It's concerning to face the realization that your company's future is at stake without having clear answers on the PPP loan forgiveness. For many businesses, Paycheck Protection forgiveness is vital but difficult to understand. All the rules are changing, and we recognize you don’t have the time to put into understanding these new rules while reinventing your business.

What do we know now about PPP loan forgiveness?  The original 11-page forgiveness form has been revised to a 3 page “EZ” form. Keep in mind your bank may require additional forms as well as require supporting documentation.  The SBA has announced lenders can start submitting applications for Paycheck Protection Program loan forgiveness as early as August 10th.  Even if your lender has not yet started accepting applications for forgiveness, you can find the application you need to apply for Paycheck Protection loan forgiveness on the SBA website. The forms have accompanying instructions to follow, which make it easier to complete the application.

New Info to Keep in Mind

You should also be aware that there is a current proposal in Congress that allows some loans to be eligible for automatic forgiveness. The Paycheck Protection Program Small Business Forgiveness Act would allow PPP loans of $150,000 or less to be automatically forgiven once the borrower completes a one-page forgiveness document.  It is estimated that this bill could help 87% of borrowers expedite the forgiveness process.

About PPP Loan Forgiveness

The Paycheck Protection Program offers the benefit of loan forgiveness to those who meet the necessary criteria. If these criteria are met, the loan will not need to be repaid. The employer must maintain or quickly rehire employees and maintain their salary levels to be approved for loan forgiveness. If the number of full-time employees lowers or salaries or wages decline, the loan amount that will be forgiven will be reduced.

The “look back’ to determine forgiveness allows borrowers to use an alternative payroll covered period aligning with their regular payroll cycle, and include expenses from both payroll and other costs in the 24 weeks following the receipt of their loan. The 8 week test period option is still available as well.  There is information on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness. Some exemptions from the loan forgiveness reduction are also allowed, including employers who rehired workers by June 30 or made a good-faith attempt to rehire that was rejected.

You haven’t yet applied for a PPP? It is not too late as the Payment Protection Program has reopened and the new deadline to apply for a PPP loan is August 8, 2020. 

Need help and more information on your PPP loan forgiveness? This program might seem overwhelming to navigate, so please don't hesitate to contact us at The Farmers Bank, and I'd be happy to help you get more information.

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Karen Gregerson is President & CEO of The Farmers Bank, a locally owned and operating bank with 10 banking offices in Central Indiana.

The Farmers Bank is a $700 million asset organization chartered in 1876 with headquarters in Frankfort, IN.  The Farmers Bank is locally owned and operated with 10 banking offices located in Central Indiana providing retail, business, investment & trust services, mortgage, and electronic banking services.  Member FDIC, Equal Housing Lender