PPP Loan Resources
The Paycheck Protection Program (PPP) is providing relief to businesses impacted by the COVID-19 pandemic. It provides funds from the government through Small Business Administration (SBA) lenders, and if the funds are used in a particular time frame and for certain expenses, some or all of the loan may be forgiven. Forgiveness simply means the loan proceeds do not have to be paid back.
PPP Loan Forgiveness Checklist
Use this checklist to guide you through the steps of asking the right questions, gathering needed documentation, and finding the help you need.
- Verify eligible expenses
To qualify for loan forgiveness, PPP funds must be used for one or more of the following expenses billed or incurred in the 24-week period triggered after you received your loan:
- Payroll costs, including employee benefits
- Interest on mortgage obligations, where the mortgage obligations originated before February 15, 2020
- Rent, under lease agreements in force before February 15, 2020
- Certain utilities, for which service began before February 15, 2020
- Understand potential missteps
You’ll owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 24 weeks triggered after you received the loan. Payroll costs must represent at least 60% of the forgiveness amount.
You may also owe money — and your loan forgiveness may be reduced — if you do not maintain your staff and payroll, such as:
- If you decrease your full-time employee headcount
- If you decrease salaries or wages by more than 25% for any employee who made $100,000 or less annualized in 2019
You may avoid a reduction in forgiveness if you restore your full-time employment and salary levels by December 31, 2020. You may also avoid a reduction in forgiveness if you can document an inability to return to your standard level of business activity due to compliance with COVID-19 requirements or guidance.
- Gather documentation
Documentation requirements are subject to change, but your business will likely need to submit documentation to:
- Verify the number of employees on your payroll and their pay rates
- Record expenses, including collecting cancelled checks, payment receipts, transcripts of accounts, and documents verifying payments for mortgage, lease, and utilities
- Apply for loan forgiveness
Know that the your friendly TCB Bankers are here to help. Please visit the SBA websites for the Loan Forgiveness Applications and Instructions:
- Understand the time frame for loan forgiveness
Once you submit your application, TCB has 60 days to review it; you will hear from us during that time if we have any questions or need any follow-up information. We will then submit your application to the SBA, which has 90 days to review and respond to us. We will contact you as soon as we hear from the SBA.
- Manage funds that aren't forgiven
TCB will notify you if and when the SBA determines the amount of loan forgiveness. You can appeal this decision if you don't agree. More information will be forthcoming from the SBA on the process. The remainder of the PPP funds that aren't forgiven will become a loan with interest capped at 1%. So long as you submit your forgiveness application within 10 months of the end of the 24-week forgiveness period, your payments of loan principal may be deferred until the forgiveness amount is finalized. Any amount of the loan that is not forgiven must be repaid at a 1% interest rate over two years (or five years for later-originated loans). There are no prepayment penalties.