Payroll Protection Program Loan Forgiveness

Thank you for allowing Powell Valley National Bank to be your trusted partner for the SBA’s Payroll Protection Program.  It has been an honor and a pleasure to assist you and our communities during this most trying time.  

Congress is currently considering several proposals and changes to the PPP forgiveness process.  The proposed changes may affect how your application for forgiveness is prepared and processed.  Rest assured that PVNB will monitor any changes and its impact upon our customers.  The bank strives to ensure that your forgiveness application will be handled as accurately and efficiently as possible, using the most updated information.  Therefore, Powell Valley National Bank has chosen to wait until September 15, 2020 to begin accepting applications for forgiveness.  Meanwhile, we hope that the following information will assist you as you prepare your application.    

Choosing a Covered Period:

  • If your PPP loan was approved before June 5, 2020, you may choose between an 8-week or 24-week loan forgiveness covered period. If you do NOT provide notice of your preference, your loan forgiveness period will be 24 weeks after loan disbursement, or December 31, 2020, whichever is earlier.
  • If your PPP loan was approved on or after June 5, 2020, your loan forgiveness period is 24 weeks after your loan was disbursed or December 31, 2020, whichever is earlier.

Use of Funds:

You will be required to provide documentation of your utilization of PPP funds.  Only the following uses of loan funds are eligible for forgiveness:

  • Payroll– Salary, Wage, Vacation, Parental, Family, Medical, or Sick Leave, Health Benefits;
  • Business Mortgage Interest– as long as the mortgage was signed before February 15, 2020;
  • Business Rent- as long as the agreement was in effect before February 15, 2020;
  • Business Utilities-as long as the service began before February 15, 2020.

For Full Forgiveness, at least 60% of loan proceeds must be used for payroll costs. This means that no more than 40% of loan proceeds may be used for the other three purposes-business mortgage interest, business rent, and business utilities.

Preparing Your Application:

Listed below are the two application forms currently available when submitting for forgiveness.  Please contact your PVNB Loan Officer before submitting any application. 

  • 3508 PPP Loan Forgiveness Application – This application is required for borrowers who have reduced hourly wages or salary by 25% or greater during the covered period. This application is also required if the borrower was not able to retain the same number of employees during the covered period.
  • 3508-EZ PPP Loan Forgiveness Application – This application may be used by borrowers who are self-employed individuals, independent contractors or sole proprietors without employees. Other businesses may also use the 3508-EZ, as long as the business has not reduced hourly wages or salary by 25% or greater or reduced the total number of employees during the covered period. 

Required Supporting Documentation:

A successful forgiveness application will require prudent record documentation to maximize full loan forgiveness.  The following is an outline of supporting documentation required for your forgiveness.  Not all documents listed are required for every forgiveness request.  Please consult with your tax adviser and/or bookkeeper if you have questions regarding which supporting documentation is required for your business.  (All documentation provided for forgiveness should be retained in your records for a period of six years from the date of loan forgiveness.)

  • Payroll Documentation-Documents verifying eligible cash compensation and non-cash benefits consisting of the following:
    • Payroll reports and account statements documenting the cash compensation paid to employees;
    • Payroll tax filings (typically IRS Form 941);
    • Unemployment insurance filings to your State
    • Receipts, Cancelled Checks, or Statements for any employer contributions to employee health insurance and retirement plans that you included in PPP Schedule “A”, lines 6 & 7.
  • Non-Payroll Documentation-Documents verifying that the following items existed prior to February 15, 2020, and that eligible payments were made during the covered forgiveness period. Payments can be documented using receipts, cancelled checks, and/or account statements.
    • Business Mortgage Interest– copy of lender amortization schedule and payment documentation during covered period;
    • Business Rent– copy of current lease agreement and payment documentation during covered period;
    • Business Utilities– copy of invoices from February 2020, and those paid during the covered period, and payment documentation during the covered period.
    • Employee Documentation- (If completing 3508) Documentation showing the average number of FTE employees for the time period you selected in line 11 of PPP Schedule “A”. Documents may include payroll tax filings on IRS Form 941, state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported to your State. Documents may cover periods longer than the time period selected.

Submitting for Forgiveness:

Upon receipt of your completed PPP Loan Forgiveness Application, our team will thoroughly review the documentation and communicate to you if additional information is required.   When the forgiveness application is determined to be compliant with SBA guidelines, your package will be submitted to the SBA for review. Once notified, your PVNB Loan Officer will contact you with any communications or decisions from the SBA.

Please be patient as this forgiveness process can take up to 90 days.  It’s also important to note that the SBA may also audit any PPP loan, of any size, at its own discretion. These items are outside of the control of Powell Valley National Bank.   

Remaining Balances:

Any outstanding, unforgiven balance of your PPP loan will continue to accrue interest at 1% for the remainder of the loan term. There is no pre-payment penalty and the outstanding balance can be paid off at any time without incurring additional fees. Please refer to your PPP loan documentation for additional terms and conditions.

PVNB stands ready and prepared to provide assistance as you apply for forgiveness of your PPP Loan.

Thank you for placing your trust in us and allowing us the opportunity to serve your small business needs during this time.