PPP LOAN FORGIVENESS UPDATE

Community State Bank is working hard to make the Paycheck Protection Program Loan Forgiveness process as easy as possible for our customers. With that in mind, we have been monitoring the news for updates regarding legislation to ease the burden created by the PPP Forgiveness process. On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Pub.L. 116-260) was signed into law. This act set the loan forgiveness amount at $150,000 for the 3508S form which requires far less documentation to be forgiven. To that end, we now have an online portal that will walk you through the Forgiveness Application process step-by-step. By using this portal, you will be able to upload and submit the required documents and information to our Community State Bank team for review prior to its submission to SBA.

This Portal is available through a personalized link that will be emailed to the account that we have on file. If you feel comfortable going through the forgiveness process and need no assistance, you may do so. However, if you would like assistance, we will be glad to set up an appointment to assist you. Simply call 904-964-7830 and ask for PPP scheduling.

When accessing the Loan Forgiveness Portal, please use Microsoft Edge or Google Chrome. You may download Google Chrome from the following link: DOWNLOAD GOOGLE CHROME HERE.

As you work to complete your PPP Loan Forgiveness application through the portal, feel free to reference the below forms and most recent version of the Frequently Asked Questions from the Small Business Administration as a resource.

Paycheck Protection Program - SBA Site

SBA FAQ

PPP Forgiveness Fact Sheet

PPP Forgiveness Form 3508 (Long Form) - (As of 12/27/20)

PPP Forgiveness Form 3508 (Long Form) Application Instructions (As of 12/27/20)

PPP Forgiveness Form 3508EZ (Short Form) - (As of 12/27/20)

PPP Forgiveness Form 3508EZ (Short Form) Application Instructions (As of 12/27/20)

PPP Forgiveness Form 3508S (Short Form Under $150,000) - (As of 12/27/20)

PPP Forgiveness Form 3508S (Short Form Under $150,000) Application Instructions (As of 12/27/20)

SECOND DRAW PPP LOANS UPDATE

On December 27, 2020, President Trump signed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act) (Pub. L. 116-260) into law to provide continued assistance to individuals and businesses that have been financially impacted by the ongoing coronavirus pandemic. This new act authorizes the U.S. Small Business Administration (SBA or the Administration) to guarantee Paycheck Protection Program Second Draw Loans. These loans may be originated through March 31, 2021 (“Second Draw PPP Loans”) to borrowers that previously received a PPP loan (“First Draw PPP Loans”) and have used or will use the full amount of the initial PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw PPP Loan. Like First Draw PPP Loans, Second Draw PPP Loans are intended to provide expeditious relief to America’s small businesses. Second Draw PPP Loans generally are guaranteed by SBA under the same terms, conditions, and processes as First Draw PPP Loans. SBA guarantees 100 percent of Second Draw PPP Loans and SBA may forgive up to the full principal loan amount.

For more information, you may visit the SBA's website here :

SBA Paycheck Protection Program - SBA Website

A Copy of the Application and Istructions can be found here:

PPP Second Draw Application With Instructions (As of 1/8/21)

On June 3, 2020, the Senate passed H.R. Bill 7010, the Paycheck Protection Flexibility Act. This bill added new flexibility on spending PPP loan proceeds for PPP borrowers. This new bill contained several new provisions:

The period for funds to be spent on payroll was extended from the original 8 weeks to 24 weeks or end of the year, whichever is earlier.
The percentage of funds borrowers could spend on payroll was lowered from 75% to 60%.
The date to rehire workers was extended to June 30, 2020.
For any new PPP loans, the loan terms was extend to 5 years.

PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION SHEET:

For More Information

Community State Bank is closely watching the updates related to the CARES Act, as it is intended to provide financial help for small businesses impacted by COVID-19. The CARES Act, which was passed on March 27th, provides an authorization for the SBA 7(a) program to provide relief loans for operating costs to eligible small businesses.

The Paycheck Protection Program ("PPP") authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.

The loan amounts will be forgiven as long as:

The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
Employee and compensation levels are maintained.

Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

Loan payments will be deferred for 6 months.

When can I apply?

Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

Where can I apply?

You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders.

Who can apply?

All businesses - including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors - with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail).

For this program, the SBA's affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA's Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.

What do I need to apply?

You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Click HERE for a copy of our application packet.

What other documents will I need to include in my application?

You will need to provide your lender with payroll documentation.

Do I need to first look for other funds before applying to this program?

No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement).

How long will this program last?

Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.

How many loans can I take out under this program?

Only one.

What can I use these loans for?

You should use the proceeds from these loans on your:

Payroll costs, including benefits;
Interest on mortgage obligations, incurred before February 15, 2020;
Rent, under lease agreements in force before February 15, 2020; and
Utilities, for which service began before February 15, 2020.

What counts as payroll costs?

Payroll costs include:

Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
State and local taxes assessed on compensation; and
For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

How large can my loan be?

Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.

How much of my loan will be forgiven?

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 not 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, 2020.

How can I request loan forgiveness?

You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

What is my interest rate?

0.50% fixed rate.

When do I need to start paying interest on my loan?

All payments are deferred for 6 months; however, interest will continue to accrue over this period.

When is my loan due?

In 2 years.

Can I pay my loan earlier than 2 years?

Yes. There are no prepayment penalties or fees.

Do I need to pledge any collateral for these loans?

No. No collateral is required.

Do I need to personally guarantee this loan?

No. There is no personal guarantee requirement. *** However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.***

What do I need to certify?

As part of your application, you need to certify 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 payments, 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 than 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.

Rest assured that your family here at Community State Bank will be here to help you navigate this crisis. If you would like to discuss how the CARES Act, Paycheck Protection Program, or the Economic Injury Disaster Loans relate to your working capital and business needs, please reach out – We are here to help you.