Paycheck Protection Program Loan Forgiveness Application ......The final tab is Resources and Help. Click on Resources and Help for Instructions for PPP Schedule A. These instructions

Paycheck Protection ProgramLoan Forgiveness Application Portal

Client Guide

Payroll Protection Program Forgiveness Application Client Guide

Contents

A) Introduction...................................................................... 1

B) PPP Loan Application Forgiveness Platform Login..... 2

C) One Time Password (“OTP”) Authentication................. 3

D) Landing Page – First Time Entering Portal.................... 4Overview TabDocuments Required TabApplication Steps TabResources and Help Tab

E) Landing Page – Returning to the Portal.......................... 11

F) Application Information.................................................... 13Economic Injury Disaster Loan (EIDL)If Borrower Received PPP Loans in Excess of $2 MillionThe Rules for Self Employment

G) Payroll Costs..................................................................... 17Summary of Costs Eligible for ForgivenessDetermining Your Covered PeriodCash CompensationOther Compensation

> Health> Retirement> Taxes

Owner Compensation

H) Eligible Nonpayroll Costs................................................. 26Add an ExpenseUploading Supporting Documentation

I) Forgiveness Amount Calculation...................................... 30Salary and Wage ReductionSafe Harbor(s) Exemption from FTE ReductionAdditional Exemptions from FTE ReductionFTE Reduction Reference Period

> Seasonal Employer or BusinessAverage FTEFTE QuotientFTE Reduction Result

J) Review Application............................................................ 37Application InformationPayroll CostsEligible Nonpayroll CostsSalary/Wage and FTE Reduction

K) eSign & Submit.................................................................. 42

L) View Document.................................................................. 48

M) eSignature Completed...................................................... 52

N) Submitted Screen.............................................................. 53

O) Help & Contact Information.............................................. 54


Section AIntroduction

Welcome to the City National Bank of Florida (CNB) Paycheck Protection Program (PPP)Loan Forgiveness Application Portal Client Guide.

Completion of the PPP Loan Forgiveness Application will help qualifying Borrowersobtain full or partial forgiveness of their PPP Loan - a significant financial benefitduring these extraordinary times.

In this Client Guide we will provide detailed instructions for entering the necessaryinformation into the PPP Loan Forgiveness Application Portal to successfully completeand submit the PPP Loan Forgiveness Application to CNB.

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Section BPPP Loan Application Forgiveness Platform Login

Below is a screenshot of the Login Page for the PPP Loan Application Forgiveness Portal.

The following information is required in order to Login to the Portal:• Email Address – this is the same email address you provided to the Small BusinessAdministration (“SBA”) at the time of your loan application

• Funded Loan Amount from SBA• Last Four (4) Digits of the Funded Loan Number

Enter the required information. You must log into the portal one time before authorizing a proxy onyour business' behalf. Please continue to >>blank section<< if you would like to authorizea proxy to complete the forgiveness application.

Click the blue NEXT button to proceed.

A One Time Password (“OTP”) will automatically be sent to the email address provided in the Loginscreen.

This OTP is required to validate the Borrower’s identity and enter the portal.

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Section COne Time Password (“OTP”) Authentication

Clicking NEXT on the Login screen automatically sends a One Time Password (“OTP”) to the emailaddress provided to be used for entry into the PPP Loan Application Forgiveness Portal. Enter (youmay copy and paste) the six digit OTP provided in your email where shown. Then click on the blueSUBMIT button:

If the OTP authorization code is not received, please click on the blue Resend OTP link to requestthe OTP be resent. Upon receipt, enter, then click on the blue SUBMIT button:

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Section D

Landing Page – First Time Entering Portal

After entering the One Time Password into the Login (OTP Authentication) screen, access isgranted to the PPP Loan Forgiveness Portal:

You should see Paycheck Protection Program Forgiveness Application in the top left header.

Immediately to the right the following information is auto-filled based on your business:Borrower’s Company Name, Loan Amount, and Business Address. Below the header, left to right,you will see a six (6) part timeline, where the completion of each corresponding action is displayed:• Loan Funded. This is the date your application was completed and accepted by theSBA and the loan proceeds deposited into your designated City National Bank account.

• Portal Available. The date you are able to access the Application Portal.

• Forgiveness Application Due. The date by which you must submit your ForgivenessApplication.

• Submit to SBA. The earliest date permitted to submit the PPP Forgiveness Applicationto the SBA

• SBA Review. The date the SBA completes its review of the PPP Forgiveness Application.This date is variable depending upon each individual loan application.

• Forgiveness Receipt. The date the SBA provides a “Response” for the PPP ForgivenessApplication.

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Immediately below the six part timeline you will see Select Forgiveness Period. To the rightthere are two (2) radio buttons with the option to select 8 Weeks or 24 Weeks. Click on theappropriate forgiveness period, either 8 weeks or 24 weeks.

Below the Select Forgiveness Period radio buttons, you will see four (4) tabs:• Overview• Documents Required• Application Steps• Resources and Help

Reset coverage period:A) If the Borrower chooses to reset the coverage period at any point in the application,

they can click on the back button until they navigate to the Borrower details screenB) The Borrower can reset the coverage period from 8 weeks to 24 weeks and vice versa

on this screenC) When the Borrower returns to the application by accessing the link, the Borrower is

presented with the button “Reset Coverage Period”. The Borrower can choose to click on thisbutton and reset the coverage period from 8 weeks to 24 weeks and vice versa.

Overview TabThe Overview tab provides detailed instructions for completing the PPP Loan ForgivenessCalculation Form. There are five (5) data areas:

1) Forgiveness Amount Calculation2) Covered Period3) Alternative Payroll Covered Period4) Payroll Costs5) Eligible Nonpayroll Costs

For more information to complete the required inputs, please click on the down arrow (▼) to theright of each item:

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Item 1: Forgiveness Amount Calculation

Item 2: Covered Period

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Item 3: Alternative Payroll Covered Period

Item 4: Payroll Costs

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Item 5: Eligible Nonpayroll Costs

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Documents Required TabThe next tab, to the right of the Overview tab, is the Documents Required tab. As the headingmakes clear, this details documents each Borrower MUST submit with its PPP ForgivenessApplication.

Missing, or incorrect, documents will delay the review and approval for your PPP ForgivenessApplication. Please review the information shown here in its entirety. In particular, please note:• Please indicate the relevant numbers on each submitted document, for ease of review• In addition to full copies of your leases or loans, a separate file for each containing select copies

of pages from your leases or loans may be required, including the first page, pages with paymentterms, and signature page

Important: All records relating to your PPP loan, including documentation submitted with your PPPloan application, documentation supporting your certifications as to the necessity of the loanrequest and your eligibility for a PPP loan, documentation necessary to support your loanforgiveness application, and documentation demonstrating your material compliance with PPPrequirements must be retained in your files for six years after the date the loan is forgivenor repaid in full. Authorized representatives of the SBA, including representatives of its Office ofInspector General, MUST have access to these files upon request.

Application Steps TabNext is the Application Steps tab. This shows the Steps to complete an Application, as shownon the screen.

The six steps required to complete the application before submission are:1) Borrower Details2) Payroll Costs3) Eligible Nonpayroll Costs4) Salary/Wage and FTE Reduction5) Review Application6) eSign & Submit

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Resources and Help TabThe final tab is Resources and Help. Click on Resources and Help for Instructions forPPP Schedule A. These instructions provide line by line information for completing your PPPSchedule A application. This serves as important reference material.

Following review, please click on the blue CONTINUE APPLICATION top right to begincompleting your Application. [New screenshot no longer has “Continue Application”.]

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Section ELanding Page – Returning to the Application Portal

Clicking on CONTINUE APPLICATION will return you to the Application Portal. The first screenyou see will show Application Progress:

• Added Expenses Total

• Current Eligible Expense TotalThe total sum of Payroll Costs (enter the amount from PPP Schedule A, line 10)Line 2, Business Mortgage Interest PaymentsLine 3, Business Rent or Lease PaymentsLine 4, Business Utility Payments

• Current Reduction Total> Reduction for Number of Employee Costs – The ratio of forgivable costs is now 60%

eligible payroll costs and 40% eligible non-payroll costs. The SBA will reduce the amountforgiven by any Economic Injury Disaster Loan advance that was received.

> Reduction for Salary Cuts – The new interim final rule states that if a Borrower appliesfor loan forgiveness before the end of the covered period and has reduced any employees’salaries or wages by more than the 25% allowed for full forgiveness, the Borrower mustaccount for the excess salary reduction for the full eight week or 24 week covered period,whichever one applies to its loan.

Under that guidance, PPP Borrowers that apply early for loan forgiveness forfeit a safe harborprovision allowing them to restore salaries or wages by December 31, 2020 and avoidreductions in the loan forgiveness they receive. For example, if a Borrower has a 24 weekperiod that ends in November but wants to apply in September, any wage reduction in excessof 25% as of September would be calculated for the entire 24 week period even if the borrowerrestores salaries by December 31.

> Reduction Total – The sum of your Reduction for Number of Full Time Employees andyour Reduction for Salary Cuts amount.

• Current Forgiveness Estimate – The estimated amount of your PPP Loan that qualifiesfor Forgiveness.

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Section FApplication Information

You have now arrived at the Application Information screen and are ready to begin entering theinformation needed to complete your PPP Forgiveness Application.

To complete this screen, please note:For Loan Information enter the “Employees at Time of Loan Application” AND “Current Number ofEmployees”, as indicated by the orange arrows on the screen:

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Authorized Representative of the Borrower/Authorized Representative of the Borrower Appointed Third-Party1) If the Borrower selects “Authorized Representative of the Borrower”, the system considers

the Borrower as the person who will be filling in the application.a) The Borrower will fill in all the details of the application as explained in the subsequent pages.

2) If the Borrower selects “Authorized Representative of the Borrower Appointed Third-Party”,the system prompts the Borrower to assign the application to a Third-Party who can fill in thedetails on behalf of the Borrower.a) The Borrower enters the First Name, Last Name and Email address of the Third-Party and

clicks on the ‘Assign’ buttonb) The system generates an email notification with a link and e-mails to the assigned

Third-Partyc) The Assigned Third-Party will click on the link and access the applicationd) The Assigned Third-Party will complete the application on behalf of the Borrowere) The Assigned Third-Party will not be presented with an option to eSign and submit

the applicationf) The Assigned Third-Party after filling in the details in the application, will be presented with

a button to ‘Notify’ the Borrowerg) The system will send an email notification to the Borrower indicating that the assigned

Third-Party has completed the application. The application is ready for eSign and submissionh) The Borrower will click on the link which was sent to access the application and will eSign

and submit the application

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For review of application descriptions, please refer to Section D of this Guide: Overview tab,Item 1 - Forgiveness Amount Calculation.

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The next part of the Application Information screen below shows a number of choices.Additional questions may appear as you answer the questions.

This is where you will enter the Economic Injury Disaster Loan (EIDL) information and respondto other questions pertaining to you and your business. Once you have completed this section, clickon the blue CONTINUE button on the bottom right hand side of the screen to move on to the nextsection: Payroll Cost.

Notes for completing the EIDL SectionEconomic Injury Disaster Loan (EIDL)Note: If applicable, the SBA will deduct EIDL Advance Amounts from the forgiveness amountremitted to the Lender.

If the Borrower Received PPP Loans in Excess of $2 MillionNote: If you, the Borrower, together with your affiliates (to the extent required under SBA’s interimfinal rule on affiliates (85 FR 20817 (April 15, 2020)) and not waived under 15 U.S.C.636(a)(36)(D)(iv)), received PPP loans with an original principal amount in excess of $2 million.

The Rules for Self EmploymentNote: If you are self-employed, you can still qualify for PPP forgiveness, even if you don’t haveemployees. The distinction is that you are given a PPP loan based on 2019 net profit, not 2019payroll records. So you don’t need to spend 60% of the loan on payroll. Instead, eight weeks’worth of your 2019 net profit can automatically be forgiven if your loan was received prior to June5, 2020. If your loan was received after June 5 or you've contacted your lender to opt to use a 24week period, 2.5 months of your 2019 net profit will be automatically forgiven which will be yourfull loan amount.

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Section G

Payroll Costs

Summary of Costs Eligible for ForgivenessYour PPP loan funds can be used to cover payroll expenses so that you can keep your business

staffed. Various payroll costs are qualified expenses, including:

• Salaries, Wages, Tips & Commissions

> Capped at $100,000 annually per employee

• State and local taxes on compensation

• Employee Benefits

> This includes costs associated with retirement plans, group health insurance, separation

or dismissal, vacation time, sick and medical leave, and parental and family leave

• If you are a sole proprietor or independent contractor, self-employment wages, salaries,

and commissions not exceeding $100,000 annually also qualify as payroll costs. These costs will

need to be proven by submitting payroll documentation. For small businesses, acceptable

documentation includes:

> Tax Forms: 941 Quarterly Tax Filings and 944 Annual Tax Filings

> Payroll Registers: Should be from the last 12 months

> Business Bank Statements: Should be from the last 12 months

• If you’re an independent contractor or sole proprietor, documentation proving payroll

costs include:

> Tax Forms: 1040 Schedule C and 1099s

> Income and expense reports

> Other documentation may be acceptable - ask your CNB Loan Officer for additional

details

• Mortgage Interest

> Your PPP loan can be used to pay mortgage interest. Mortgage interest obligations

must have been incurred prior to February 15, 2020 to be a qualified expense.

> Documentation showing mortgage interest paid is required. Acceptable documentation as

evidence that the debt existed prior to February 15, 2020 includes receipts, bank statements,

account statements, and canceled checks.

• Rent

> If you rent your commercial space, you can use a portion of your funds to cover rent

for two months. To be considered a qualified expense, a lease agreement for the property must

have been in effect prior to February 15, 2020.

> Documentation proving your funds were spent toward this qualified expense are required. Be

sure to retain all relevant account statements, receipts, bank statements, and canceled checks

as evidence the lease existed before February 15, 2020. Provide the full lease and also a file

containing the pages from the lease that show the terms, and signature page (signed).

• Utilities

> A portion of your PPP loan may be used to cover utilities. The SBA defines utilities as

“electricity, gas, water, transportation, telephone or internet access, for which service began

before February 15, 2020.”

> Documentation proving these utilities were paid is required. Be sure to retain relevant

account statements, bank statements, canceled checks, and receipts.

> Important note: at least 60% of your loan must be used to cover payroll costs in order

to be forgiven. The remaining 40% can be used to pay mortgage interest, utilities, and rent.

> Important note: before the passage of the Paycheck Protection Program Flexibility Act,

Borrowers were required to use at least 75% of loan funds for payroll costs. Failure to meet this

requirement would result in a reduction in the portion of the loan that is forgiven. Now, only

60% of funding must be used toward payroll costs. However, if you don’t meet this threshold,

you may still be eligible for partial forgiveness.

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Payroll CostsPayroll Costs include compensation up to $100,000 (applies only to cash compensation, and not tonon-cash benefits) on an annualized basis to employees with a principal place of residence in theU.S. in the form of:• Gross salary, gross wages, gross commissions, or similar compensation• Gross cash tips or the equivalent (based on employer records of past tips or, in the absence ofsuch records, a reasonable, good-faith employer estimate of such tips)• Payment for vacation, parental, family, medical, or sick leave• Allowance for separation or dismissal• Payment for the provision of employee benefits consisting of group health care coverage,

including insurance premiums, and retirement - not including such employer contributions madeon behalf of the self employed individual, general partners, or owner-employees of an Scorporation

• Payment of state and local taxes assessed on compensation of employees• If a 24 week Applicable Covered Period applies, for owner-employees, self-employed

individuals and general partners, compensation replacement, the lesser of 2.5 months’ worth of2019 compensation or $20,833

• If an 8 week Applicable Covered Period has been elected for owner-employees,self-employed individuals and general partners, compensation replacement, the lesserof 8 weeks' worth of 2019 compensation or $15,385

Payroll Costs may not include:• Compensation of an individual employee in excess of an annual salary of $100,000 inone year, pro-rated during the covered period

• Any compensation of any employee whose principal place of residence is outside of theUnited States

• Qualified sick leave wages or family leave wages for which a credit is allowed undersection 7001 or 7003 of the Families First Coronavirus Response Act

• Amounts paid to independent contractors

Borrowers are generally eligible for forgiveness for the payroll costs “paid” and the payroll costs“incurred” during the Applicable Covered Period.

Payroll costs are considered “paid” on the day that paychecks are distributed or the Borroweroriginates 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 during the Borrower’s last pay period of the Applicable CoveredPeriod are eligible for forgiveness if paid on or before the next regular payroll date.

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Determining Your Covered PeriodCovered Period: The Covered Period is either 1) the 24-week (168-day) period beginning on thePPP Loan Disbursement Date, or 2) if the Borrower received the PPP loan before June 5, 2020, theBorrower may elect to use an eight week (56-day) Covered Period. For example:• If the Borrower is using a 24 week Covered Period and received its PPP loan proceeds on

Monday, April 20, the first day of the Covered Period is April 20 and the last day of the CoveredPeriod is Sunday, October 4, 2020. In no event may the Covered Period extend beyond December31, 2020.

Alternative Payroll Covered Period: For administrative convenience, Borrowers with a bi-weekly(or more frequent) payroll schedule may elect to calculate eligible payroll costs using the 24 week(168-day) period ((or for loans received before June 5, 2020 at the election of the Borrower, theeight week (56 day) period)) that begins on the first day of their first pay period following their PPPLoan Disbursement Date. For example:• If the Borrower is using a 24 week Alternative Payroll Covered Period and received its PPP

loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loandisbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April26 and the last day of the Alternative Payroll Covered Period is Saturday, October 10, 2020.

Borrowers that elect to use the Alternative Payroll Covered Period must apply the AlternativePayroll Covered Period wherever there is a reference in this application to “the Covered Period orthe Alternative Payroll Covered Period”.

However, Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period)wherever there is a reference in this application to “the Covered Period” only. In no event may theAlternative Payroll Covered Period extend beyond December 31, 2020.

See below for examples of Payroll Costs screens.

For detailed information for this Payroll Costs tab please refer to detailed descriptions above. Formost Borrowers, the following examples will be useful. For instance, if you choose “Other” for yourCovered Period, you will need to select the date in the month tool provided.

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Example if Payroll Costs are Monthly

After determining your Covered Period or Alternative Covered Period, the next section will beCash Compensation. In the following screens, you have the opportunity to upload thedocumentation required to support your entries.

Cash CompensationIn the Cash Compensation screen, enter the sum of gross salary, gross wages, gross tips, grosscommissions, paid leave (vacation, family, medical or sick leave, not including leave covered by theFamilies First Coronavirus Response Act), and allowances for dismissal or separation paid orincurred during the Covered Period or the Alternative Payroll Covered Period.

For each individual employee, the total amount of cash compensation eligible for forgiveness maynot exceed an annual salary of $100,000, as prorated for the Covered Period.

For an 8 week Covered Period, that total is $15,385. For a 24 week Covered Period, that total is$46,154.

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Below is an example of the Cash Compensation screen with the Document Upload input areahighlighted with an orange arrow. Upload supporting documentation such asAccount Statement and Worksheet Document from a Third Party payroll service:

The screen below shows an example of options for payroll reported tax filings, or equivalent third-party payroll service provider reports to upload. Options include IRS forms 943 and 941 or OtherIRS Form:

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Other CompensationHealthIn the Other Compensation - Health - screen, enter information relating to group health carebenefits, including employer contributions to a self-insured, employer-sponsored group health plan,but excluding any pre-tax or after-tax contributions by employees.

Below is an example of the options available for upload in support of ‘Other Compensation’ Health.Includes documentation for the amount of monies entered for the ‘Employer contribution foremployee health insurance.’ The choices include, ‘Account Statement’, ’Payment Receipt’, or‘Cancelled Check’:

Other CompensationRetirementIn the Other Compensation - Retirement - screen, enter contributions to retirement benefitplans, excluding any pre-tax or after-tax contributions by employees.

Below is an example of the options available for upload under Other Compensation -Retirement. Includes documentation for the amount of monies entered for the “Employercontribution for employee retirement plans”. The choices include, “Account Statement”, “PaymentReceipt”, or “Cancelled Check”:

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Other CompensationTaxesIn the Other Compensation - Taxes - screen, enter Tax forms (or equivalent third-party payrollservice provider reports) for the periods that overlap with the Covered Period or Alternative PayrollCovered Period, including:

• Payroll tax filings reported, or that will be reported, to the IRS (typically Form 941)• State quarterly business and individual employee wage reporting and unemploymentinsurance tax filings reported, or that will be reported to the relevant state

Below is an example of the options available for upload in support of Other Compensation -Taxes, to provide documentation for the amount of monies entered for “Employer state and localtaxes assessed on employee compensation”. The choices include, “Business Tax Filing”, “IndividualTax Filing”, or “Unemployment Insurance Tax Filing”:

Owner CompensationDetailed information for completing the Owner Compensation screens is shown below.

Once the screen, or screens for multiple owners, is/are complete, select Yes or No as appropriate,then click on the blue CONTINUE button to proceed to the next section, Eligible Nonpayroll Costs.

Notes for completing Owner CompensationRecent Interim Final Rules and Line 9 of the Forgiveness Application include this new limitationon compensation paid to owners, which is intended to prevent an owner from increasing theircompensation during the Covered Period.

The loan forgiveness amount for owner-employees, self-employed individuals and general partnersis capped at the lesser of 8/52 of the 2019 compensation (approximately 15.38 percent of 2019compensation) or $15,385 per individual in total across all businesses if using an eight weekCovered Period. Under a 24 week Covered Period, the cap is the lesser of $20,833 or 2.5 months of2019 compensation.

Owner-employees are capped by the amount of their 2019 employee cash compensation andemployer retirement and health care contributions made on their behalf.

Schedule C filers are capped by the amount of their owner compensation replacement, calculatedbased on 2019 net profit.

General partners are capped by the amount of their 2019 net earnings from self-employment(reduced by claimed section 179 expense deduction, unreimbursed partnership expenses, anddepletion from oil and gas properties) multiplied by 0.9235.

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No additional forgiveness is provided for retirement or health insurance contributions for self-employed individuals, including Schedule C filers and general partners, as such expenses are paidout of their net self-employment income.

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Section HEligible Nonpayroll CostsNonpayroll costs eligible for forgiveness include:

• Covered mortgage obligations, such as payments of interest (not including anyprepayment or payment of principal) on any business mortgage obligation on real or personalproperty incurred before February 15, 2020

• Covered rent obligations, for instance, business rent or lease payments pursuant tolease agreements for real or personal property in force before February 15, 2020

• Covered utility payments, like business payments for a service for the distribution ofelectricity, gas, water, transportation, telephone, or internet access for which service beganbefore February 15, 2020

Eligible nonpayroll costs must be paid during the Applicable Covered Period or incurred during theApplicable Covered Period and paid on or before the next regular billing date, even if the billingdate is after the Applicable Covered Period. For further clarification, The Interim Final Rule onForgiveness provides this example of an electric bill:

• Electric bills are typically paid in arrears. The Borrower’s Applicable Covered Period isJune 1 through July 26, 2020. The electric bills that the Borrower pays for May and June arepaid during the Applicable Covered Period and eligible for forgiveness. The July electric bill ispaid on August 10, 2020 (which is the next regular billing date). The payment on August 10,2020 (only for the portion of the Borrower’s July electricity bill through July 26, 2020 – the endof the Applicable Covered Period) may be included in the requested forgiveness amountbecause the related expenses were “incurred” during the Applicable Covered Period and paid onthe next regular billing date.

As a reminder, as a result of the PPP Flexibility Act, eligible non-payroll costs cannot exceed 40% ofthe total forgiveness amount.

Add an Expense

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Please select your category type from the drop down menu:• Mortgage Interest• Rent or Lease• Utilities

Mortgage Interest

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Rent or Lease

Utilities

Enter the total expense amount for the corresponding category in the Amount Box.

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Upload Supporting DocumentationPlease select your Document type from the drop down menu:

• Account Statement• Payment Receipts• Cancelled Checks

Click on the Choose File button to drag and drop the above supporting documentation.

Click on the Done button when you are finished. This will take you to the screen which displaysyour cumulative Expense Types, Amounts, Document Type, and Description of the uploadeddocument.

When you have finished uploading the documents, please click on the blue CONTINUE button inthe bottom right hand corner of the screen to move on to the Forgiveness Calculations Section.

What your screen should look like when uploading the supporting documentation:

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Section IForgiveness Amount Calculation

Salary and Wage ReductionGenerally, for employees who earned $100,000 or less in 2019 (or were not employed by theBorrower in 2019), the Borrower’s loan forgiveness will be reduced for each employee whoseaverage pay (salary or hourly wage) during the Applicable Covered Period is less than 75% of theiraverage pay compared to the period from January 1, 2020 to March 31, 2020.

The Salary/Hourly Wage Reduction Safe Harbor provides that 1) if the average annual salary orhourly wages between February 15, 2020 and April 26, 2020 is equal to or greater than the annualsalary or hourly wages as of February 15, 2020 or 2) if the average annual salary or hourly wageas of December 31, 2020 is restored to an amount equal to or greater than the average annualsalary or wage as of February 15, 2020, then the reduction during the Applicable Covered Perioddoes not count to reduce the amount of forgiveness.

If the Borrower does not meet the Salary/Hourly Wage Reduction Safe Harbor, the total amount offorgiveness is reduced by the total dollar amount of salary or wage reduction in excess of 25% ofthe salary or wages between January 1, 2020 and March 31, 2020. This reduction calculation isdone on a per employee basis, not in the aggregate.

There are two (2) methods for a Borrower to calculate a full time equivalent employee (FTE):• Option #1 – for each employee, take the average number of hours paid per week,

divide by 40, and round the total to the nearest tenth. The maximum for each employee iscapped at 1.0.

• Option #2 – Assign a 1.0 for employees who work 40 hours or more per week and 0.5for employees who work fewer hours.

Borrowers may select only one of these two methods, and must apply that method consistently to allof their part time employees for the Applicable Covered Period and the selected reference period.

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Safe Harbor(s) Exemption from FTE ReductionThere are two (2) separate safe harbors that may apply to exempt Borrowers from theFTE Reduction:1) If you, the Borrower, are able, in good faith, to document that you were unable to operate

between February 15, 2020 and the end of the Covered Period at the same level of businessactivity as before February 15, 2020, due to compliance with requirements established orguidance issued by the Secretary of Health and Human Services, the Director of the Centers forDisease Control and Prevention, or the Occupational Safety and Health Administration during theperiod beginning on March 1, 2020 and ending December 31, 2020, related to the maintenanceof standards for sanitation, social distance, or any other worker or customer safety requirementsrelated to COVID-19.

2) The FTE Reduction Safe Harbor provides that if both 1) the Borrower reduced its FTEemployee levels between February 15, 2020 and April 26, 2020; and 2) the Borrower restoredits FTE employee levels not later than December 31, 2020 to the levels in the Borrower’s payperiod that included February 15, 2020, then such reduction will not reduce the amount eligiblefor forgiveness.

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Additional Exemptions from FTE ReductionOther situations do not count toward the Full Time Employee (FTE) Reduction calculations:

• The Borrower offered to rehire former employees or offered to restore the reduced hoursof such employee so long as the following conditions are met:> The Borrower made a good-faith, written offer to rehire the employee (or, if

applicable, restore the reduced hours of such employee) during the Covered Period or theAlternative Payroll Covered Period

> The offer was for the same salary or wages and the same number of hours as earnedby such employee in the last pay period prior to the separation or reduction in hours

> The employee rejected the offer> The Borrower maintained records documenting the offer and its rejection> The Borrower informed the applicable state unemployment insurance office of the

offer and rejection within 30 days of the employee’s rejection. This last requirement is a newprovision from the Interim Final Rule on Forgiveness. The SBA will provide additionalinformation on this reporting requirement on its website.

• Employees fired for cause during the Applicable Covered Period• Employees who voluntarily resigned during the Applicable Covered Period• Employees who requested and received a reduction in their hours during the Applicable

Covered Period• The Borrower, in good faith, can provide documentation of its inability to 1) rehire

employees who were employed on February 15, 2020 and 2) hire “similarly qualifiedemployees” for unfilled positions on or before December 31, 2020.

Any FTE reductions in the above cases do not reduce the Borrower’s loan forgiveness.

When you are viewing the Average FTE, you will enter in the appropriate figures that pertain toyour business at the time of the loan application.

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FTE Reduction Reference Period

Generally, the Borrower’s loan forgiveness will be reduced if the Borrower’s average number ofFTEs during the Applicable Covered Period is less than the average number of FTEs during theBorrower’s chosen reference period. Borrowers can choose between the following referenceperiods:

• February 15, 2019 to June 30, 2019• January 1, 2020 to February 29, 2020or• For seasonal employers, either of the preceding periods or a consecutive 12 week periodbetween May 1, 2019 and September 15, 2019.

You will select the period for your FTE Reduction Reference Period. Remember, all supportingdocumentation needs to be within this time frame.

Again, the same method must be used for each employee. Also, some items to note:

Seasonal Employer or BusinessThe SBA Act does not define a seasonal employer or seasonal business. The statute allows the SBAadministrator to define the term.

If the applicant is a seasonal employer, determine the average number of FTE employees permonth during February 15, 2019 to June 30, 2019. This will be compared to the FTE employeesduring the eight week period beginning after funding of the loan.

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Average FTEBorrowers are eligible for loan forgiveness for certain expenditures during the Covered Period orthe Alternative Payroll Covered Period. However, the actual loan forgiveness amount that theBorrower will receive may be less, depending on whether the Borrower’s average weekly number ofFTE employees during the Covered Period or the Alternative Payroll Covered Period was less thanduring the Borrower’s chosen reference period.

If none of the FTE Reduction exceptions or safe harbors apply, the average number of FTEs duringthe Applicable Covered Period reduces the amount of forgiveness proportionally by the percentageof reduction in FTEs. For example, if the Borrower has 20% fewer FTEs during the ApplicableCovered Period, then the amount of forgiveness is reduced by 20%. The Forgiveness Applicationand schedules account for these reductions.

FTE QuotientEmployment loss for forgiveness purposes is based on FTEs, not workforce headcount.

Employment loss is calculated by determining the quotient of average number of FTEs each payperiod during the Covered Period or Alternative Payroll Covered Period divided by pre-loan FTEs.

FTE Reduction ResultIn order to achieve full forgiveness of the loan under the PPP Flexibility Act, Employers must do allof the following:

1) Use at least 60 percent of the total amount of the loan on qualifying payroll and benefitcosts during the Covered Period or Alternative Payroll Covered Period

2) Spend the remaining loan proceeds of not more than 40 percent of the total loanamount on qualifying rent, mortgage interest, and utility payments during theCovered Period, and

3) Not have their forgiveness reduced based on reductions in FTEs or employees’ wagesor salaries, or qualify for one of the safe harbors discussed above.

The amount of forgiveness will be reduced by multiplying the otherwise forgivable loan amount(i.e. the amount spent on permissible expenses less any EIDL advance) by the proportion ofemployment loss.

Employment loss for forgiveness purposes is based on FTEs, not workforce headcount.Employment loss is calculated by determining the quotient of average number of FTEs each payperiod during the Covered Period or Alternative Payroll Covered Period divided by pre-loan FTEs.

For example, if the resulting quotient is 90 percent, the employer’s loan forgiveness is reduced by10 percent (unless adjusted based on the savings provisions discussed above in the Safe HarborExemption from FTE Reduction section).

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When all of the figures are entered,please click on the blue CONTINUE button at the bottom of the screen

to review your application.

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Section JReview Application

Now we arrive at the section of the PPP Forgivenss Application portal where you are able to reviewyour entire PPP Forgiveness Application before you submit. The four tabs for you to review are:

• Application Information• Payroll Costs• Eligible Nonpayroll Costs• Salary/Wage and FTE Reduction

Application Information

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Payroll Costs

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Eligible Nonpayroll Costs

Salary/Wage and FTE Reduction

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After confirmation of information,please click on the blue CONTINUE button.

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Section KeSign & Submit

When you have reviewed your application and are fully satisfied with your responses, move on tothe next screen: eSign & Submit.

You will enter your First Name, Last Name, and Title where indicated below:

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When you, the Borrower, click on the blue eSign Document button, you are brought to thefollowing screen:

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You, the Borrower, must review the Electronic Record and Signatures disclosure and, if you agree,click on "I agree to use Electronic Documents and Signatures" to continue with the application.

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If you click on Other Actions, you will see the following options:• Finish Later• Print & Sign• Help & Support• About DocuSign• View History• View Certificate (PDF)• View Electornic Record and Signature Disclosure• Session Information

An example of some of these are shown below:

View History

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View Certificate (PDF)

View Electronic Record and Signature Disclosure

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Session Information

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Section L

View Document

Click on “View your signed document” to download your file. The next section will illustrate anexample of what this should look like.

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Section MeSignature Completed

Please go back to the eSignature Completed tab in your web browser to click on the green FINISHbutton to complete your application process.

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Section NSubmitted Screen

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Section OHelp & Contact Information

For questions or other assistance in completing your Payroll Protection Program ForgivenessApplication, please contact:

> Your Relationship Manageror

> Call 305-448-6500 for a Client Representative

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