SBA PPP Loan Forgiveness - mvbank.com · borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period). • Non-payroll

SBA PPP Loan Forgiveness

Martha’s Vineyard Bank

Agenda• Welcome

• Overview of current status

• Forgiveness Timeline

• What You Will Need

• Preview of Martha’s Vineyard Bank Forgiveness Application (online)• Email and PIN Number

• Key concepts

• E-sign and completion

• Next Steps

• Q&A

Current StatusSource: Journal of Accountancy

• Legislation signed June 5, lowered to 60% from 75% the minimum % borrowers have to spend on payroll costs to be forgiven.

• Partial forgiveness MAY be available under the 60% threshold.

• Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement. Borrowers that have already received PPP loans retain the option to use an eight-week covered period.

• Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time-equivalent (FTE) employees for borrowers that are unable to return to the same level of business activity the business was operating at before Feb. 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020, and Dec. 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 worker or customer safety requirements related to COVID-19.

• Provide a safe harbor from reductions in loan forgiveness based on reductions in FTE employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on Feb. 15, 2020, and unable to hire similarly qualified employees for unfilled positions by Dec. 31, 2020.

https://www.journalofaccountancy.com/news/2020/jun/partial-ppp-loan-forgiveness-remains-60-percent-threshold.html


Current Status (continued)

Source: Journal of Accountancy

• Increase to five years the maturity of PPP loans that are approved by the SBA (based on the date the SBA assigns a loan number) on or after June 5, 2020.

• Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that the SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).

• Non-payroll eligible costs:

• (a) covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 (“business mortgage interest payments”);

• (b) covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (“business rent or lease payments”); and

• (c) covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 (“business utility payments”).



TimelineJune 30 -PPP Program ends for new loans

July 7- Martha’s Vineyard Bank PPP Forgiveness Application live

Loan Origination Date (SBA Acceptance) +24 weeks use of funds

Until December 31, 2020 to file for forgiveness.

Preview online PPP Forgiveness Application

You will receive an email with a unique web address. Clicking on the link will take you to a page to enter a PIN number.

If a bookkeeper or office manager is filling out the form, you will need the PIN to sign.


Easy to follow

navigation

Information will be

prefilled.


• Excel Worksheet to download and upload. A sample worksheet will be available at mvbank.com/ppp

• Self employed w/o employees may not need to fill the worksheet

And there is more…

• Video Walk-through of the application and worksheet based on your business type (with employees; without employees) will be added to mvbank.com/ppp.

• Live webinar “workshops” for filling applications will be available to join. Schedule to be posted at mvbank.com/ppp

Next Steps to be ready for PPP• Enjoy June and Fourth of July weekend;• Collect your documents;• File 2019 tax returns by July 15;• Consult an accountant with any questions.

• This deck and the webinar video will be available at

mvbank.com/pppin a couple of days.

Questions?

I understand the timeframe for the PPP Program was extended past mid June and that the use of the funds was expanded to include more than Payroll and Utilities.

Assuming the distributed funds were used per the guidelines, will the loan still be fully forgiven. What is the timing for this moving forward as my loan will have been fully distributed this week per the original guidelines?

Have they extended the “spend period” beyond the original 8 weeks?

Has the 'pay-out' period for compensation and accepted 'other expenses' been extended from '8-week window' (8-week clock beginning at the time loan proceeds have been funded to recipient's checking account) until the end of December 2020?

If the spend period ends mid-month, is it ok to pay the following month’s rent by the end date rather than waiting until the last week of month?

Guidance on Calculating FTE headcount and what the rule is for “restoring” the FTE by June 30th to meet the requirements for forgiveness?

There is a lot of confusion with regard to self-employed individuals with no employees. Most instructions have been written for those businesses that have employees. There appears to be a different set of forgiveness rules for self-employed people vs small companies with employees, according to what I have read on various websites-none of which are all consistent...

Would you clarify the percentage of funds, which can be used for owner replacement compensation (self-employed)? According to what I have read (depending upon the site), companies with employees can use the entire amount of loan proceeds for payroll, if so needed, but self-employed can't use the entire amount for owner replacement compensation? 25% must be used for 'other expenses' (rent, mortgage interest, utilities); if you are self-employed and have nothing but a home office, your expense overhead might be very low and, therefore, it would be difficult to use 25% of funds received toward the permitted expenses for forgiveness.

Small business health insurance is permitted for forgiveness for small businesses with employees, but not for self-employed?

Thank you.

Documents

SBA PPP Loan Forgiveness - mvbank.com · borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period). • Non-payroll