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Paycheck Protection Program (PPP) Forgiveness

Who should apply? When can I apply?

Companies that received a PPP loan in 2020 or 2021 (First or Second Draw) may apply for forgiveness once loan proceeds have been used on eligible expenses, up to the maturity date of the loan.

We recommend the same person that applied for the loan completes the forgiveness application. The Small Business Administration’s (SBA) forgiveness process only allow applicants who are known as beneficial owners and/or individuals with significant responsibility to apply – based on each company’s tax ID and the individual applicant’s Social Security Number (SSN).

As a note, if your business received first and second draw PPP loans, you must submit forgiveness applications in order of the loans, and each one must be submitted separately.

Why should I apply? What is the deadline?

A key feature of the SBA’s PPP Program is the opportunity to receive forgiveness on all or part of your loan balance, including any associated interest. PPP loans are deferred 10 months from the end of your “covered period”. At that point, if you have not applied for forgiveness, you must begin making payments on your loan. Forgiveness can take up to 90 days for the SBA to process, and delays may occur for various reasons, so allowing additional time for processing is recommended. You may apply for forgiveness up to the maturity date of your loan.

What is a covered period?

This is the period of time when the amount you spend on allowable costs is counted towards loan forgiveness. The Covered Period is between 8 and 24 weeks, at the election of the Borrower. The Covered Period begins on the date your loan proceeds were disbursed and ends on any day of your choosing between 8 and 24 weeks later.

Which forgiveness application applies to me?

The SBA has published three different applications forgiveness that apply in different situations. Our automated portal will help guide you to the correct application, or you may also review the application options here:

  1. https://www.sba.gov/document/sba-form-3508s-ppp-3508s-loan-forgiveness-application-instructions
  2. https://www.sba.gov/document/sba-form-3508ez-ppp-ez-loan-forgiveness-application-instructions
  3. https://www.sba.gov/document/sba-form-3508-ppp-loan-forgiveness-application-instructions

Do I qualify?

First Draw PPP Loan forgiveness terms
First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
• Employee and compensation levels are maintained
• The loan proceeds are spent on payroll costs and other eligible expenses; and
• At least 60% of the proceeds are spent on payroll costs

Second Draw PPP Loan forgiveness terms
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
• Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
• The loan proceeds are spent on payroll costs and other eligible expenses; and
• At least 60% of the proceeds are spent on payroll costs

What does the process look like?

  • First, access and submit your PPP forgiveness application using our self-service portal.
  • Next, your application is reviewed by our team, and we may reach out for additional documentation/information as needed.
  • Then, once we have approved your application, you’ll receive your completed application to sign via e-signature.
  • Once we have a signed application, we will submit it to the SBA for review and processing.
    As the SBA reviews your application, they may also request additional documentation/information if needed.
  • The SBA has up to 90 days to review the application, and will provide First Western with a notification once a decision has been made.
  • Our automated system will provide you with a notification when the process is complete, and our Private Banking team will keep you informed every step of the way.
  • As a note, if your loan is not eligible to be fully forgiven by the SBA, you will need to begin making payments on your loan once a final decision in the application process has been made by the SBA.

What documents/information should I have ready?

Borrowers should gather all required documentation and prepare needed calculations ahead of accessing the application in order to further simplify the application process.

Payroll (provide documentation for all payroll periods that overlapped with the Covered Period or the Alternative Payroll Covered Period):
• 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, canceled 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

Non-payroll (for expenses that were incurred or paid during the covered period and showing that obligations or services existed prior to February 15, 2020):
• Business mortgage interest payments: Copy of lender amortization schedule and receipts verifying payments, or lender account statements
• Business rent or lease payments: Copy of current lease agreement and receipts or canceled checks verifying eligible payments
• Business utility payments: Copies of invoices and receipts, canceled checks or account statements

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Mind the “Forgiveness Gap” and make sure you apply for full forgiveness (if you intend to)

On the application, your forgiveness gap will be calculated once you have entered your payroll/eligible costs over the covered period. If the Forgiveness Gap is greater than 0, you are not requesting full forgiveness for your loan and you will have a remaining balance to pay.

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What if I don’t think I will be fully forgiven? What happens?

If your loan is not fully forgiven, payments will be due on the remaining balance until the maturity date of your loan.

Helping Our Communities Through PPP Lending

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With a focus on supporting businesses and their employees within our communities, we’ve worked hard to quickly prepare for PPP funding – well ahead of many larger peer banks.

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We have assisted hundreds of businesses, providing hundreds of millions in PPP lending and helping support thousands of local jobs in the communities we serve.

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So far, we have assisted hundreds of businesses, providing over $220 million in PPP lending, and helping support approximately 15,000 local jobs in the communities we serve.

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Nearly half of the small businesses we assisted were new to First Western Trust – often referred to us by our clients and others within our communities.

To connect with a local private banker with questions or where to start, complete the form below.