compute their forgiveness amount, sign the attestations, and submit all payroll and non-payroll documentation to the Credit Union.

Q: What is the turnaround time to receive a decision on the PPP Loan forgiveness application?

A: The Credit Union has 60 days to review the forgiveness request – the SBA then has 90 days to provide a forgiveness decision.

Q: Is there a deadline for when I have to submit my PPP loan forgiveness application?

A: 10 months from the end of the covered period. However, if there has not been any reduction in number of employees or salary during the covered period, we recommend starting the process sooner.

Q: Can I have my loan payments recalculated if there is a balance that was not forgiven?

A: Yes, at the time you are notified about the leftover balance/next payment, you have the option to recalculate the payments.

Q: When will my loan payments begin? Do I owe a payment now?

A: Loan payments begin once a forgiveness decision has been rendered by the SBA. If the application has yet to be submitted or you are awaiting a decision, there is no payment due. If there is a balance due it will consist of either the remaining unforgiven balance of the PPP loan or the Economic Impact Disaster Loan provided by the SBA. Borrowers who are in repayment are notified prior to their next payment.

Q: If I already submitted my 3508 or 3508EZ do I need to apply again using the 3508S form?

A: No, if a borrower qualifies for Form 3508S but has already begun a Form 3508 or 3508EZ application, they will need to continue that application path.

Q: Is my PPP loan eligible for forgiveness?

A: Payroll requirement - at least 60% of PPP must have been spent on payroll

Non-payroll expenses - no more than 40% includes: mortgage interest, rent, utilities

Time period to use funds - 8 or 24 weeks

Borrowers who had a disbursement date of 6/5 or after can only have a 24 week covered period. Those who received their loan disbursement prior to 6/5 can choose an 8 or 24 week covered period.

Rehire requirements - Workers must be rehired by December 31, 2020

  • Unable to rehire individual who was an employee on or before 2/15/2020
  • Able to demonstrate the inability to hire similarly qualified employees on or before 12/31/2020
  • Able to demonstrate the inability to return to the same level of business activity as before 2/15/2020

Q: Is my PPP loan forgiven if I am self-employed?

A: By choosing a 24-week covered period, a person who is an independent contractor or sole proprietor with no employees and files a Schedule C 1040 can have the entire loan forgiven as a payroll expense. By choosing an 8-week covered period, you can only have a maximum forgivable amount of $15,385.

Q: Will the SBA review each PPP loan file individually?

A: Yes. The SBA has stated that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application.

Q: What counts as an Interest expense?

A: Any PPP loan money used to pay interest on a mortgage or on a property used for business purposes is eligible and qualifies for forgiveness.

Acceptable examples include interest on a loan to finance the real estate for your primary place of business; auto loan interest on a car you own to make business deliveries; or, mortgage interest on a warehouse you won to store inventory. The Mortgage or loan must have been in place prior to 2/15/2020.

Q: What lease expenses count toward my loan forgiveness?

A: PPP non-payroll uses can include rent or leases for real estate used by the business. The lease must have been in place prior to 2/2020. Note: If you moved your business after 2/2020 and obtained a new lease on the property or leased a new piece of equipment after 2/2020, you cannot use your PPP funds to pay that lease.

Q: Can I prepay my rent or mortgage using PPP proceeds?

A: No, prepayment of principal is not allowed and is not eligible for forgiveness.

Q: How does the PPP define an employee?

A: For loan eligibility, the CARES Act defines the term employee as “individuals employed on a full-time, part-time, or other basis.” Borrowers must, therefore, calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold. For example, if a borrower has 50 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 100 employees.
By contrast, for purposes of loan forgiveness, PPP uses the standard of “full-time equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions.

Q: What happens if I have already laid-off employees?

A: Borrowers that can EITHER rehire their workforce or hire and replace those workers AND maintain at least 75% of the same level of compensation, can be eligible for forgiveness.

Q: Will a borrower’s PPP loan forgiveness amount be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

A: No. Under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and the same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower.

Q: If my loan is not forgiven, how much is my monthly payment?

A: Any loan principal not forgiven will carry an interest rate at 1% for the two-year standard maturity (which could be eligible for an extension to five years) for loans made prior to June 5, 2020, and for the five-year period for any loans made after June 5, 2020. Please keep in mind that no payments are due until after the Deferral Period which starts after a forgiven decision is rendered by the SBA.

Q: When does my loan start accruing interest?

A: Interest for your PPP loan begins accruing the day your loan was funded to you.

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