SBA PPP Forgiveness - $50,000 or less
Chain Bridge Bank, N.A. clients with Paycheck Protection Program (PPP) loans of $50,000 or less can apply for loan forgiveness using the Small Business Administration (SBA) 3508S simple application.
All eligible borrowers must use the Bank’s online portal to fill out and submit this forgiveness application. Manual application forms will not be accepted. Chain Bridge will provide each forgiveness applicant with a dedicated account representative to address any questions or concerns they have when they fill out their application in the online portal.
The following frequently asked questions can help applicants understand what’s expected of them when they fill out their 3508S forgiveness application in the portal.
Once ready to apply through the portal, borrowers should contact their dedicated account representative or firstname.lastname@example.org to get started.
How do I know if I’m eligible?
The PPP borrower is eligible if:
- The PPP loan amount is $50,000 or less;
- No affiliates of the borrower received PPP loans of $2 million or greater;
- Proceeds were used for eligible costs, such as payroll costs to retain employees, mortgage interest payments, rental payments, or utility bill payments;
- Payroll costs exceed 60% of the loan amount.
What’s the benefit of applying using this method?
The SBA has designed form 3508S to be the simplest PPP loan forgiveness application in order to provide relief to business owners and operators with loans of $50,000 or less. This relief includes:
- No calculations required within the application form;
- No reductions to loan forgiveness because of staffing levels, salaries or wages;
- No unknown wait time – the SBA has a limit of 90 days upon receipt from the lender to review the application.
What do I need to show to get payroll costs forgiven?
Payroll costs are eligible for full forgiveness. Payroll costs must be made during the covered period (see below for help determining the covered period) and must exceed 60% of the loan amount in order to use the 3508S simple application. The SBA requires three types of documents to verify payroll costs for forgiveness:
- Bank account statements or third-party payroll service provider reports (e.g. Paychex) documenting the amount of cash compensation paid to employees;
- Tax forms for the federal payroll tax (typically IRS 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.
What do I need to show to get mortgage interest payments forgiven?
Mortgage interest payments are eligible for full forgiveness. The mortgage loan must be made to the borrower rather than a related party and the loan must be established prior to February 15, 2020. Unlike mortgage interest, mortgage principal payments are not eligible for any forgiveness. The SBA requires these documents to verify mortgage interest payments for forgiveness:
- A copy of the promissory note;
- Lender amortization schedule 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;
- Receipts or cancelled checks verifying eligible payments during the covered period.
What do I need to show to get rental payments forgiven?
Payments of rent on lease agreements are eligible for full forgiveness. The lease agreement must be made to the borrower rather than a related party and the lease must be established prior to February 15, 2020. The SBA requires these documents to verify rental payments for forgiveness:
- A full copy of the current and fully executed lease agreement;
- Lessor’s account statements, receipts, or cancelled checks verifying eligible payments during the covered period and through one month after the end of the covered period.
What do I need to show to get utility bill payments forgiven?
Payments of utility bills are eligible for full forgiveness. The contracts for utilities must be made to the borrower rather than a related party and the agreements must be established prior to February 15, 2020. The SBA requires these documents to verify utility bill payments for forgiveness:
- Full copies of statements or invoices beginning in February 2020 and through the covered period;
- Cancelled checks or bank statements verifying the eligible payments on utility bills during the covered period.
What is the covered period?
The covered period is the timeframe used to add up the costs eligible to be included in the loan forgiveness amount. Most PPP borrowers will select a 24-week period tied to their loan disbursement date. See the following criteria to determine the appropriate covered period:
- For PPP loans made prior to June 5, 2020, the covered period can be either the 8-week OR 24-week period beginning on the loan disbursement date.
- For PPP loans made on or after June 5, 2020, the covered period is the 24-week period beginning on the loan disbursement date.
- For borrowers that use a biweekly or more frequent payroll schedule, the covered period can begin on the first day of the first period following the loan disbursement date.
What else should I be aware of?
Even though the 3508S form is the simplest application method, it still requires the borrower to have thorough documentation of their costs and payments eligible for forgiveness. Chain Bridge advises its PPP borrowers to consult their attorneys and accountants for legal and compliance expertise. All borrowers should continue to be aware of the following restrictions for applying via form 3508S:
- Payroll costs must exceed 60% of the loan amount in order to use the Form 3508S.
- Individual owner’s compensation and/or employee's compensation that counts in forgivable payroll costs is limited to up to 2.5 months of 2019 compensation and $20,833 for the 24-week covered period and 2 months of 2019 compensation and $15,385 for the 8-week covered period.
- Partial documents cannot be accepted to verify any forgivable costs and all pages are required for payroll reports, bank statements, leases, etc.