Paycheck Protection Program Update: Loan Forgiveness
Now Open: PPP Loan Forgiveness ApplicationThe SBA has finalized the details of the updated Paycheck Protection Program loan forgiveness process, and we are now accepting forgiveness applications. As a reminder, you must submit your forgiveness application within 10 months of the end of your covered period. You can refer to your original DocuSign document for your SBA loan number to securely access your forgiveness application. Please be prepared with the information that was provided at the time of application, such as your business address zip code, number of employees and the loan amount you received.
For application types that require supporting documentation, that documentation is required to be submitted with the forgiveness application. We recommend you retain all documentation related to your loan for 4 years, as the SBA may request further information at a later date.
If you have any questions about filling out the application or the forgiveness process, we're here to help. You can reach our dedicated PPP team at 913.905.7012.
Paycheck Protection ProgramThe Paycheck Protection Program is a federal loan program backed by the SBA to help small businesses affected by the COVID-19 pandemic. It was created from the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) to assist in covering payroll costs and other approved expenses. The program has since been retired, with funding exhausted on May 4, 2021. Though funding has ended for the Paycheck Protection Program, the act includes several programs to assist eligible businesses. The SBA website provides the most current and accurate information on each new government program. Program details are changing frequently, and we are working continuously to provide the most timely and helpful information available.
Economic Injury Disaster Loans and Loan AdvanceOffers low interest loans to small businesses located in a declared disaster zone to help overcome the temporary loss of revenue they may be experiencing. Get the details.
SBA Debt Relief
Under the CARES Act, existing SBA borrowers whose loans are in good standing are relieved of any obligation to pay principal, interest and associated fees due after March 27, 2020, for a period of six months. If you have an SBA loan with CommunityAmerica, your banker will be contacting you with additional information. You can find out more here.
PPP Funds & Qualified ExpensesThe Paycheck Protection Program was created to help you keep your employees at their current base pay and cover other essential business costs. To be 100% forgiven, 60% of funds must cover payroll costs, while up to 40% can be used for other qualifying costs (like rent, leases and utilities) over a 24-week period starting the date the funds are received. For second draw loans, you will need to show the 25% reduction in revenue to qualify for full forgiveness.
Any remaining loan amount, after forgiveness, will need to be repaid. You will not be required to start your PPP loan repayment until your forgiveness application has been completed and processed, and you will have up to 10 months after the end of your covered period to apply for forgiveness. After that time, you will be required to pay the loan back over the remaining 5-year period with a fixed interest rate of 1%.
The SBA defines qualifying payroll costs as:
- Full-time and part-time employee (who lives in the U.S.) compensation in the form of salary, wages, commissions or anything similar
- Cash tips or equivalent, based on employer records of past tips or reasonable, good-faith employer estimates if there are missing or no historical records
- Vacation, parental, family, medical or sick leave payments
- Healthcare coverage, including insurance premiums, and retirement
- State and local tax payments based on employee compensation
- Wage, commission, income or net earnings from self-earners or similar compensation
No more than 40% of funds can be used to cover:
- Costs related to group healthcare benefits during paid sick, medical or family leave, as well as insurance premiums
- Mortgage interest payments (not including mortgage prepayments or principal payments) – 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 – includes expenses such as electricity, water, gas, sewage, telephone services, internet and transportation costs, as long as service began before February 15, 2020
As a result of the latest legislation, new qualifying expenses include:
- Operations expenditures – such as payments to business software or cloud computing systems, product or delivery, the processing, payment or tracking of payroll expenses, and other expenses related to human resources and accounting needs
- Property damage costs – includes costs related to property damage from public disturbances that occurred in 2020 and are not covered by insurance
- Supplier costs – expenditures to suppliers that are essential to the recipient’s current operations
- Worker protection – worker protection and facility modification expenditures, including personal protective equipment in order to comply with COVID-19 federal health and safety guidelines
PPP Second Draw Loans
Businesses that already received funding through a First Draw PPP loan were eligible to apply for additional financial assistance through a Second Draw PPP loan from the new round of funding. Second Draw PPP loans are capped at $2 million, and businesses are required to meet the same spending guidelines as their First Draw PPP loan, as well as the following additional criteria:
- Must have utilized or will utilize all of the First Draw
- PPP loan must have fewer than 300 employees
- Must have experienced at least a 25% reduction in revenue in a quarter for 2020, compared to the same quarter in 2019
- Supporting documentation showing the reduction of revenue will be required when applying for loan forgiveness