Three existing forgiveness application forms

1. Loan Forgiveness Application 3508S: For PPP loans of $150,000 or less.

Application

2. Loan Forgiveness Application 3508EZ: For PPP loans of any size that meet one of these three criteria:

  • You are a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application.
  • 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 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.)
  • You did not reduce the annual salary or hourly wage 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.

Application – Along with a completed form, you must also include supporting payroll documentation and nonpayroll documentation. To simplify this process, we suggest using as much Payroll expense as possible for forgiveness. Please see the instructions for exact descriptions of required documentation.

3. Loan Forgiveness Application 3508: For loans of any size that do not qualify under any other forms.

Application – Along with a completed form, you must also include supporting payroll documentation and nonpayroll documentation. To simplify this process, we suggest using as much Payroll expense as possible for forgiveness. Please see the instructions for exact descriptions of required documentation.

Best practices for managing PPP funds

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.

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).  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.  The minimum timeframe is 8 weeks. You may submit your forgiveness application at any time after the 8 weeks and all funds have been used appropriately.

When may I apply for forgiveness?

We suggest waiting until all 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. You may use any time frame between 8 and 24 weeks to use the PPP funds.

Consumers Credit Union has 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, however in some cases the time frame has been longer.

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.

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.
  • Covered Operations expenses
    • Business Software or cloud computing service that facilitates operations
    • Product or service delivery
    • Processing, payment or tracking of payroll expenses
    • Human Resources
    • Sales and Billing Functions
    • Accounting of tracking of supplies, inventory, records, and expenses
  • Property Damage Costs – Related to vandalism or looting due to public disturbances in 2020 and not covered by insurance or other compensation
  • Supplier Costs
    • Essential to operations AND
    • Under a contract, order, or purchase order in effect prior to the PPP loan funding (for perishable goods, in effect before or any time during the Covered Period)
  • Worker Protection Expenses
    • Any expenses that facilitate the adaptation of the business to comply with requirements/guidance from government related to maintenance standards for sanitation, social distancing, or worker or customer safety requirements due to COVID-19
    • Must be spent between March 1, 2020 and the date the national emergency with respect to COVID-19 expires
    • Does not include residential real property or intangible property

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.

When do my loan payments begin?

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

Payments are deferred to the date that SBA sends the loan forgiveness amount to Consumers Credit Union.

For loans approved before June 5, 2020, any remaining principal balance and accrued interest must be repaid over 18 months at 1% interest.

For loans approved after June 5, 2020, any remaining principal balance and accrued interest must be repaid within 60 months of loan disbursement.

If you do NOT apply for loan forgiveness, payments will begin 67 weeks (24 weeks + 10 months) after loan disbursemen.

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.

Contact Us

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

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