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New Peoples Bank assisted nearly 700 businesses with the Small Business Administration (“SBA“) Paycheck Protection Program (“PPP“) - to provide the resources they need to maintain their payroll, hire back employees, and cover applicable overhead. We hope you are doing well and staying safe during these unusual times. This website is to provide you with information regarding the next steps of the Paycheck Protection Program.
Congress is currently considering several proposals and changes to the PPP forgiveness process. The proposed changes may affect how your forgiveness application is prepared and processed. You can trust that New Peoples Bank will continue to monitor any changes and its impact upon our customers. NPB will handle your forgiveness application as accurately and efficiently as possible using the most updated information. NPB encourages you to start taking the initial steps to receive PPP loan forgiveness. We hope that you will find the following information to be helpful to you when preparing your application for submission. As always, NPB encourages you to contact your loan officer for help in guiding you through this process.
Preparing Your Application
Below are three PPP forgiveness applications along with their respective instructions that your business can choose from.
3508EZ Forgiveness Application
The 3508EZ application can be completed if you qualify under one of these scenarios.
- The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form (SBA Form 2483).
- The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees“ means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000); And, The Borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. Also, ignore reductions in an employee's hours that the Borrower offered to restore and the employee refused.
- The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees“ means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000); And, The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 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 the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.
Loan Forgiveness Application 3508EZ Form
Loan Forgiveness Application 3508EZ Instructions
Choosing a Covered Period for Your PPP Loan:
- If your PPP loan was approved before June 5, 2020, you may choose between an 8-week or 24-week covered period. Please keep in mind that December 31, 2020 is the last day to use PPP loan funds. Please keep in mind when completing your forgiveness application that if you choose the 24-week covered period that it is acceptable to file for forgiveness prior to the end of the 24-week period. Please ensure that the covered period on the forgiveness application reflects a full 24-week period.
- If your PPP loan was approved on or after June 5, 2020,your loan forgiveness period is automatically 24 weeks. Please keep in mind that December 31, 2020 is the last day to use PPP loan funds. Please keep in mind when completing your forgiveness application that if you are on a 24-week covered period that it is acceptable to file for forgiveness prior to the end of the 24-week period. Please ensure that the covered period on the forgiveness application reflects a full 24-week period.
PPP Loan Usage
You will be required to provide documentation of the of the utilization of PPP loan funds. Only the following uses of loan funds are eligible for forgiveness:
- Payroll: Salary, Wage, Paid Leave (Vacation, Parental, Family, Medical, or Sick), Health Benefits and Retirement
- Business Mortgage Interest: If the mortgage was in existence before February 15, 2020
- Business Rent: If the agreement was in effect before February 15, 2020
- Business Utilities: If the service was in existence before February 15, 2020
In order to receive
full forgiveness, at least 60% of loan funds must be used for payroll costs. This means that no more than 40% of loan funds can be used for the other three purposes, business mortgage interest, business rent, and business utilities.
Required Supporting Documentation
Along with your PPP forgiveness application, the SBA will require your business to submit supporting documentation in order to receive forgiveness.
Payroll: Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:
- Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
- Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
- 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.
- 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.
- If you checked only the second box on the checklist on page 1 of the 3508EZ instructions, the average number of full-time equivalent employees on payroll employed by the Borrower on January 1, 2020 and at the end of the Covered Period.
Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.
- Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
- Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
- Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments.
If the 3508 forgiveness application is completed then the following must also be submitted:
FTE: Documentation showing (at the election of the Borrower):
- the average number of FTE employees on payroll per week employed by the Borrower between February 15, 2019 and June 30, 2019;
- the average number of FTE employees on payroll per week employed by the Borrower between January 1, 2020 and February 29, 2020; or
- in the case of a seasonal employer, the average number of FTE employees on payroll per week employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive 12-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.
PPP Loan Forgiveness Application Submission:
Upon receipt of your completed PPP Loan Forgiveness Application, our team will review the documentation and communicate to you if additional information is required. Once NPB has reviewed your application and is compliant within SBA requirements, your package will be submitted to the SBA for review. Once notified, NPB will contact you with any communications or decisions from the SBA.
Please keep in mind that it can take the SBA up to 90 days to review your application and determine a decision. It is also important to note that the SBA may also audit any PPP loan, of any size, at its own discretion. These items are outside of the control of New Peoples Bank.
Unforgiven Balance:
Any remaining, unforgiven balance of your PPP loan will continue to accrue interest at 1% for the remainder of the loan term. There is no pre-payment penalty and the outstanding balance may be paid in full at any time without additional fees. Please refer to your PPP loan documentation for additional terms and conditions. Please keep in mind that your business has up to 10-months after your “covered period“ to file for forgiveness. After the 10-month period, principal and interest payments will begin on the full PPP loan amount.
Additional Resources:
Below are some additional links to help guide you through the PPP loan forgiveness process.
SBA's Coronavirus Relief Options: Paycheck Protection Program
SBA's Frequently Asked Questions on PPP Loan Forgiveness
ICBA: COVID-19 Frequently Asked Questions on PPP Loans
All of us at NPB trust that your PPP loan has helped to assist your small business. Please stay safe as we all navigate these difficult times.