COVID-19 solutions Paycheck Protection Program

Embrace the power of forgiveness.

If receiving your Paycheck Protection Program (PPP) loan was a relief, imagine how you’d feel to find out your loan was forgiven. We want that experience for you—so we’re helping you prepare for your forgiveness application. 

Preparing your forgiveness application

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The Flexibility Act changed several aspects of the PPP, including Extended Deferral Periods, amended forgiveness requirements, extended deferral periods, and extended loan terms. Here’s how:

  • Loan Maturity - PPP loans made on or after June 5, 2020 have a minimum 5-year maturity. The Flexibility Act didn’t extend the 2-year maturity date on loans made prior to June 5, 2020.
  • PPP Forgiveness - The Covered Period for forgiveness has been extended from 8 weeks to 24 weeks or December 31, 2020, whichever is earlier. If you received your loan prior to June 5, 2020, you can choose to keep the original 8-week forgiveness period.
  • Employee Headcount - Your forgiveness amount won’t be reduced based on a reduction in full-time equivalent (FTE) employee headcount if you can document an inability to:
    • Rehire individuals who were employees on February 15, 2020;
    • Hire similarly qualified employees for unfilled positions on or before December 31, 2020; or
    • Return to the same level of business activity as prior to February 15, 2020, due to compliance with certain COVID-19 related measures related to social distancing, sanitation, or other worker or customer safety requirement.
  • Forgiveable Expenses - Your payroll costs must be at least 60% of forgivable expenses, previously 75%, and no more than 40% can be for non-payroll costs, previously 25%.
  • Extended Deferral Periods - Loan payments of principal, interest, and fees will now be deferred until the date that the determined forgiveness amount is remitted to the lender by the SBA, instead of the previous 6-month period.

    Borrowers who fail to apply for forgiveness within 10 months of the last day of the forgiveness period will have to make payments of principal, interest, and fees on covered loans.

No need to right now—we’ll be launching your forgiveness application in the PPP Client Portal in the coming weeks.

Once you receive the email alert that your digital application is live, you can file for forgiveness:

  • At the end of your 24-week or 8-week (if available and elected) Covered Period, or December 31, 2020, whichever is earlier
  • Before the end of your Covered Period if you’ve used all the loan proceeds for which you’ll be requesting forgiveness
  • At any time prior to the maturity date of your PPP loan

Keep in mind that despite the repayment terms stated in your promissory note:

  • You won’t have to start making payments on your loan until the SBA has made a final decision on your forgiveness application and sent that amount to Truist; OR
  • If you don’t apply for forgiveness, until 10 months after the last day of your Covered Period.

On June 16, 2020, the SBA released Form 3508EZ, simplifying the forgiveness application process for certain borrowers.

You can submit Form 3508EZ if you:

  • Are a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of your PPP loan application and didn’t include employee salaries in the computation of average monthly payroll; or
  • Didn’t reduce annual salary or hourly wages by more than 25% during the Covered Period, compared to the period between January 1, 2020, and March 31, 2020, not including any employee who received more than $100,000 on an annualized basis during any pay period in 2019, and you didn’t reduce the number of employees or average paid hours of employees between January 1, 2020, and the end of the Covered Period; or
  • Didn’t reduce annual salary or hourly wages by more than 25% during the Covered Period, compared to the period between January 1, 2020, and March 31, 2020, not including any employee who received more than $100,000 on an annualized basis during any pay period in 2019, and you were unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with certain COVID-19 related measures related to social distancing, sanitation, or other worker or customer safety requirements.

You can find more information on the Form 3508EZ at the SBA’s website as well as the CARES Act section of the Treasury’s website.

The Flexibility Act reduced the minimum payroll cost amount to 60% of the forgivable amount, meaning up to 40% of the forgiven amount can be non-payroll costs like certain rent and utilities. Prior to the Flexibility Act, at least 75% of forgivable expenses were required to consist of payroll costs.

We're rolling out loan forgiveness applications in phases to provide a smooth client experience. You'll receive an email invitation when it's time for you to apply for forgiveness.

No. We’re only accepting applications through the PPP Client Portal. Paper applications won't be accepted.

Make your application process easier by preparing required documentation before you begin.

You’ll need to submit documentation to show how you spent the proceeds of your PPP loan, such as:

  • Eligible payroll expense documentation, which may include bank statements, payroll reports or IRS payroll filings
  • Non-payroll expenses, categorized as utilities payments, mortgage interest payments, and/or rent payments, documentation may include invoices, billing statements, bank statements, lease agreements, or mortgage amortization schedules

Additional documentation requirements may vary based on your application.

  • Documents needed for Form 3508 can be found on page six of the revised SBA Form 3508 instructions.  
  • Documents needed for Form 3508EZ can be found on page four of the SBA Form 3508EZ instructions.

Collecting your documentation

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In general, you’ll be required to submit payroll, FTE employee headcount, and non-payroll documentation with your application. Below is a summary of documentation requirements from the SBA:

  • The SBA-issued PPP Loan Forgiveness Calculation Form
  • Payroll documentation verifying the eligible employee cash compensation and non-cash benefit payments consisting of each of the following:
    • Bank account statements or third-party payroll service provider reports
    • Tax forms
    • Payment receipts, cancelled checks, or account statements
  • Non-payroll documentation verifying the existence of obligations before February 15, 2020 and eligible payments from the Covered Period, including:
    • Business mortgage interest payments - Copy of lender amortization schedule and receipts or cancelled checks; or lender account statements verifying interest amounts and eligible payments.
    • Business rent or lease payments - Copy of current lease agreement and receipts or cancelled checks; or lessor account statements verifying eligible payments.
    • Business utility payments - Copy of invoices and receipts, cancelled checks, or account statements verifying those eligible payments.

If you don’t provide accurate and complete supporting documentation, the loan won’t be eligible for forgiveness.

You must retain all documentation for 6 years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.

Please consult your tax, legal, or accounting advisors with questions or for professional advice.

You can reference the instructions provided by the SBA in the PPP loan forgiveness application or consult your advisors (tax preparers, financial advisors, accountants, or attorneys) with questions. The SBA has also indicated that it will issue new regulations and guidance to further assist borrowers as they complete their applications in the near future.

Please consult your tax, legal, or accounting advisors with questions or for professional advice.

Understanding your Covered Period

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The Covered Period is the 8-week or 24-week period when you use your PPP loan funds. When you apply for loan forgiveness, you’ll need to provide documentation for funds allocated during this time.

While you have up to 24 weeks to allocate your funds, you can use them in less time if needed. However, no matter when you received your loan funding, no Covered Period can extend past December 31, 2020.

If your loan was made on or after June 5, 2020—no. Your Covered Period is 24 weeks.

If your loan was made prior to June 5, 2020—yes. You can choose either the 8-week or 24-week Covered Period when you apply for forgiveness.

Please plan accordingly when preparing supporting documentation.

It usually begins the day your loan is funded, unless you choose an Alternate Covered Period, which can start on the first day of your regularly scheduled pay period. No matter when you received your funding, your Covered Period can't extend past December 31, 2020.

Using your loan

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Certain payroll and non-payroll costs are eligible for forgiveness with appropriate documentation.

At least 60% of your PPP loan must be used for payroll costs, including salary, wages, commissions, tips, employee benefits, compensation to owners, and state and local taxes on compensation paid or incurred during your Covered Period.

  • Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period, or Alternative Payroll Covered Period if elected, are eligible for forgiveness if paid on or before the next regular payroll date.
  • Payroll costs that were both paid and incurred can only be counted once toward the forgiveness amount.
  • For a sole proprietor/independent contractor, payroll costs includes wages, commissions, income, or net earnings from self-employment.
  • Owner-employees and self-employed individual payroll compensation is limited per individual in total across all businesses and doesn't include health benefits or retirement plan contributions. The limit for forgiveness of owner-employees and self-employed individuals is dependent on the Covered Period selection of 8 weeks and 24 weeks. For the 8-week Covered Period, the pay can't exceed the lesser of 8 weeks of the 2019 compensation for any owner-employee or self-employed individual/general partner or $15,385 per individual. For the 24-week Covered Period, the pay can’t exceed the lesser of 2.5 months of the 2019 compensation for any owner-employee or self-employed individual/general partner or $20,833 per individual.

Non-Payroll costs paid or incurred during the Covered Period can’t exceed 40% of the loan forgiveness request. Non-payroll costs incurred during the Covered Period must be paid on or before the next regular billing date, even if the billing date is after the Covered Period. The following non-payroll costs are eligible for forgiveness:

  • Interest on business mortgage obligations (not including the pre-payment of interest or any payment of principal) entered into before February 15, 2020
  • Business rent or lease payments, on real or personal property, if the lease was entered into before February 15, 2020
  • Business utility payments like electricity, gas, water, transportation, telephone, or internet if the service began before February 15, 2020

Covered Period and Alternate Covered Period are both defined in the SBA Borrower PPP Loan Forgiveness Application.

According to SBA guidance, if you use PPP funds for unauthorized purposes you’ll have to repay those amounts. If you, one of your shareholders, members, or partners knowingly use PPP funds for unauthorized purposes, the SBA may take recourse, which could include charges for fraud. Please consult tax, legal, or accounting advisors for professional advice.

Yes. This program rewards borrowers that hire back workers who may have been laid off. Loan forgiveness is based in part on your ability to maintain or rehire employees, and to maintain salary levels.

If an employee's total compensation doesn’t exceed $100,000 on an annualized basis, the employee's hazard pay and bonuses are eligible for loan forgiveness because they constitute a supplement to salary or wages, and are compensation. As a reminder for the self-employed and partners, if you choose the 8-week Covered Period, it can’t exceed 8 weeks of the 2019 comparison. If you choose the 24-week Covered Period, it can’t exceed 2.5 months of the 2019 comparison.

8-week Covered Period - The pay can't exceed the lesser of 8 weeks of the 2019 compensation for any owner-employee or self-employed individual/general partner or $15,385 per individual.

24-week Covered Period - The pay can't exceed the lesser of 2.5 months of the 2019 compensation for any owner-employee or self-employed individual/general partner or $20,833 per individual.

No. The only interest payments that can be forgiven are on a business mortgage obligation on real or personal property that was incurred before February 15, 2020. A loan secured by movable personal property is a chattel mortgage, as opposed to a conventional mortgage. Personal property typically includes furniture, fixtures, tools, vehicles, and machinery, and equipment.

No. You can only use the PPP Loans for mortgage or rent payment under the Covered Period.

Payroll costs incurred during the borrower's last pay period of the Covered Period or Alternate Covered Period are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period to be eligible for forgiveness. Payroll costs are considered paid on the day that paychecks are distributed, or the borrower originates an ACH credit transaction.

Determining your forgiveness amount

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There are several factors that determine your PPP loan forgiveness amount.

Payroll and eligible non-payroll expenses make up the gross amount of your forgiveness. The number of FTE employees and wage/salary decreases cause reductions to forgiveness given the FTE safe harbor exemption rules.

Your PPP loan may be forgiven if you use the proceeds for payroll costs, mortgage interest, rent, and utilities during the Covered Period after the loan is funded. To receive a full forgiveness, you must spend at least 60% of loan amount on payroll expenses, with a cap of $100,000 annual equivalent per employee.

A reduction in an employee's salary or wages over 25% will generally result in a reduction in your loan forgiveness amount unless an exception applies. For each new employee in 2020 and each existing employee that wasn’t paid more than the annualized equivalent of $100,000 in any pay period in 2019, the borrower must reduce the total forgiveness amount by the total dollar amount of the salary or wage reductions that are over 25% of base salary or wages between January 1, 2020 and March 31, 2020. This is subject to exceptions for borrowers who restore reduced wages or salaries by December 31, 2020. This reduction calculation is performed on a per employee basis, not in the aggregate.

No. Your loan forgiveness amount won’t be reduced if you make a good faith, written offer of rehire, and document the employee’s rejection of that offer. If a return to work offer at the same salary/wages/hour was rejected by an employee, you must maintain records documenting the written offer and its rejection, and inform the applicable state unemployment insurance office of the rejected offer of reemployment within 30 days of the rejection. The SBA will be posting state unemployment offices on the SBA website.

Employees and employers should know that employees who reject offers of re-employment may forfeit eligibility for unemployment compensation.

No. The SBA will deduct EIDL advance amounts from the loan forgiveness amount.

Repaying your loan and moving on

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No. Under the Flexibility Act, payments are deferred until the SBA has made a final decision on your forgiveness application and sent that amount to Truist.

If you don’t apply for forgiveness within 10 months of the last day of the Covered Period, however, you’ll have to start making payments of principal, interest, and fees. The terms of your promissory note will be updated to reflect the deferred payment terms under the Flexibility Act and Truist will be providing further information on this process in the near future.  

Outstanding loan amounts bear interest at a fixed rate of 1.00%. For PPP loans made prior to June 5, 2020, the term of the loan is 2 years. For PPP loans made on or after June 5, 2020, the term of the loan is 5 years. However, all payments are deferred for a period until the SBA remits the lenders the applicable forgiveness amount. At the end of the deferral period, any accrued interest that hasn’t been forgiven will be due. Monthly payments of principal plus interest will begin after the deferral period.

If you don't apply for forgiveness within 10 months after the last day of your Covered Period, the PPP loan is no longer deferred and you'll have to begin paying principal and interest.

Outstanding loan amounts bear interest at a fixed rate of 1.00%. For PPP loans made prior to June 5, 2020, the term of the loan is 2 years. For PPP loans made on or after June 5, 2020, the term of the loan is 5 years. However, all payments are deferred for a period until the SBA remits the lenders the applicable forgiveness amount. At the end of the deferral period, any accrued interest that hasn’t been forgiven will be due. Monthly payments of principal plus interest will begin after the deferral period.

We’re committed to processing your application as quickly as possible.

However, the forgiveness decision takes time. Once your application is submitted, we have 60 days to review and process your application and submit it to the SBA. The SBA then has an additional 90 days to remit the appropriate forgiveness amount to Truist, unless the SBA determines that the forgiveness application needs further review. Notwithstanding the terms of the promissory note you signed, payments will be deferred until either the date the SBA has made a final decision on your forgiveness application and sent that amount to Truist, or the date that is 10 months after the last day of the Covered Period if you don’t apply for forgiveness.