PPP Loan Forgiveness Information
We are proud to have helped support so many local businesses through SBA PPP loans and now look forward to assisting you navigate the forgiveness process.
UPDATE: On June 5, 2020, a bill passed which provides greater flexibility to PPP borrowers. This bill extended the forgiveness period from 8 weeks to 24 weeks and also reduced the amount that the business must devote to payroll from 75% to 60%, among other changes. We are closely monitoring Congress and the SBA for upcoming lender regulations and formal implementation of the PPP Flexibility Act of 2020. We will provide updates on any additional changes as they are made.
Please also note that we are preparing an online portal to help you navigate the PPP forgiveness process. More information on this will be coming soon.
Obtaining the loan is just the first step. PPP loans can potentially be forgiven in-part or in-full.
The program dictates that loan amounts will be forgiven as long as:
- The loan proceeds are used to cover payroll costs, and most mortgage interest, rent and utility costs over the forgiveness period after the loan is made; and
- Employee and compensation levels are maintained.
To be eligible for loan forgiveness, funds from your PPP loan can be used for the following purposes:
- Payroll: salary, wage, vacation, parental, family, medical, or sick leave, health benefits
- Mortgage interest: as long as the mortgage was signed before February 15, 2020
- Rent: as long as the lease agreement was in effect before February 15, 2020
- Utilities: long as service began before February 15, 2020
The SBA's original PPP Loan Forgiveness Application (Form 3508) will give you an idea of the information needed to apply for forgiveness. (Note: this will have to be updated to reflect legislative changes.)
You must begin preparing now for your loan forgiveness application and below is a general breakdown of how you can start this process. A successful forgiveness application is going to require good recordkeeping and bookkeeping in order to maximize the loan forgiveness amount. Keep track of all eligible expenses and their accompanying documentation for the forgiveness period. It is recommended that you consult with your tax advisor, legal counsel or bookkeeping service to assist you if necessary.
- Eligible expenses are only those incurred during your 24-week forgiveness period, which starts the date Old Point disbursed the funds of your loan OR the first day of your first pay period following your disbursement date. (Note: Your disbursement date may not necessarily be the date on which you signed the Promissory Note.)
- Consider your payroll schedule - You may want to adjust the timing of your payroll date to accommodate as many payroll cycles as possible.
- At least 60% of your PPP loan funds must be used for payroll costs.
- No more than 40% of your PPP funds can be used for non-payroll purposes.
- Payroll costs are capped at $100,000 on an annualized basis for each employee.
- Payments to independent contractors are not included in your payroll costs.
- Remember: The following payroll costs are not eligible for loan forgiveness, but you should be keeping track of these:
- Payments to an independent contractor
- Cash compensation in excess of $100,000
- The employer’s share of federal payroll taxes
- Qualified sick leave and qualified parental leave wages for which credit is allowed under Families First Coronavirus Response ACT (FFCRA)
Review your staffing requirements:
- To receive your highest loan forgiveness, you must maintain the number of employees on your payroll.
- If you are Self-Employed:
- 24-weeks of your 2019 net profit will be eligible for loan forgiveness.
- Mortgage interest, rent and/or utilities expenses must have been claimed or are entitled to be claimed as a deduction on your 2019 Form 1040 Schedule C to qualify for loan forgiveness.
Keep a thorough, running list of all documentation, which may include the following:
- Documents verifying your number of FTEs on payroll and their pay rates for the periods used to verify you’ve met the staffing and pay requirements:
- Payroll reports from your payroll provider
- Payroll tax filings (Form 941)
- Documents verifying any retirement and/or health insurance contributions
- Income, payroll and unemployment insurance filings from your State
- Documents verifying your eligible interest, rent, and/or utility payments including but not limited to:
- Canceled checks
- Payment receipt
- Account statements
For additional information, please refer to the U.S. Department of the Treasury’s CARES Act Assistance for Small Businesses website or the SBA's dedicated PPP website.
Old Point is here to assist you should you have any other questions.
You can reach out directly to your Relationship Manager, contact our Customer Service Center at 757.728.1290 or email PPPapplicant@oldpoint.com.