PPP loan forgiveness is based on employers maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
On June 5, 2020, the Paycheck Protection Program Flexibility Act was enacted, which modified certain provisions relating to forgiveness of PPP loans. On Tuesday, June 16, 2020, the Small Business Administration (SBA) published a revised PPP Loan Forgiveness Application (Form 3508) to implement changes made by the PPP Flexibility Act. The SBA also released a new three-page "EZ" version of the forgiveness application requiring less documentation and fewer calculations than previously required. Form 3508EZ applies to borrowers who meet any one of these three criteria:
- Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees; OR
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.
Both applications give borrowers the option of using the original eight-week Covered Period (if your loan was made before June 5, 2020) or an extended 24-week Covered Period.
If you received a PPP loan, please familiarize yourself with the Loan Forgiveness Application and begin collecting the documents and records required by the SBA. And as always, please feel free to reach out to our commercial bankers as a resource at (262) 549-8551.
On October 8, 2020, the Small Business Administration released a streamlined loan forgiveness application for Paycheck Protection Program loans totaling $50,000 or less.
The two-page forgiveness application, Form 3508S, includes certifications from the borrower but does not require calculations to be submitted with the application. Applicants must submit documentation verifying forgivable payroll and non-payroll expenses. Borrowers are required to retain the documentation supporting their certifications for six years.
If your business borrowed under $50,000 through the PPP program, please standby for further communication from your lender.
The Federal Reserve’s Main Street Lending Program offers five-year loans to help credit flow to small- and medium-sized businesses that were in sound financial condition prior to the COVID-19 pandemic, but now need financing to maintain their operations until they have recovered from, or adapted to, the impacts of the pandemic. The program aims to assist businesses that are likely too big for the Paycheck Protection Program and too small for other Federal Reserve emergency credit facilities. The goal is to help businesses facing temporary cash flow interruptions.
The program offers:
- 5-year loans
- Loans from $250,000 - $300 million
- Floating rates
- Principal payments deferred for two years
- Interest payments deferred for one year.
Interested businesses can find additional information by visiting bostonfed.org/mslp or contacting a Waukesha State Bank commercial banker at (262) 549-8551.