PPP loan Forgiveness Information

We have set up an online forgiveness application process. The portal is open and ready to accept your application. All forgiveness applications to Old Point will need to be submitted via our online portal.

We continue monitoring legislative changes and updated guidance from the SBA and we’ll update our process with any applicable updates. We encourage you to review the SBA’s documentation requirements set forth in the applications available on the SBA’s (https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program ) and Treasury’s website (https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses). In addition, we encourage you to review all updated guidance related to other matters impacting the PPP, CARES Act and Flexibility Act on the SBA’s and Treasury’s website.

You will need to submit documentation to show how you spent the proceeds of your PPP loan, such as:

• Eligible payroll expense documentation, which may include bank statements, payroll reports or IRS payroll filings
• Non-payroll expenses, categorized as utilities payments, mortgage interest payments, and/or rent payments, documentation may include invoices, billing statements, bank statements, lease agreements, or mortgage amortization schedules

Additional documentation requirements may vary based on your application.

Here is when you can file for forgiveness:

• At the end of your 24-week or 8-week (if available and elected) PPP Forgiveness Period (Covered Period), or December 31, 2020, whichever is earlier
• Before the end of your Covered Period if you’ve used all the loan proceeds for which you’ll be requesting forgiveness
• Or at any time prior to the maturity date of your PPP loan

Keep in mind that despite the repayment terms stated in your promissory note, you won’t have to start making payments on your loan until the SBA has made a final decision on your forgiveness application and sent that amount to Old Point, or if you don’t apply for forgiveness, until 10 months after the last day of your Covered Period.

If your loan was made on or after June 5, 2020—no. Your Covered Period is 24 weeks.

If your loan was made prior to June 5, 2020—yes. You can choose either the 8-week or 24-week period when you apply for forgiveness.

The Covered Period begins on the day your loan is funded unless you choose an Alternate Covered Period, which can start on the first day of your regularly scheduled pay period. No matter when you received your funding, your Covered Period can’t extend past December 31, 2020.

Please plan accordingly with regard to all supporting documentation.

Payroll costs incurred during the borrower’s last pay period of the Covered Period or Alternate Covered Period are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period to be eligible for forgiveness. Payroll costs are considered paid on the day that paychecks are distributed, or the borrower originates ACH credit transaction.

A reduction in an employee’s salary or wages over 25% will generally result in a reduction in your loan forgiveness amount unless an exception applies. For each new employee in 2020 and each existing employee that wasn’t paid more than the annualized equivalent of $100,000 in any pay period in 2019, the borrower must reduce the total forgiveness amount by the total dollar amount of the salary or wage reductions that are over 25% of base salary or wages between January 1, 2020 and March 31, 2020. This is subject to exceptions for borrowers who restore reduced wages or salaries by December 31, 2020. This reduction calculation is performed on a per-employee basis, not in aggregate.

No. Your loan forgiveness amount won’t be reduced if you make a good faith, written offer to rehire, and document the employee’s rejection of that offer. If a return to work offer at the same salary/wages/hour was rejected by an employee, you must maintain records documenting the written offer and its rejection, and inform the applicable state unemployment insurance office of the rejected offer of reemployments within 30 days of the rejection. The SBA will be posting state unemployment offices on the SBA website.

Employees and employers should know that employees who reject offers of re-employment may forfeit eligibility for unemployment compensation.

Please keep in mind that while we will do our best to process all forgiveness applications in a timely manner, the SBA has established that the lender (Old Point) has 60 days from receipt of the completed application to review and provide an initial decision and then the SBA will have 90 days after that to review and accept the application and remit the appropriate forgiveness amount unless the SBA requires additional review of the loan.

No. Under the Flexibility Act, payments are deferred until the SBA has made a final decision on your forgiveness application and sent that amount to Old Point.

If you don’t apply for forgiveness within 10 months of the last day of the Covered Period, however, you will have to begin making payments of principal, interest, and fees. The terms of your promissory note will be updated to reflect the deferred payment terms under the Flexibility Act and Old Point will be providing further information on this process in the near future.

Economic Injury Disaster Loans (EIDL) are direct loans, while EIDL advances are grants. The SBA set the maximum EIDL advance at $10,000. If you received an EIDL advance, the SBA will automatically deduct the amount of any EIDL advance you received from the final PPP loan forgiveness amount. Make sure to list the amount of any EIDL advance on the loan forgiveness application, where it is requested, but the deduction from loan forgiveness should not be reflected in the loan forgiveness application calculations.

You must repay any remaining balance on the PPP loan after loan forgiveness, which will include the amount of EIDL advance.

For example, if you had a PPP loan for $50,000, an EIDL advance of $10,000, and are approved for 100% PPP loan forgiveness, the adjusted PPP loan forgiveness amount would be $40,000. You owe the remaining $10,000 as part of the PPP loan, and this balance will become a term loan with Old Point.

If you are considering change of ownership for your business, please notify Old Point as far in advance of the sale as possible to request prior approval. You will need to provide a copy of the proposed change of ownership agreement and other relevant documents. If you do not obtain prior approval of any change of ownership, it may be considered a default event and may affect your ability to apply for PPP loan forgiveness.

You must retain all documentation for 6 years after the date the loan is forgiven or repaid in full, and permit authorized representatives of the SBA, including representatives of its Office of Inspector General, to access such files upon request.

Please consult your tax, legal, or accounting advisors with questions or for professional advice.