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Applying for PPP Loan forgiveness.

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Smart Portal

You will receive an email invitation to apply for forgiveness through our Smart Portal. Using your pre-authorized login credentials, you’ll be able to apply for loan forgiveness and submit the required documentations instantly online. Click here to download our user guide.

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Document Requirements

Review the forgiveness guidelines in advance of going into the portal, the portal will generate the application on behalf of the borrower based on portal answers and will be signed/initialed via DocuSign. To get yourself a head start to the process, these are the required documents:

  • Payroll Report for the coverage period and reference period
  • Rent receipts for the coverage period
  • Utility paid receipts for the covered period
  • Mortgage interest for the covered period
  • Bank statements covering the covered period
  • Tax return for 2019
  • Other related expenses for the covered period
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Take Your Time

Your Forgiveness Application and loan payments are not due until at LEAST 10 months after the end of the covered period you select (either 8 weeks or 24 weeks from the initial loan disbursement).

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What's the timeline?

Once you’ve submitted your application, The Loan Source has 60 days to review it; you will hear from us during that time if we have any questions. We will then submit your application to the SBA, which has 90 days to review and respond to The Loan Source. We will contact you as soon as we hear from the SBA.

Frequently Asked Questions
PPP Loan Forgiveness

The following FAQs are based on the most recent pronouncements. We anticipate additional guidance from the SBA incorporating these legislative changes. In the interim, this information reflects how we expect this new legislation to affect PPP forgiveness requirements.
Who are The Loan Source & ACAP?

The Loan Source and ACAP have partnered together to be your guide in navigating the complexities of the next stages of your PPP loan. The Loan Source is a long-standing and respected SBA small business lending company with over 26 years of experience, and ACAP is a team of seasoned lenders with significant PPP experience.

Together, the Loan Source and ACAP will be taking over the forgiveness and on-going servicing process of your PPP loan.

How and when can I apply for forgiveness?

We are targeting a 7/20/2020 launch of the forgiveness portal and at that time you will be able to submit your forgiveness application. At that time, you will receive an email invitation, and using your pre-authorized login credentials, you’ll be able to apply for loan forgiveness and submit the required documentation instantly online.

However, your forgiveness application is not due until 10 months after the end of the covered period you select (either 8 weeks or 24 weeks from initial loan disbursement).

Employers
If you applied for your PPP loan with a Form 940, 941, 944, or W-2.,

You may be eligible for full forgiveness if:

  • The entire loan is used for qualifying costs:
  • At least 60% is used for payroll
  • And the rest is used for business rent, business utilities, or mortgage interest on a business property
  • You either don’t lay off employees or rehire them by December 31, 2020 For your employees who make less than $100,000 a year, you either don’t cut their wages by more than 25% or you restore their original wages by December 31, 2020
  • Note: If you received an EIDL Advance, the amount of that EIDL Advance will be deducted from your total forgiveness amount.
    You may be eligible for partial forgiveness if:

    • You lay off employees, and don’t rehire them by December 31, 2020, the forgiveness amount will be reduced by the percent decrease in employees. For example, if you lay off 20% of your employees, your forgiveness amount may be reduced by 20%
    • Your total payroll expenses for employees who make less than $100,000 a year decreases by 25% or more for each employee, the forgiveness amount may be reduced by the same percentage
    • You received an EIDL Advance

Non-Employers
If you applied for your PPP loan with a Form 1040 Schedule C.

If you selected the full loan amount in your PPP application, your loan may be fully forgivable if:

  • Your owner compensation replacement is limited to eight weeks of your 2019 net profit reported on your Form 1040 Schedule C
  • No more than 40% of loan funds are spent on certain business expenses that are deductible on your Form 1040 Schedule C, such as business utilities, business rent, or mortgage interest on a business property. (Rent, utilities, or mortgage interest for your personal residence don’t count).
  • If you selected the smaller loan amount, your business doesn’t need to meet the spending requirement to be eligible for forgiveness.

Note: If you received an EIDL Advance, the amount of that EIDL Advance will be deducted from your total forgiveness amount.

What is the timeline of forgiveness?

You will need to submit your forgiveness application within 10 months after the end of the covered period you select (either 8 weeks or 24 weeks from initial loan disbursement). The Loan Source will then review your forgiveness calculation within 60 days of submission into our portal.

Once the Loan Source reviews and approves your submission, you will need to sign your completed Forgiveness Application via DocuSign and the Loan Source will submit your completed application to the SBA. The SBA will then have 90 days to complete its review.

How long will it take to process my loan forgiveness request?

PPP loan providers have up to 60 days from receipt of a complete loan forgiveness application (including required supporting documentation) to issue a forgiveness recommendation to the SBA. Once a recommendation has been issued to the SBA, the SBA has up to 90 days to review it and inform the PPP loan provider if it is in agreement with the loan provider’s recommendation. We will keep you informed on the progress of your forgiveness application and will inform you of the outcome, once permitted to do so by the SBA.

What is the deadline to submit my forgiveness application?

While our forgiveness portal will be open beginning 7/20/20, your forgiveness application is not due until at 10 months after the end of the covered period you select (either 8 weeks or 24 weeks from initial loan disbursement).

Do I need to complete my forgiveness application before going to the portal?

No, you do not, but please review the application in detail prior to entering the portal. Our forgiveness portal will generate your application automatically based on your answers and will require an electronic signature via DocuSign. Additionally, an excel forgiveness calculation template will be available to help you calculate your forgiveness amount.

Can I submit my loan forgiveness application manually or prior to the smart portal opening on 7/20/20?

No, all applications must be completed via the smart portal.

PPP Loan Forgiveness Documentation

What documents are required to complete my forgiveness application?

You will need to submit documentation that supports all numbers within your forgiveness calculation, including but not limited to;

  • Payroll reports or bank statements supporting payroll amounts
  • Rent receipts
  • Utility paid receipts
  • Mortgage interest payments
  • Tax return for 2019
  • Other related expenses
What payroll documents do we need?

Payroll Documents:

  • Bank account statement or third-party payroll service provider reports documenting cash compensation paid to employees,
  • Tax forms or equivalent third-party payroll service provider reports for periods overlapping with the 24-week period for (1) payroll tax filings (typically Form 941), and (2) state quarterly wage reporting and unemployment insurance tax filings, and
  • Payment receipts, canceled checks, or account statements documenting payment of employer contributions to employee health insurance and retirement plan.
What are the examples of business mortgage interest payments?

Amortization schedule and canceled checks or lender account statements from February 2020 and covering the 24-week period.

What are the examples of business rent and lease payments?

Copy of current lease and receipts or canceled checks or lessor account statements from February 2020 and covering the 24-week period.

What are the examples of business utility payments?

Copy of invoices from February 2020 and the 24-week period and receipts, canceled checks, or account statements.

How do I show proof of Full-Time Employees (FTEs)?

Documentation showing the number of FTEs for the reference period from the payroll documents. Documents may include payroll tax filings (typically Form 941) and state quarterly wage reporting and unemployment insurance tax filings.

PPP Loan Forgiveness Eligibility

Are PPP loans eligible for loan forgiveness?

Yes, PPP loans are eligible for loan forgiveness—meaning you have no responsibility to repay the loan—if the funds are used for certain business expenses. It’s also possible to receive forgiveness for a percentage of the loan vs. the entire loan amount. See “Is it possible to have some of my loan forgiven, but not all?” below.

What expenses are eligible for loan forgiveness?

Loan amounts may be forgiven if they’re used (paid or incurred) for the following eligible payroll costs and nonpayroll expenses during the applicable, eligible 24-week period and all other SBA PPP loan forgiveness requirements are satisfied.

Eligible payroll costs for full-time equivalent employees:

  • Salary, wages, commissions, hazard pay, bonuses, or tips, keeping in mind that for each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed $100,000 on an annualized basis for each employee.
  • Amounts paid to owner-employees, self-employed individuals, and general partners as owner replacement compensation is eligible but limited by the SBA to a proportionate amount of 2019 net profit.
  • Employee benefits, for example, costs for vacation, parental, family, medical, or sick leave; payments for group health care and retirement benefits. State and local taxes paid by you on employee compensation.

Eligible nonpayroll expenses include:

  • Interest on business mortgages on real or personal property entered into before February 15, 2020.
  • Rent or lease payments under business lease agreements entered into before February 15, 2020.
  • Utilities for which service began before February 15, 2020, including electricity, gas, water, transportation, telephone, and/or internet.
  • For sole proprietors, self-employed, and independent contractors, the above nonpayroll expenses are eligible for forgiveness to the extent that they’re deductible on IRS Form 1040 Schedule C.
Who is eligible for the EZ application?

The EZ Loan Forgiveness Application applies only to borrowers that;

  • Are self-employed and have no employees, OR
  • Did not reduce salaries or wages of their employees by more than 25%, and did not reduce the number of hours of their employees, OR
  • Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.

PPP Loan Forgiveness Payment

When is my first payment due?

No interest or principal payments are due on your PPP loan until at least 10 months after the end of the covered period you select (either 8 weeks or 24 weeks from initial loan disbursement).

Is it possible to have some of my loan forgiven, but not all?

Yes. 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 utility payments over the 24 weeks triggered after you received the loan. Payroll costs must represent at least 60% or the forgiveness amount.

What happens if my loan is not fully forgiven?

If you receive partial forgiveness, we will extend the maturity date of your remaining post-forgiveness loan from 2 years to 5 years after the initial disbursement date via a simple letter extension that you will sign via DocuSign.

What will happen if the SBA declines my forgiveness application?

You will be notified if the SBA determines that all or part of your loan is not forgivable. If you do not agree with the SBA’s determination, you may appeal the decision. The SBA will provide more information on the appeal process soon. You will be required to start repaying any portion of your PPP loan that is not forgiven. The loan term will be five years with a 1% interest rate. There is no prepayment penalty.

PPP Loan Forgiveness General Information

Is Loan Source accepting new PPP applications?

At this time, the Loan Source is not accepting new PPP applications at this time.

Does Loan Source handle personal loans?

No, Loan Source only makes commercial SBA loans.

How can I verify my loan was purchased by Loan Source and ACAP?

You can verify Loan Source and ACAP purchased your loan by reaching out to your pervious bank for confirmation.

How is the forgiven amount of the loan determined?

The amount of the loan forgiven is determined based on how the loan funds are used, in the SBA required percentages for forgiveness eligible payroll and nonpayroll expenses purposes, during the first 24 weeks immediately following receipt of loan funding or during an alternative 24-week period for payroll costs, as outlined below. (As explained above, if your loan was funded before June 5, 2020, and you choose to use the available 8 week period, the amount forgiven will be determined based on how the loan funds are used during the first 8 weeks immediately following receipt of loan funding or during an alternative 8-week period for payroll costs, as outlined below.)

Additionally, and subject to certain exceptions, full-time employee equivalent headcount must be maintained or restored and certain employee compensation levels must be maintained. Each of these conditions is outlined in detail below.

Can I extend or amend the loan?

You will be able to extend to 5 years after we go through the forgiveness process but since there are no payments or interest due until after the forgiveness determination, which is 10 months after your 24 week covered period, we will make that amendment at that point in time.

How is the 24-week period determined?

The 24-week (168 day) period begins on the day that you received the PPP loan proceeds. However, for administrative convenience, businesses with weekly or bi-weekly payroll, may choose to calculate eligible payroll costs using the 24-week (168 day) period beginning on the first day of their first pay period following the day the PPP loan proceeds were received (the SBA refers to this as the Alternative Payroll Covered Period).

There is no alternative period for nonpayroll costs. The covered period for nonpayroll costs will always start on the day that you received the PPP loan proceeds. And remember, if your PPP loan was made before June 5, 2020, you may elect to have your loan forgiveness period be the 8-week period beginning on the date your PPP loan was disbursed.

24-Week Example:

  • If you received the PPP loan proceeds on April 20, 2020, then your 24-week period would begin on April 20, 2020 and end on October 4, 2020.
  • However, in that same example, if you received the PPP loan proceeds on April 20, 2020, but your next pay period began on April 26, 2020, you could choose to have your 24-week timeframe for payroll expenses begin on April 26, 2020 and end on October 10, 2020.
What could cause my loan forgiveness amounts to be reduced?

There are several situations where loan forgiveness could be less than the full amount of the loan or, in some cases, declined. These include, among others:

  • If at least 60% of the loan funds are not used for full-time equivalent employee eligible payroll costs during the eligible 24-week (or 8-week, if applicable) period.
  • If any of the remaining portions of the loan funds are not used for eligible nonpayroll expenses during the eligible 24-week (or 8-week, if applicable) period.
  • If full-time employee equivalent headcount or full-time employee salaries and wages decrease, as compared to certain historical levels, unless those historical levels are returned to by December 31, 2020, or an applicable exception applies (See below.).
  • You fail to satisfy other PPP loan SBA forgiveness requirements.

You have until December 31, 2020, to restore your full-time equivalent employment and salary levels for any changes made between February 15, 2020, and April 26, 2020. The employee headcount retention/restoration requirement is subject to certain exemptions. For example, if you make good faith efforts to rehire employees, but they refuse, or you are unable to return to regular business activity due to compliance with requirements or guidance issued by government agencies regarding customer or worker safety related to COVID-19. (See detailed FAQ below.)

What happens if the full loan amount is not forgiven?

The loan amount that is not forgiven will need to be repaid following the end of your payment deferral period, and interest will continue to accrue while payments are deferred.

The payment deferral period will be determined as follows:

  • If you submit a loan forgiveness application within 10 months after the end of the applicable 24-week period beginning on the date your loan was disbursed (or the applicable 8-week period if your loan was made before June 5, 2020, and you elect the 8-week period for your Loan Forgiveness Application), you will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to your lender (or notifies your lender that no loan forgiveness is allowed). We will notify you when these events occur, and if your loan is not fully forgiven by the SBA, the due date, and the amount of your first payment.
  • If you do not submit a loan forgiveness application within 10 months after the end of the 24-week period beginning on the date your loan was disbursed, you must begin paying principal and interest after that period. For example, if a borrower’s PPP loan is disbursed on June 25, 2020, the 24-week period ends on December 10, 2020. If the borrower does not submit a loan forgiveness application to its lender by October 10, 2021 (10 months after the end of the 24-week period), the borrower must begin making payments on or after October 10, 2021.
What happens to loan proceeds that are not forgiven?

Proceeds that are not forgiven must be repaid pursuant to your promissory note, and can only be spent on the following:

  • At least 60% of the loan proceeds must be used for payroll costs.
  • The remaining 40% of loan proceeds may be spread across the following items only:
    • Mortgage interest payments (but not mortgage prepayments or principal payments);
    • Rent payments;
    • Utility payments;
    • Interest payments on any other debt obligations that were incurred before February 15, 2020.
  • If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you could be subject to additional liability such as charges for fraud.
What are the interest rate and terms for the PPP loan amount that is NOT forgiven?

PPP loans that are not used for qualifying payroll costs and qualifying non-payroll costs will not be forgiven. PPP loans that are not forgiven will have a 1% fixed annual interest rate and over the term of the loan. Interest will start accruing the day the loan is originated. Repayment is deferred to the date of your loan forgiveness decision. Businesses must begin making payments if they do not apply for and receive forgiveness within about 16 months of receiving the PPP loan funds.

What happens if loan funds are used for purposes other than those that are defined as eligible under the program?

If you use PPP funds for unauthorized purposes, the SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you may be subject to additional liability.

Can expenses forgiven by the SBA be deducted in my 2020 tax returns?

For any portion of your PPP loan that is forgiven, you won’t be able to deduct those business expenses covered by PPP forgiveness on your 2020 taxes. You won’t be able to count the forgiven portion of your PPP loan as part of your 2020 gross income either.

Important Updates

June 22, 2020

The SBA released a new Interim Final Rule (IFR) #20, entitled Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule. Here are some select highlights of the IFR pertaining to your PPP loan.

  • Extends loan maturity from 2 years to 5 years for loans approved by SBA on or after June 5, 2020 and when mutually agreed to by Lender and Borrower for loans approved by SBA prior to that date.
  • Changes the maximum percentage of a forgiveness amount that can be approved for nonpayroll costs from 25% to 40%.
  • Extends the covered period from original 8 weeks to 24 weeks but allows borrowers with loans approved prior to June 5, 2020 to continue to use the original 8-week covered period if they choose.
  • Extends deferral period from 6 to 10 months after the last day of the covered period.
  • Please review the full Interim Final Rule (IFR) #20 for complete details and updates surrounding PPP forgiveness.
June 16, 2020

The SBA released a revised Loan Forgiveness Application implementing the PPP Flexibility Act of 2020. Additionally, the SBA published a new EZ Loan Forgiveness Application that applies only to borrowers that:

  • Are self-employed and have no employees, OR
  • Did not reduce salaries or wages of their employees by more than 25%, and did not reduce the number of hours of their employees, OR
  • Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.

Both forgiveness applications give you the option of using the original 8-week covered period (if your loan was received prior to June 5, 2020) or an extended 24-week covered period.

May 22, 2020

The SBA released two interim final rules pertaining to forgiveness of PPP loans. The two documents can be found at PPP Interim Final Rule – SBA Loan Review Procedures and Related Borrower and Lender Responsibilities and PPP Interim Final Rule – Loan Forgiveness.

Information and Website Disclaimer

The materials and the related links on this website are provided for informational purposes only. They are not intended as and do not constitute legal or accounting advice and should not be acted on as such. The materials and links are also not the legal or accounting opinions of the Loan Source, Inc. or any of its employees, officers, directors, advisors, agents or representatives (each “Lender Representative”), nor are the materials represented as being all-inclusive, correct, complete or up-to-date. No one should rely on any information on this website or its links. We suggest, instead, that you should seek the advice of an attorney and/or an accountant with respect to any matter contained in the website, its links or information provided by a Lender Representative.

Some of the material on this website contains links to other Internet resources. The links are provided as citations and are not intended to state or imply that Lender is affiliated, associated with or legally authorized to use any trade name, registered trademark, logo, legal or official seal, or copyrighted symbol or material contained in the link. Please direct any questions about this website to support@theloansource.com.

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