Arvest is pleased to have helped thousands of small businesses secure loans through the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP). For those who have obtained a loan and are applying for loan forgiveness, you must meet these standards (among other requirements):
- Certify that the business is suffering economic uncertainty. All borrowers should carefully review the required certification that current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.
- A minimum of 75% of the loan funds must be used for payroll costs (the maximum annual salary for any employee is capped by law at $100,000).
- No more than 25% of the loan funds may be used for specified non-payroll costs, including mortgage interest, rent and utilities.
- Loan forgiveness will be reduced if you decrease your full-time employees
- Loan forgiveness will be reduced if you decrease salaries and wages by more than 25% for any employee who made less than $100,000 annualized in 2019. This could change with subsequent guidance.
- For Self-Employed or Independent Contractors: You are entitled to use the PPP loan to replace lost compensation. Eight (8) weeks’ worth of your 2019 net profit will be eligible for forgiveness.
- You have until June 30, 2020, to restore your full-time employment and salary levels for any changes made between February 15, 2020, and April 26, 2020. This could change with subsequent guidance.
Borrowers also may find the following Q&A helpful
Q: How much of my loan will be forgiven?
A: You will 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 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that no more than 25% of the forgiven amount may be for non-payroll costs.
You will also owe money if you do not maintain your staff and payroll.
- Number of Staff: Your loan forgiveness will be reduced if you decrease your full- time employee headcount.
- Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
- Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26,
Q: How can I request loan forgiveness?
A: You can submit a request to the lender that is servicing the loan. Your lender will provide a complete listing, but general documents you should expect to provide include: Forgiveness Application, payroll reports, Payroll Tax Filings (Form 9410, verification of FTEs on payroll, verification of health insurance and retirement contributions, verification of eligible interest, and rent and utility payments (canceled checks, receipts, account statements). If a sole proprietor, you can have eight weeks forgiven, but you’ll need to provide documentation for remaining two weeks’ worth of cash flow, proving you spent it on mortgage interest, rent, lease and utility payments. The lender must make a decision on the forgiveness within 60 days.
Q: What do I need to certify?
A: As part of your application process, you certified in good faith that:
- Current economic uncertainty makes the loan necessary to support your ongoing operations.
- The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
- You have not and will not receive another loan under this program.
- You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs covered mortgage interest payments, covered rent payment, and covered utilities for the eight weeks after getting this loan.
- Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more that 25% of the forgiven amount may be for non-payroll costs.
- All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
- You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.
This information is current as of today and is subject to change. More guidance is expected from the SBA related to loan forgiveness. As your bank, we want to ensure you can make informed decisions for your business. If you have questions or concerns about your loan, please do not hesitate to contact us at (866) 952-9523.