Two Types Of Applications
Loan Forgiveness Application 3508EZ

You may use the EZ form if you fit any one of these three criteria:

  1. You are a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application.
  2. You did not reduce the annual salary or hourly wages of any employee by more than 25% compared to the period between January 1 and March 31, 2020 ANdD You did not reduce the number of employees/average hours (Ignore reductions if you were not able to rehire existing or new employees for unfilled positions by December 31, 2020 or reductions in hours if you offered and the employee refused.)
  3. You did not reduce the annual salary or hourly wages of any employee by more than 25% compared to the period between January 1 and March 31, 2020 AND You experienced reductions in business activity as a result of health directives related to COVID-19

Loan Forgiveness Application EZ

Loan Forgiveness Application EZ Instructions

 

To apply for forgiveness of your Paycheck Protection Program (PPP) loan using the 3508 EZ Form, the following must be submitted to your Lender:

  • Completed 3-page application
  • Payroll Documentation – verifying eligible cash compensation and non-cash benefits – may include bank account statements, third-party payroll service provider reports, tax forms, payment receipts, cancelled checks, and account statements
  • Nonpayroll Documentation – verifying existence of loans/leases/services prior to February 15, 2020 and eligible payments – may include a copy of lender amortization schedule, receipts, cancelled checks, lender account statements, current lease agreement, lessor accounts statements, and invoices

Documentation that you must maintain for six years, but are not required to submit with the 3508EZ Form:

  • Support that annual salaries/hourly wages were not reduced by more than 25% – may include payroll records that separately list each employee and pay
  • Regarding employee job offers and their refusal to return, their refusal to accept restoration of hours, firings for cause, voluntary resignations, written requests by employees for reduction in work hours, inability to hire qualified employee for unfilled positions by December 31, 2020
  • Support that number of employees/average hours was not reduced – may include payroll records that separately list each employee and hours
  • Support that you were unable to operate at the same level of business activity due to health directives due to COVID-19 – may include requirements for each locations and relevant borrower financial records

 

Loan Forgiveness Application 3508

If you do not qualify under one of the three 3508EZ criteria, you must use the full form.

Loan Forgiveness Application

Loan Forgiveness Application Instructions

 

To apply for forgiveness of your Paycheck Protection Program (PPP) loan using the 3508 Form, the following must be submitted to your Lender:

  • Completed PPP Loan Forgiveness Calculation Form (2 pages)
  • PPP Schedule A (1 page)
  • Payroll Documentation – verifying eligible cash compensation and non-cash benefits – may include bank account statements, third-party payroll service provider reports, tax forms, payment receipts, cancelled checks, and account statements
  • FTE Documentation – Tax Forms verifying average number of FTE on payroll per week between February 15, 2019 – June 30, 2019 OR January 1, 2020 – February 29, 2020 OR for seasonal employers, any consecutive 12-week period between May 1, 2019 – September 15, 2019
  • Nonpayroll Documentation – verifying existence of loans/leases/services prior to February 15, 2020 and eligible payments – may include a copy of lender amortization schedule, receipts, cancelled checks, lender account statements, current lease agreement, lessor accounts statements, and invoices

Documentation that you must maintain for six years, but are not required to submit with the 3508 Form:

  • PPP Schedule A
  • Listing of each individual employee, including salary/hourly wage reduction calculation
  • Listing of each individual employee compensation during each pay period in 2019
  • Regarding employee job offers and their refusal to return, their refusal to accept restoration of hours, firings for cause, voluntary resignations, written requests by employees for reduction in work hours, inability to hire qualified employee for unfilled positions by December 31, 2020
  • Support that you were unable to operate at the same level of business activity due to health directives due to COVID-19 – may include requirements for each locations and relevant borrower financial records
  • Support for FTE restored by December 31, 2020 (referred to as Safe Harbor 2) – may include payroll records and PPP Schedule A Worksheet

Computing Loan Forgiveness

Best Practices

Accounting experts are recommending that businesses follow these best practices:

  1. Transfer the PPP monies into a separate Business Checking account within Online Banking. To create a separate account, please call us at 800.991.2221 and indicate the account is for the distribution of your PPP funds. Calling is preferred so we can authenticate you over the phone.
  2. Use your separate Business Checking account to pay your qualified expenses as needed by using one of these methods:
  • If you process your payroll by ACH, the new account will be available to select for ACH payments.
  • Your new account can be used for Bill Pay.
  • If you pay by check, you can transfer funds to your operating account and write the check as you normally would. For easier tracking, transfer only the amount of the check you are writing so it’s easier to match up.
  1. While the Small Business Administration (SBA) has updated its application forms (including a new EZ form) for Paycheck Protection Program (PPP) loan forgiveness, it still has not established procedures for lenders to submit forgiveness applications for approval. As a result, Consumers Credit Union is not accepting forgiveness applications until all guidance has been received from SBA. We are not unique in that circumstance; the industry as a whole is not currently accepting forgiveness applications as we await SBA instruction.

Frequently Asked Questions

What do I need to do to get loan forgiveness?

Loan forgiveness is not automatic; you must request it.  Forgiveness may be granted for some or all of the principal balance of the loan on eligible payments.

These payments must be made within 24 weeks of loan disbursement (the date funds were deposited into your account), or the 24 weeks beginning with your first payroll immediately following loan disbursement if you have a bi-weekly or more frequent payroll cycle.  You do not need to wait until the end of the 24 weeks to apply for forgiveness if you have used all your PPP funds and the entire amount is eligible for forgiveness according to the program guidelines.  You may submit your forgiveness application at any time.

When may I apply for forgiveness?

We suggest waiting until all legislation has cleared through Congress relating to the PPP loans, and after your PPP funds have been spent with the entire amount eligible for forgiveness according to the program guidelines.

The deadline for bringing back all employees is 168 days (24 weeks) after loan disbursement, but no later than  December 31, 2020.  If you received the PPP loan before June 5, 2020, you may also elect to use an 8-week (56 days) period.

Further guidance is forthcoming from SBA on how Consumers Credit Union will submit your application to SBA for forgiveness approval.  We have 60 days from the date we receive a COMPLETE application to review the documentation.  SBA has 90 days from the date they receive a complete forgiveness application to review the request.

What do I need to know about PPP loan forgiveness and how it works?

Find the latest information at www.SBA.gov and www.Treasury.gov. Other eligibility requirements may apply.

How can I request loan forgiveness?

You will need to submit a request for forgiveness from the SBA through Consumers Credit Union. We will email you with directions on how to do so in the coming weeks.

 

Loan Forgiveness Applications

Will the loan forgiveness amount be reduced if I do not maintain my staff and payroll?

Yes, under the CARES Act, your loan forgiveness may be reduced if you:

  • Decrease the number of employees or average paid hours by more than 25%
  • Decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019

You have until the end of your 24-week period to restore your full employment and salary levels, but not later than December 31, 2020.

If you were forced to reduce business activity due to health directives caused by COVID-19 (and can document it), your loan forgiveness amount will not be reduced due to a decrease in the number of employees or average paid hours.

How do I determine how much of my loan will be forgiven?

To be eligible to receive loan forgiveness, loan funds must be used for specified purposes, and at least 60% must be used for payroll costs, as defined by the SBA. Not more than 40% of the loan forgiveness amount may be attributable for non-payroll costs as outlined by the SBA and listed below.

The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount of these costs over the 24-week period following the date of the loan disbursement:

  • Payroll costs
  • Payments of interest on mortgage obligations incurred before February 15, 2020
  • Rent payments on leases dated before February 15, 2020 and
  • Covered utility payments under service agreements dated before February 15, 2020
    • Covered utility payment means payment for a service of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.

Owner compensation for sole proprietors who file a Schedule C is limited to 2.5 times average monthly payroll (2.5/12) of 2019 net profit as reported on their 2019 Schedule C, not to exceed $20,833.

For full forgiveness provide documentation to Consumers for all expenses for which you plan to request forgiveness.

Flexibility Act

The Flexibility Act was signed June 5, 2020 and is an enhancement for the Paycheck Protection Program.

Two key changes to be aware of:

  1. The Flexibility Act extends the covered period of the loan forgiveness from 8 weeks to 24 weeks, through December 31, 2020; whichever comes first. Existing borrowers may still elect the 8-week covered period.
  2. At least 60 percent of the loan forgiveness amount must be attributed to payroll costs versus the original 75 percent rule.

While the Small Business Administration (SBA) has updated its application forms (including a new EZ form) for Paycheck Protection Program (PPP) loan forgiveness, it still has not established procedures for lenders to submit forgiveness applications for approval. As a result, Consumers Credit Union is not accepting forgiveness applications until all guidance has been received from SBA. We are not unique in that circumstance; the industry as a whole is not currently accepting forgiveness applications as we await SBA instruction.

When do my loan payments begin?

If your whole loan is forgiven, there will be no payments required.

For loans approved before June 5, 2020, payments are deferred for 6 months, and the remaining principal balance and accrued interest must be repaid over 18 months.

For loans approved after June 5, 2020, payments are deferred to the date that SBA sends the loan forgiveness amount to Consumers Credit Union, and the remaining principal balance and accrued interest must be repaid within 60-months of the loan disbursement.

If your loan currently has a 6-month deferral period, you may request Consumers Credit Union to consider a longer deferral and repayment period.

You are responsible to repay Consumers Credit Union for any amounts not forgiven. If you do not apply for loan forgiveness, payments will begin 67 weeks (24 weeks + 10 months) after loan disbursement, but no later than 10 months after December 31, 2020.

Contact Us

Do you have business banking questions? Contact your business development manager.

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