CARES Act Business Loans
This information is intended for existing Bank of Prairie du Sac customers. If you are not already a Bank of Prairie du Sac customer, please visit the SBA Website for assistance at this time.
PPP Loan Forgiveness Application
The Small Business Administration and Treasury Department released a Paycheck Protection Program Loan Forgiveness Application and Instructions. The application and instructions include:
- Options to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles.
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after borrowers received their PPP loan.
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
PLEASE NOTE: This application is current as of May 18, 2020 and is subject to change if SBA issues any updates in the future.
**This information is accurate and updated as of May 18, 2020. Terms and conditions are subject to change. No other guidance on forgiveness has been provided by SBA.**
PPP Loan Forgiveness Calculator
To aid borrowers with the calculations related to the forgiveness phase of the PPP program, we will be using a Paycheck Protection Program Forgiveness Calculation Tool developed by the Wisconsin Banking Administration (WBA)’s legal team.
PLEASE NOTE: These calculations are formulated for small business use ONLY. This is not intended for use by self-employed individuals or independent contractors. We will make that guidance available upon receipt.
Updated Forgiveness FAQ
Updated FAQ on Loan Forgiveness has been provided by WBA. This guide has been updated since our previous email and now includes even more detailed information for borrowers and details to help guide you through the calculation of any remaining balance after forgiveness using the calculation tool above.
**This information is accurate and updated as of April 26, 2020. Terms and conditions are subject to change. Exact guidance on forgiveness has not yet been provided by SBA.**
PPP Loan Forgiveness: What You Need to Know
IMPORTANT REMINDERS FOR BORROWERS TO OBTAIN FULL FORGIVENESS OF SBA PPP LOAN
Section 1106 of the CARES Act provides for forgiveness for the full principal balance amount of qualified loans guaranteed under PPP, plus any accrued interest. That is, you will not be responsible for any loan payment if you used all of the loan proceeds for a forgivable purpose and your employee and compensation levels were maintained. Below are details of what you must consider and track for you to receive the full amount of forgiveness under the program.
IT IS YOUR RESPONSIBILITY TO TRACK YOUR USE OF PPP LOAN PROCEEDS. YOU WILL BE REQUIRED TO PROVIDE DOCUMENTATION WHEN APPLYING FOR PPP LOAN FORGIVENESS.
What Amount May Be Forgiven?
The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before Feb. 15, 2020, rent payments on leases dated before Feb. 15, 2020, and utility payments under service agreements dated before Feb. 15, 2020, over the 8-week period following the date of the loan. At least 75% of PPP loan proceeds must be used for 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;
- 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 Can SBA Restrict the Amount of Loan Forgiveness?
If you use PPP loan proceeds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If one of your shareholders, members, or partners uses PPP loan proceeds for unauthorized purposes, SBA will have recourse against the shareholder, member, or partner for the unauthorized use.
Your loan forgiveness will be reduced by SBA if you decrease your full-time employee headcount. SBA will also reduce your forgiveness amount if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019. Speak to your lender for more information regarding these required thresholds.
How Can You Request PPP Loan Forgiveness?
After 8 weeks from your PPP loan disbursement, you can submit a request to the lender servicing the PPP 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, during the covered period. You will be required to 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 will make a decision on the forgiveness request based upon SBA's rules within 60 days.
We will continue to update you on this program as we receive more information. We appreciate your business and your understanding during this process.
**This information is accurate and updated as of April 21, 2020. Terms and conditions are subject to change. Exact guidance on forgiveness has not yet been provided by SBA.**
Small Business Paycheck Protection Program
PPP Funds Exhausted
Funds for the Payroll Protection Program have been exhausted. We will continue to collect applications and supporting documentation from customers interested in the program and will place them in queue. If more money is appropriated for this program in the future we will process these applications as soon as we can. But at this time we are no longer able to obtain approvals for any new applications.
PPP Fund Usage and Forgiveness
For any existing applicants, please review a few of the program requirements and features to make sure you understand them:
1. All funds from PPP must be used for the following authorized purposes only:
- Payroll support – At a minimum, 75% of your expenses must be used for payroll expenses in order to be considered for forgiveness
- Mortgage payments – only the interest portion of these payments is considered forgivable
- Rent or lease payments
As stated in the application, funds used for unauthorized purposes may result in the federal government pursuing criminal fraud charges.
2. Funds must be used within an 8 week period beginning on the loan date in order to be considered for forgiveness by SBA.
The balance not used by the end of this period may still be used to pay for authorized purposes (listed above). This balance is not forgivable and will be paid back by you, the borrower, on an 18 month fully amortizing note with an interest rate of 1.00%.
Any remaining funds can only be used for the authorized purposes listed above.
A previous email sent to PPP applicants stated that unused funds may be used to pay down the loan. That option has since been called into question and we are waiting for SBA to confirm if this will be allowed or not.
3. As stated above; a portion, if not all, of your loan may be considered for forgiveness.
In order for SBA to consider loan forgiveness, you as the borrower must provide documentation of the eligible use of funds. Though several aspects of the PPP remain unclear at this time, this much is certain.
To maximize the forgiveness portion of your loan and assist you with tracking your eligible expenses, we will provide you with a spreadsheet. Please make sure all funds are used for authorized purposes and that at least 75% of your expenses are payroll related. We will be collecting this spreadsheet along with supporting documentation to submit to SBA within 10 days after the 8 week period.
The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.
Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
Must Keep Employees on the Payroll—or Rehire Quickly
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
All Small Businesses Eligible
Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—are eligible. Businesses with more than 500 employees are eligible in certain industries.
When to Apply
- Starting April 3, 2020, small businesses and sole proprietorships can apply.
- Starting April 10, 2020, independent contractors and self-employed individuals can apply.
We encourage you to apply as quickly as you can because there is a funding cap.
How to Apply
We are emailing our current business customers with application information. Please check your emails for guidance or contact us if you have not received any emails.
Applications will be processed in the order they are received. We will send an email confirmation that your files have been received. It is your responsibility to submit a complete application package.
Please understand that Banks have not received final direction from the SBA. Thank you in advance for your patience during this process. We can promise we will do everything in our power to guide you through this process as smoothly as possible.
The Paycheck Protection Program is implemented by the Small Business Administration with support from the Department of the Treasury. Borrowers can also visit www.sba.gov or www.coronavirus.gov for more information.
While we all wait for final guidance implementing the CARES Act as it relates to the Paycheck Protection Program (PPP), there is some preparation you can do now to help ensure you are ready to go once program rules are announced and the application form is finalized.
The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was just passed by Congress are intended to assist business owners with whatever needs they have right now.
When implemented, there will be many new resources available for small businesses, as well as certain non-profits and other employers. Please review the guide below from the U.S. Senate to learn about the major programs and initiatives that will soon be available from the Small Business Administration (SBA) to address these needs.
The U.S. Chamber of Commerce has prepared a Small Business Guide and Checklist to help answer some of your questions about the loan program. Learn about eligibility, general lender considerations, loan amounts, and loan forgiveness at the link below.
How You Can Prepare Now
- Be ready to produce required documentation quickly to help your lender with your application. All loan programs still require some information in order to underwrite the loan, including the ones created through the CARES Act. For example, the Paycheck Protection Program (PPP) is intended to help cover 2 ½ months’ worth of payroll and loan proceeds used for “covered expenses” will be forgiven upon verification. It is a good idea to gather documentation verifying the number of employees on payroll for the last 12 months and pay rates, including IRS payroll tax filings and state income, payroll and unemployment insurance filings; documentation verifying payments on covered mortgage obligations, lease obligations and utilities.
- Have patience. The industry wants to help you through these unprecedented times but not all programs are in place yet, and even when they are, technology can cause hiccups or delays (e.g. systems crashing).
We will continue to keep you updated as more information becomes available on these loan programs. Please contact our commercial lending team if you have any urgent requests.