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Help Center for the Paycheck Protection Program (PPP) Loan Forgiveness Process

If you have received a PPP loan, through AmurEF or another provider, you  are eligible to have all or a portion of the loan principal forgiven based on how and when the loan principal was used. 

Please see below for more details.  Please note that, while AmurEF intends to be as helpful to you in this process as possible, loan forgiveness is ultimately governed by the Small Business Administration (SBA) and the terms and conditions of the PPP.

Will my PPP loan be forgiven?

Your PPP loan amount will be forgiven so long as:

  • The PPP loan proceeds are used to cover payroll costs and other qualifying expenses during either an 8-week period (for businesses that received a loan prior to passage of the PPP Flexibility Act, if they choose to keep this forgiveness window) or a 24-week period (for business that received a loan after the passage of the PPP Flexibility Act) immediately following receipt of the PPP loan; 
  • Employee and compensation levels are maintained; and
  • All documentation is correctly prepared and submitted. 

How much of my PPP loan can be forgiven?

Up to 100% of your PPP loan can be forgiven if the PPP loan is used on eligible expenses:

Eligible expenses include:

  • Payroll expenses (using the same definition of payroll costs used to determine loan eligibility), which must account for at least 60% of the usage of your PPP loan,
  • Interest on mortgage obligations incurred in the ordinary course of business,
  • Rent under a a leasing agreement that began before February 15, 2020,
  • Payments on utilities, including electricity, gas, water, transportation, telephone and Internet access for service that began before February 15, 2020.

Eligible expenses are those that are incurred over twenty-four weeks (originally eight weeks), starting from the day the first payment was made by your lender. This is not necessarily the date on which you signed your loan agreement.

Forgiven amounts will not be considered a cancellation of indebtedness income for federal tax purposes.

Can the amount forgiven be reduced?

Yes.  Pursuant to the terms of the PPP Flexibility Act, our understanding is that, if less than 60% of loan proceeds are spent on qualifying payroll expenses, you will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs.  Please visit SBAs website for further details. 

How can I request loan forgiveness?

You should submit a request for forgiveness to your PPP lender (including AmurEF) that originated your loan after your twenty-four-week forgiveness period ends (or original eight-week forgiveness period ends if you received a PPP loan prior to June 3, 2020).  You will need to provide the following:

  • A completed and signed SBA PPP Forgiveness Application.
  • Documentation verifying the number of employees on your payroll and pay rates, including IRS payroll tax filings and state income, payroll and unemployment insurance filings to provide evidence of payroll expenses during the forgiveness period.
  • Documentation verifying payments on covered mortgage obligations, lease obligations and utilities.
  • Certification that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

After you submit your application for forgiveness, your lender is required by law to provide you with a response within 60 days.

What documentation do I need to submit for loan forgiveness?

Below is a list of documents that each borrower must submit with its PPP Loan Forgiveness Application as indicated by the SBA, for more information visit the SBA website;

a. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.

b. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the forgiveness period:

i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and

ii. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.

c. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount (PPP Schedule A, lines (6) and (7)).

  • FTE: Documentation showing (at the election of the Borrower):

a. the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019;

b. the average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020 and February 29, 2020; or

c. in the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive twelve week period between May 1, 2019 and September 15, 2019.

The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11. Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. Documents submitted may cover periods longer than the specific time period.

  • Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

a. Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the forgiveness period; or lender account statements from February 2020 and the months of the forgiveness period through one month after the end of the forgiveness period verifying interest amounts and eligible payments.

b. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the forgiveness period; or lessor account statements from February 2020 and from the forgiveness period through one month after the end of the forgiveness period verifying eligible payments.

c. Business utility payments: Copy of invoices from February 2020 and those paid during the forgiveness period and receipts, cancelled checks, or account statements verifying those eligible payments.

Documents that Each Borrower Must Maintain but is Not Required to Submit

PPP Schedule A Worksheet or its equivalent and the following:

a. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.

b. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.

c. Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.

d. Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.” All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements. The Borrower must retain all such documentation in its files for six 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.

What happens if I’m not approved for forgiveness?

Your lender may allow you to provide additional documentation so they can reevaluate your request.

Otherwise, your outstanding balance will continue to accrue interest at 1%, for the remainder of the 5-year period (or 2-year period for existing PPP loans, which can be extended up to the new 5-year period if the lender and borrower agree). The interest rate remains at 1%.  You can defer principal and interest payments on PPP loans until the SBA compensates lenders for any forgiven amounts (rather than the previous 6-month deferral period). If you don’t apply for forgiveness, your first payment will be due 10 months after the program expires.

There is no prepayment penalty. You can pay off the outstanding balance at any time with no additional fees.

Will I owe money on my PPP loan?

Only if you do not qualify for 100% loan forgiveness.  You may not qualify for 100% loan forgiveness if:

  • You use PPP loan funds for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 24-week period following your receipt of the loan.  
  • You do not spend at least 60% of your PPP loan proceeds on qualifying payroll expenses.
  • 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 40% for any employee that made less than $100,000 annualized in 2019.
    • Re-Hiring: Your forgiveness will not be penalized if you reverse any changes made to full-time salaried employees between February 15, 2020 and April 26, 2020 by December 31, 2020. 
  • If less than 60% of loan proceeds are spent on qualifying payroll expenses, you will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs.  Please visit SBAs website for further details. 

  • The Paycheck Protection Program Flexibility Act which was signed on June 5, 2020, allows forgiveness amounts to be maintained for companies that can document their inability to rehire workers employed who were employed as of February 15 or their inability to find similarly qualified workers by the end of the year. Likewise, forgiveness amounts can be maintained if business can show that they could not resume business levels from before February 15 because they were following federal requirements for sanitization or social distancing.

PPP Forgiveness FAQs

Can I get PPP loan expenses forgiven and deduct them from my taxes?

No. Any expenses that you claim for forgiveness under the PPP cannot then be deducted from your taxes. A forgivable PPP loan is already tax-free.

What counts as a utilities expense?

Business expenses on electricity, gas, water, transportation, telephone, or internet access are eligible uses of PPP funds and qualifies for forgiveness.

Can I prepay my rent or mortgage?

No, prepayment is not a qualifying use of the PPP funds and is not eligible for forgiveness.

What counts as mortgage interest?

Any interest paid on mortgage on property used for business purposes is an eligible expense that the PPP can be used for, and qualifies for forgiveness.

For additional information, please visit the SBA’s website HERE.