SBA DISASTER ASSISTANCE
Paycheck Protection Program (PPP) Forgiveness Information
SBA Preliminary Guidance Only, last updated 5/28/2020
Guidance is still coming from the SBA regarding PPL forgiveness. We are actively working to make the process as efficient as possible. We will keep you up to date as new information becomes available.
What you can do now:
- Review the SBA Form 3508 PPP Forgiveness Application and begin gathering necessary documentation. Don't complete the application yet as we will be receiving additional information from the SBA.
- Watch for email communications from Bank of Bartlett with next steps.
- Self-employed / 1099 (without employees) need to focus on Page 6 Line 9 for compensation to owners AND page 4 certification #1 “does not exceed eight weeks’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $15,385 per individual.”
How much of my loan will be forgiven? According to the CARES Act, SBA will provide loan forgiveness for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities, and not more than 25% of the forgiven amount may be for non-payroll costs.
The forgiveness amount may be reduced and you will owe money when your loan is due if you use the loan for anything other than business related payroll costs, mortgage interest, rent, and utilities payments (incurred before February 15, 2020) over the 8 weeks after getting the loan. As specified under the Paycheck Protection Program Rule. If the funds are knowingly used for unauthorized purposes, the federal government may hold the owner legally liable, such as for charges of fraud.
You will also owe money if you do not maintain your staff and payroll.
Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
For self-employed who file a 2019 Form 1040, Schedule C the Owner compensation replacement is calculated based on 2019 net profit and forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit, but excluding any qualified sick leave equivalent amount for which a credit is claimed under section 7002 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116-127) or qualified family leave equivalent amount for which a credit is claimed under section 7004 of FFCRA.
How can I request loan forgiveness? For loans originated by the Bank of Bartlett, you can submit a written request to the Bank of Bartlett eight weeks after the loan origination. The request will need to include documents that verify the number of full-time equivalent employees and pay rates, dollar amounts of payroll costs, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. To substantiate your request for loan forgiveness, if you have employees, you should submit Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that best correspond to the covered period (with evidence of any retirement and health insurance contributions). Whether or not you have employees, you must submit evidence of business rent, business mortgage interest payments on real or personal property, or business utility payments during the covered period if you used loan proceeds for those purposes.
- You do not have to be an existing Bank of Bartlett customer to apply.
- Maximum loan is 2.5x your average monthly payroll costs
- Based on the Treasury Department guidance dated 4/2/20, the interest rate can be as low as 1%, with a cap of 4%
- A portion of the loan proceeds issued under the PPL, up to or equal to 8 weeks of covered expenses, will be forgiven by the SBA if certain requirements (see below) are met.
Document checklist for 1099 employees and self-employed individuals:
- Download this application, and contact a Bank of Bartlett branch manager for assistance.
- Copy of Drivers' License
- 2019 IRS Form 1040 Schedule C (If you have not yet filed a 2019 return, fill it out and compute the value.)
- 2019 IRS Form 1099-MISC detailing non-employee compensation received
- 2020 invoice, bank statement, or book or record that establishes you are self-employed and in operation on or around February 15, 2020
- Note: SBA will issue additional guidance for those individuals with self-employment income who: (i) were not in operation in 2019 but who were in operation on February 15, 2020, and (ii) will file a Form 1040 Schedule C for 2020.
Document checklist for businesses:
- Download this application, and contact a Bank of Bartlett business banker for assistance.
- Payroll Expense Verification documents to include:
- IRS Form 940 and 941
- Payroll Summary Report with corresponding bank statement.
- 12 months payroll, by pay period, with summary totals and headcount. If a Payroll Summary Report is not available, Employee Pay Stubs as of February 15, 2020 (or corresponding period) with corresponding bank statement.
- Breakdown of payroll benefits (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.)
- Verification of number of FTE’s
- List of All Employees, broken down by Full Time, Part Time, Contract, Salary vs. Hourly, Separate list by those making under 100k and those making over 100k
- Certification that all employees live within the United States.
- IRS SS-4 for Tax ID Number
- Articles of Incorporation/Organization of each borrowing entity
- Bylaws/Operating Agreement of each borrowing entity
- Copies of all owners’ Driver’s Licenses
We're here to help. If you need assistance, give us a call.