Paycheck Protection Program
What You Need to Know
You must have an SYB Business Checking account as of February 15, 2020, and the following:
- The date you started your business
- Detailed information in order to calculate the average monthly payroll costs for your employees for the past 12 months, as outlined by the SBA
- Your annual revenue
- Your business mailing address
Here’s what you need to know about PPP loan forgiveness and how it works. This is based on the latest information from the Small Business Administration (SBA). Find the latest information at SBA.gov and Treasury.gov. Other eligibility requirements may apply.
- Loan forgiveness is not automatic, you must request it. Forgiveness may be granted for some or all of the principal balance of the loan on eligible payments made within 8 weeks, from the date of loan disbursement (the date funds were deposited into your account).
- To be eligible to receive loan forgiveness, loan funds must be used for specified purposes, and at least 75% must be used for payroll costs, as defined by the SBA. Not more than 25% of the loan forgiveness amount may be attributable for non-payroll costs.
- Generally, companies must maintain employee headcount and compensation levels during the 8 week period after loan disbursement.
- The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount of these costs over the eight-week period following the date of the loan disbursement:
- Payroll costs
- Payments of interest on mortgage obligations incurred before February 15, 2020
- Rent payments on leases dated before February 15, 2020, and
- Utility payments under service agreements dated before February 15, 2020
- We are currently processing requests for loan forgiveness from first-round PPP loans. Recent legislative changes have provided for an expedited forgiveness process for loans under $150,000. Please contact your loan officer for details.
It is your obligation, as the borrower, to understand the SBA's rules.
Small Business Administration (SBA) Paycheck Protection Program Update On Loan Forgiveness
The SBA will be releasing the names of companies that have participated in PPP as part of their public disclosure process. As a result, you may be contacted by potential vendors who are using this information for marketing purposes. You are under no obligation to engage with any new vendors as we continue to be your point of contact for the PPP process. Please contact your banker for any questions.
The SBA has opened its portal for Lenders to submit PPP loan forgiveness applications. You must apply for forgiveness through the Lender that made your PPP loan. There are three different forms a Borrower may use depending on their circumstances. They include form 3508S for loans $50,000 and under, form 3508 and form 3508 EZ. The requirements to use the 3508 EZ for all Borrowers are included in the instructions documents provided by the SBA. If a Borrower does not meet these requirements, the main one being that the Borrower did not reduce staff or reduce pay by more than 25 percent for any employees, the Borrower must use the 3508 form. The three forms and the SBA instructions are included in the link. Please note the supporting documentation that must be submitted with the application referenced in the instructions. The required documentation for each application type is included in the instructions and in the supporting documentation documents attached below. As your submission is an application for a Federal grant, Stock Yards Bank, as your Lender, cannot waive the requirement to submit all documentation that is referenced in the instructions.
If you have any questions, please contact your SYB loan officer.
Pertinent Changes to PPP Loan Program via PPP Flexibility Act
- Covered period for loan forgiveness has been extended from 8 weeks to 24 weeks. Borrowers who have received PPP loans prior to the addition of the 24 week period retain the option to use an eight-week covered period.
- Percentage of required money to be spent on payroll costs for the covered period has been lowered from 75% to 60%.
- Safe harbor is provided from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020.
- Deferral period is extended for loan payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).
Listed below is a summary of the Loan Forgiveness calculation. The amount of forgiveness will be equal to the amount of Qualified Expenses incurred over the Covered Period less Adjustments. Bold terms explained below.
- Qualified Expenses
- Payroll expenses
- Business mortgage interest payment
- Business rent or lease payments
- Business utility payments
- Covered Period – 24 week period immediately following funding of PPP loan or 24 week period immediately following first payroll after PPP loan funding. Borrower retains the option to use the initial 8 week covered period.
- Adjustments – Reductions in full-time equivalents (FTE) and Salary/Hourly wage reductions will reduce loan forgiveness.
Loan Forgiveness Process - What to Expect
- Submit your completed Forgiveness application to Stock Yards Bank, including exhibit A if using Form 3508 and any supporting documentation required for your application form.
- Stock Yards Bank has 60 days to review your application and submit to the SBA for approval.
- The SBA has an additional 90 days to approve or decline the application and process your Forgiveness payment.
- Your Forgiveness payment will be remitted to Stock Yards Bank and applied to your PPP loan.
- VERY IMPORTANT – expect changes. The government rolled this vast program out in record time. Many of the details of the program have been clarified after the fact. While this is not ideal, it has been our experience to date. There remains the possibility that Congress will pass legislation to simplify this process, especially for loans of $150,000 or less. You may choose to wait to see if this occurs. This is your decision. If you decide to move forward under the current rules, SYB will process your application under the existing rules. Please contact your Relationship Manager if you have questions or concerns.
$150,000 & Under PPP Loan Forgiveness
The video below provides specific instruction on First Draw and Second Draw PPP loans. Borrowers must complete a separate application for each loan.
First Draw PPP Forgiveness
- Complete SBA form 3508S
- Complete SYB PPP 2020 loan form
- Return both completed forms to your SYB relationship manager
Second Draw PPP Forgiveness
- Complete SBA form 3508S
- Complete SYB PPP 2021 loan form
- Review the SBA document on how to calculate revenue reduction and provide the documentary support as required by the SBA
- Return the 2 completed forms and the financial statements as required to your SYB relationship manager