American lenders issued more than five million loanable loans through the Pesque Protection Program, the federal government’s coronovirus assistance initiative for small businesses. In August the Small Business Administration began accepting applications to forgive loans and began approving them this month. Know some things here.
How can I apply?
PPP borrowers should apply for forgiveness through the loan issuing lender. The lender then submits an application to the SBA, which makes a final determination on how much forgiveness the borrower should receive.
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The submission process varies by lender. Some lenders have just started accepting applications or currently have opened applications to select borrowers.
For example, JP Morgan Chase, the top PPP lender by dollar amount, is emailing customers on a limited basis and inviting them to apply on the basis of receiving their PPP funds, Chief Executive Officer of Chain Business Banking According to Jane Roberts.
“It has helped us test the SBA’s submission process and identify some common pitfalls that we can help customers avoid,” said Ms. Roberts.
Other lenders are still working to acquire the technology and personnel before they start accepting applications.
Borrowers can apply for forgiveness at any time before the maturity date of the loan. However, to avoid initiating loan payments, PPP borrowers must apply for forgiveness within 10 months of the end of their covered term. The period covered began on the loan disbursement date and is for the subsequent 24 weeks, or eight weeks for some eligible borrowers who opt for this deadline.
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What is needed to forgive a debt?
To forgive the entire amount, borrowers must spend at least 60% of their loans at the cost of payroll and can use the remaining funds for other qualified costs, such as mortgage interest, rent, and utilities. The amount of forgiveness may be reduced if the business has reduced its employee head count or reduced salary and wages.
Borrowers should prepare to collect and apply for documents and take stock of how much debt they have taken on allowable expenses, focusing specifically on payroll, said Atlantic Union Bank Chief Executive Officer John Asbury of Virginia A lender issued $ 1.7 billion. In PPP loan.
“See how much you can forgive based on your payroll before you start thinking about your other eligible expenses,” Mr. Serb said. “If you can forgive the whole thing based on your payroll, then you’re done.”
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Lisa Simpson, director of firm services at the American Institute of Certified Public Accountants, said some payroll-processing companies offer customized reports to provide the information needed for the amnesty application, so borrowers should see if the service is available to them. is.
Borrowers may also require documentation of other eligible expenses, such as utility bills and lease agreements.
What is an application like?
The SBA and the Treasury Department have issued three separate applications, and the one that borrowers must use depends on the nature of their business, their loan size, and whether they are employee head counts or salary and salary reductions. .
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Both the full pardon application and the EZ application require the borrower to calculate their forgiveness amount, creating certificates about how closely they followed the program’s guidelines and submitting supporting documents. The completed form is longer and more complex, but only some borrowers are eligible to use the EZ form, such as those who are self-employed with no employees or who maintain salaries and wages and head counts at certain levels.
The SBA said the third and most recently issued form, Form 3508S, is for loans of $ 50,000 or less and “streamlines the PPP forgiveness process to provide financial and administrative relief.”
Similar to other applications, Form 3508S asks borrowers to produce certificates and present documents to the lender.
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One important difference: Form 3508S is “less about calculations and more about certifications,” said Greg Clarkson, SBA division manager at BBVA USA. “While the documentation still needs to be gathered and provided, there is no need to review it [by lenders] To the same extent that it was either in Easy Form or Full Form. ”
Crucially, borrowers who use Form 3508S will have no reduction in their forgiveness amount if the business has a head count or salary and salary reduction.
Many lenders and organizations are providing resources such as checklists, webinars and online calculators to help borrowers understand how forgiving they can be and which application forms to use. Some of these devices are free of charge.
How long will it take to get an answer?
A lender has 60 days to review the borrower’s application and submit it to the SBA. The agency has up to 90 days to review the submission and issue the decision. The agency said it expected to “address most amnesty decisions in a timely manner.”
Want to know anything else?
Controversial negotiations over more coronovirus assistance in Washington, with many PPP lenders and small-business advocates lobbying the Trump administration and Congress to further simplify the amnesty process for loans under $ 150,000.
A principal of technology advisors said, “Some lenders need not put people through this process, where it is essentially a full-pardon forgiveness process, according to the new guidelines, when new guidelines Can be exposed, it can be difficult to navigate. ” The group at the accounting firm Ernst & Young, which is helping many lenders set up their own forgiveness portals.
Given the legislative uncertainty, Atlantic Union Bank has opened applications of amnesty for borrowers with loans of only $ 150,000 and enables customers with small loans to tell that according to Alison Holt-Fuller, head of the bank’s product, It may be prohibited from implementation. Management.
Nevertheless, Ms. Holt-Fuller said that there might be benefits to starting the process sooner rather than later.
“If you have already finished your cover period, then everything is fresh,” Ms. Holt-Fuller said. He said that borrowers waiting “may lose track of its accounting perspective”.
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