Paycheck Protection Program

On July 23, the SBA announced its PPP Forgiveness Platform will open and begin accepting lender submissions on August 10th. Rivermark is working on a digital online loan application which we will have available by the end of September. We will reach out via email to our PPP borrowers once we are ready to start accepting forgiveness applications. This timing is subject to extension if any new legislative amendments to the forgiveness process require system changes. We will continue to communicate updates through email.

Your loan may be eligible for forgiveness for expenses related to payroll, mortgage interest, rent, or utilities paid or incurred within 24 weeks following the origination date of your PPP loan. You, the borrower, may not be responsible for repayment of the loan if you use all the funds for forgivable expenses. Rivermark Community Credit Union will follow Small Business Administration (SBA) guidance to determine the amount that is forgivable and will require an application with supporting documentation. Guidance on loan forgiveness is evolving and rules may change, check back for updates

The below are for reference only. Please do not fill out a paper application as we will have a digital online loan application coming soon which you will need to complete to start the Forgiveness process.

The digital online loan application will have you answer questions that will guide you to which application to fill out.

The type of documentation required may vary depending on the nature of the funds spent for which you are seeking forgiveness. All supporting documentation is required to submit the forgiveness application to the SBA. You may need to wait for statements to be issued in order to submit your application.

A complete listing of the documentation required by the SBA:

• Form 3508: See page six of the SBA PPP Loan Forgiveness Application Instructions for Borrowers (6-16-20) 
  
  
• Form 3508EZ: See page four of the SBA Paycheck Protection Program EZ Loan Forgiveness Application Instructions

SBA Website

If you have a question please feel free to email us [email protected] we are happy to help.

Not sure which documents you need to submit, no worries, once you submit your Forgiveness application, we will reach out to let you know what documents are required for your submission.

Payroll documentation

• Bank account or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
• Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period: Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
• State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
• Payment receipts, canceled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that you included in the forgiveness amount.

Non-payroll documentation

• Mortgage interest payments: Copy of lender amortization schedule and receipts or canceled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
• Business rent or lease payments: Copy of current lease agreement and receipts or canceled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
• Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, canceled checks, or account statements verifying those eligible payments.

What costs qualify as utility expenses within non-payroll costs?

The SBA states the below categories are eligible if service began before February 15, 2020:

• phone
• internet
• gas
• water
• electricity
• transportation utility fee assessed by state or local governments

Here are some frequently asked questions about loan forgiveness. Guidance on loan forgiveness is evolving and rules may change, so check back for updates.

In addition to the below FAQ’s, you may also reference the SBA Forgiveness FAQs.

What are permitted uses for PPP loans?

• Payroll costs (as described below);
• Interest on mortgage obligations, in force before February 15, 2020;
• Rent, under lease agreements in force before February 15, 2020; and
• Utilities, for which service began before February 15, 2020.

How will the amount of loan forgiveness be determined? Can a PPP loan be fully forgiven?

Yes, the amount of the loan can be fully forgiven as long as certain conditions are met. The specific amount will generally depend in part on what portion of the loan is used on eligible payroll costs and whether the employer has maintained staffing and pay levels during the covered period.

A loan may be fully forgiven if all the following three conditions are met:

• The loan proceeds are spent, or qualifying costs are incurred, within the applicable covered period following receipt of the loan proceeds (unless using an Alternative Payroll Covered Period for payroll costs, described below).
• At least 60 percent of the loan amount was used for eligible payroll costs, and no more than 40 percent was used for the other Loan Uses described above.
  
  Example: If a small business seeks 100% forgiveness on a loan for $50,000, at least $30,000 must be for payroll costs during the applicable covered period following disbursement of the loan. No more than $20,000 may be for the other Loan Uses described above.
• Staffing and pay levels must be maintained during the applicable covered period immediately following disbursement of the loan (see below).

What is the period within which I must spend my loan proceeds to obtain full loan forgiveness?

To obtain full forgiveness, loan proceeds must be spent during the 24-week period immediately following disbursement of the loan or by December 31, 2020, whichever is earlier (the Covered Period). If you received your loan prior to June 5, 2020, you may choose the 8-week period following disbursement of your loan as your Covered Period. Also, if you pay your employees on a biweekly or more frequent schedule, you may choose to begin the covered period on the first day of the first pay period following disbursement of the loan (“Alternative Payroll Covered Period”) for qualifying payroll costs only.

How will the determination of whether my business has maintained staffing levels be made?

To determine whether staffing levels have been maintained, the average number of full-time equivalent employees (FTEs) during the applicable Covered Period or Alternative Payroll Covered Period will be compared to one of two time periods. Borrowers may either use the period from February 15 through June 30, 2019 or January 1 through February 29, 2020. For instance, if the employer had 20 FTEs from February 15 through June 30, 2019 and 18 FTEs from January through February 2020, the borrower would most likely choose the latter time period since it may be more advantageous to use the lower FTEs number for the chose lookback period. If the number of FTEs during the Covered Period or Alternative Payroll Covered Period is lower than the time period chosen, the amount of loan forgiveness may be reduced proportionately.

Seasonal employers may compare the average FTEs employed during the Covered Period or Alternative Payroll Covered Period to either period listed above or to any consecutive twelve-week period between May 1 through September 15, 2019.

Note that your forgiveness amount will not be reduced by a failure to maintain staffing levels during the Covered Period or Alternative Payroll Covered Period if (a) your average FTEs between February 15 and April 26, 2020 is lower than your FTES as of February 15, 2020, and (b) you restored the level of FTEs on or before December 31, 2020 to be equal or higher to the FTEs levels as of February 15, 2020. There are other exceptions that may apply. See the question below discussing rehiring employees.

When calculating the amount of loan forgiveness, how will the determination of whether my business has maintained pay levels be made?

Repayment of part of the loan may be required if an employee’s average annual salary (for salaried employees) or average hourly rate (for hourly employees) are reduced by 25% or more during the applicable Covered Period or Alternative Payroll Covered Period compared to the period of January 1 through March 31, 2020.

However, if (a) a given employee’s wage levels (annual salary level for salaried employees and hourly wages for hourly employees) between February 15 and April 26, 2020, are lower than as of February 15 and (b) you restore the wage levels by December 31, 2020, to be same or higher than as of February 15, 2020, there will be no reduction in forgiveness based on that employee’s wage levels.

Note: When comparing wage levels to determine if your loan forgiveness amount will be reduced, employees who earned wages or a salary at an annualized rate of more than $100,000 in any pay period of 2019 aren’t considered.

My company previously laid off an employee, but later offered to rehire the employee. If the employee declined the rehire offer, will my PPP loan forgiveness amount still be reduced?

Loan forgiveness will not be reduced based on an inability to rehire employees if the employer can document (1) written offers to rehire individuals who were employees of the organization on February 15, 2020; or (2) an inability to hire similarly qualified employees for unfilled positions by December 31, 2020.

Additionally, forgiveness will not be reduced for failure to maintain employment levels if the organization is able to document an inability to return to the same level of business activity as existed prior to February 15, 2020, due to compliance with COVID-19-related guidance for sanitation, social distancing, or worker or customer safety requirements from the Health and Human Services (HHS), the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration (OSHA) between March 1 and December 31, 2020.

The SBA has suggested that the documentation required above would be satisfied if an employer made a good faith, written offer of rehire at the same salary/wages and for the same number of hours, the employee rejected the offer of rehire, and the employer notified the applicable state unemployment insurance office of the employee’s rejection of rehire within 30 days. Employees who are terminated for cause, voluntarily resign, or voluntarily request and receive a reduction of hours may also be excluded from the FTEs reduction calculations.

How are "payroll costs" defined under the PPP?

Under the PPP, payroll costs generally include:

• Employee gross pay including salary, wages, commissions, bonuses, and tips, capped at the annualized value of $100,000 for the length of the applicable Covered Period or Alternative Payroll Covered Period. For employers who received loans prior to June 5, 2020, and choose to use an 8-week Covered Period, this limit is $15,385, which is the 8-week value of the annualized $100,000 cap. For employers using a 24-week Covered Period, this limit is $46,154.
• All employer state and local taxes paid on employee gross pay, such as state unemployment insurance and employer-paid state disability insurance (in applicable states).
• Employer-paid healthcare benefits, including insurance premiums.
• Employer-paid retirement benefits, including defined-benefit or defined-contribution retirement plans and employer 401(k) contributions.

Note: The definition of payroll costs excludes employer federal taxes, workers compensation premiums, payments to independent contractors, and payments to employees for leave covered under the Families First Coronavirus Response Act.

Do all payroll costs need to be paid within the Covered Period or Alternative Payroll Covered Period?

No. The latest guidance from the government indicates that borrows are eligible for forgiveness for payroll costs paid and payroll costs incurred, but not yet paid, during the Covered Period or Alternative Payroll Covered Period. Payroll costs are considered paid on the date of distribution of paychecks or origination of an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid within the Covered Period or Alternative Payroll Covered Period must be paid by the next regular payroll date to be counted for forgiveness purposes.

What happens if I use less than 60 percent of the PPP loan on payroll costs?

The Paycheck Protection Program Flexibility Act provides that at least 60% of the covered loan amount must be used for payroll costs. If less than 60% of the loan amount is used on payroll costs, the amount of the loan that is forgiven may be reduced. The Treasury Department has indicated that at least 60 percent of the loan forgiveness amount must have been used for payroll costs.

How do I apply for loan forgiveness? How long will it take?

You can apply for loan forgiveness through our Online Digital Forgiveness Application process. Rivermark has 60 days to make a decision on loan forgiveness. The SBA has issued a loan forgiveness applications and instructions, which can be found here.

Can I use the new EZ Loan Forgiveness Application form that the SBA released?

The Treasury Department and Small Business Administration have issued a new “EZ” version of the Loan Forgiveness Application form and Instructions, which are available here. The EZ form contains simplified calculations and reduced reporting requirements for eligible borrowers. In order to use the EZ form, borrowers must be able to certify that one of the following three scenarios apply:

1. The borrower is self-employed individual, an independent contractor, or a sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the PPP loan application.
2. The borrower did not reduce the annual salary or hourly wages of any employee by more than 25 percent during the applicable Covered Period or the Alternative Payroll Covered Period as compared to the period between January 1, 2020 and March 31, 2020 (excluding any employee who, during any single period in 2019, received wages or salary at an annualized rate greater than $100,000)
   AND
   The borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period, excluding reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020 and also excluding reductions in an employee’s hours that the Borrower offered to restore and the employee refused.
3. The borrower did not reduce the annual salary or hourly wages of any employee by more than 25 percent during the applicable Covered Period or the Alternative Payroll Covered Period compared to the period between January 1, 2020 and March 31, 2020 (excluding any employee who, during any single period in 2019, received wages or salary at an annualized rate greater than $100,000)
   AND
   The borrower could not operate during the applicable Covered Period at the same business activity level as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

What payroll documentation will I need to submit to Chase with my Loan Forgiveness request?

The SBA has shared the following guidance on what Payroll documents will be needed to verify the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:

• Bank account or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
• Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:◦Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and

◦State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.

Payment receipts, canceled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that you included in the forgiveness amount.

What non-payroll documentation will I need to submit to Rivermark with my Loan Forgiveness request to verify existence of the obligations/services prior to February 15, 2020?

• Business mortgage interest payments: Copy of lender amortization schedule and receipts or canceled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
• Business rent or lease payments: Copy of current lease agreement and receipts or canceled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
• Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, canceled checks, or account statements verifying those eligible payments.

What costs qualify as utility expenses within non-payroll costs? 

The SBA states the below categories are eligible if service began before February 15, 2020:

• phone
• internet
• gas
• water
• electricity
• transportation