At UVA Community Credit Union, we know that small businesses are the heartbeat of our local economy. That's why we're working hard with the SBA and others to provide financial assistance options during these difficult times.
Paycheck Protection Program Update
On December 27, 2020 the President signed the 2.3 trillion Coronavirus Relief and Government Funding Bill into law, extending billions of dollars in COVID aid. This latest package provides an additional $285 billion in Paycheck Protection Program (PPP) funds for businesses with fewer than 300 employees. There are a few key points below for guidance, but for full program descriptions for First and Second Draw PPP Loans, visit the US Treasury and SBA pages using the links below.
PPP borrowers can apply for an additional PPP loan as long as:
Qualifications and maximum loan calculator for First Draw PPP Loan
Qualifications and maximum loan calculator for Second Draw PPP Loan
Additional Provisions:
Remember: It is still the case that not more than 40% of the forgiven amount can be for non-payroll costs, which may limit how much of your loan can be forgiven.
For additional details we encourage you to visit the SBA, the US Chamber of Commerce, and the US Treasury websites.
IMPORTANT NOTICE
We are currently only accepting PPP First and Second Draw loan applications through our online portal. Eligible borrowers may email us at business.services@uvacreditunion.org and we will send you the portal link.
If you would like to explore other business loan options, please contact us.
A Borrower may apply for forgiveness using SBA Form 3508, 3508S or 3508EZ depending on SBA requirements. Our portal will help you determine which forgiveness application to use based on the preliminary questions you answer when you begin the process.
Sole proprietors, independent contractors, and self-employed individuals who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form automatically qualify to use the Loan Forgiveness Application Form 3508EZ or lender equivalent and should complete that application. The SBA has also released a simplified forgiveness application (3508S) for PPP small business loans of $50,000 or less. This new form should greatly streamline the PPP forgiveness process.
In order to qualify for full loan forgiveness, you must meet the qualifications outlined by the Small Business Administration. Any reduction in employment (full-time equivalent), reduction in salaries (by more than 25%), or use of funds for non-qualifying purposes may result in reduced forgiveness or may disqualify you from loan forgiveness. You will need to complete a Borrower Certification in which you certify to appropriate and permissible use of your PPP loan. You must sign this document in order to qualify for loan forgiveness.
A borrower is eligible for loan forgiveness if at least 60% of proceeds were used for payroll costs. Up to 40% of proceeds may be forgiven if used to cover allowable expenses such as mortgage interest, rent, and utilities.
Payroll costs include:
• Salaries
• Wages
• Vacation Pay
• Parental and Family Leave
• Employer Medical or other group benefits
• Sick leave
• Employer Retirement Benefits
• Bonuses, commissions or hazard pay
The Covered Period is either (1) the 24-week (168-day) period beginning on the PPP loan disbursement date, or (2) if the borrower received its PPP loan before June 5, 2020, the borrower may elect to use an eight-week (56-day) Covered Period. For example, if the borrower is using a 24-week Covered Period and received its PPP loan proceeds on Monday, April 20, the first day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, October 4. In no event may the Covered Period extend beyond December 31, 2020.
Note: Borrowers with loans prior to June 5 can still elect to use 8-weeks » Alternative payroll covered period begins 8-weeks (56 days) or 24-weeks (168 days), from the first day of the first payroll cycle following the PPP loan disbursement date
Note: Alternative payroll isn’t available for semi-monthly payroll cycle
If you applied to the PPP as: An Independent Contractor, Sole Proprietor, Self Employed or Partnership with or without employees.
PAYROLL EXPENSES:
Without Employees: 2019 1040 Schedule C OR 2019 Schedule K-1, to verify your owner/ partner compensation replacement PLUS copies of cancelled checks or other evidence of payments made to you during the covered period.
With Employees: Payroll reports relating to the 8 or 24 week covered period (typically 941 or 944). Any additional documentation verifying retirement contributions or health insurance
Full Time Equivalent (FTE) DOCUMENTATION:
Any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule; documentation showing average number of FTE employees
NON-PAYROLL EXPENSES:
Business mortgage interest payments:
• Amortization schedule and cancelled checks or
• Credit Union/bank account statements from February 2020 and each month of the Covered Period, plus one additional month
Business rent and lease payments:
• Copy of current lease and receipts
• Cancelled checks or credit union statements from February 2020 and each month of the Covered Period, plus one additional month
Business utility payments:
• Copy of invoices from February 2020 and those paid during each month of the Covered Period, plus one additional month
• Receipts, cancelled checks, or account statements
If you applied for the PPP as: A Corporation or Not-for-Profit with employees.
PAYROLL EXPENSES:
• Credit Union/bank account statements or third party payroll service provider reports documenting cash compensation paid to employees
• Tax forms or equivalent third-party payroll service provider reports for: payroll tax filings and state quarterly wage reporting and unemployment insurance tax filings (typically 941 or 944)
• Payment receipts, cancelled checks, or account statements documenting employee health, dental and vision insurance and retirement plan contributions
FTE DOCUMENTATION:
• Any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule; documentation showing average number of FTE employees number of FTE employees
NON-PAYROLL EXPENSES:
• Business mortgage interest payments: Amortization schedule and cancelled checks or
• Credit Union/bank account statements from February 2020 and each month of the Covered Period, plus one additional month
Business rent and lease payments:
• Copy of current lease and receipts
• Cancelled checks or account statements from February 2020 and each month of the Covered Period, plus one additional month
Business utility payments:
• Copy of invoices from February 2020 and those paid during each month of the Covered Period, plus one additional month
• Receipts, cancelled checks, or account statements
Yes. Lenders may accept any form of E-consent or E-signature that complies with the requirements of the Electronic Signatures in Global and National Commerce Act (P.L. 106-229).
If electronic signatures are not feasible, then when obtaining a wet ink signature without in-person contact, lenders should take appropriate steps to ensure the proper party has executed the document.
This guidance does not supersede signature requirements imposed by other applicable law, including by the lender’s primary federal regulator.
Please be patient. The SBA gives borrowers up to 10 months following the end of their selected covered period to submit their PPP Loan Forgiveness Application. At this time we are not yet accepting PPP loan forgiveness applications, as pending legislative changes may impact the process.
We will only be accepting applications via our online portal. After we receive your application the Credit Union has 60 days to process it, then the SBA has 90 days to review this information to determine the amount of the loan that will be forgiven. Loan payments are deferred until the PPP Loan Forgiveness has been submitted (within the 10 month deadline) and the SBA has made a decision. Keep in mind Congress is still discussing guidelines and may make additional changes in an anticipated future COVID stimulus bill. While nothing has been finalized there is a push to make the PPP Loan Forgiveness process easier and possible changes may include:
Remember, these legislative changes have not been approved and may or may not be approved. Once you submit your forgiveness application and the SBA determines the forgivable amount, any remaining deferral period is forfeited and any remaining balance becomes due and payable under the terms of your Loan Agreements. It may not be beneficial to apply for forgiveness until Congress and the SBA finish making changes to the program. Consult with your tax advisor and discuss your specific situation prior to applying for PPP Loan Forgiveness.
Yes. If a Lender denies a Borrower’s Forgiveness Application, the Lender must notify the Borrower in writing that it has issued a decision to the SBA denying the loan forgiveness application. Within 30 days of such notice from the Lender, the Borrower may notify the Lender that it is requesting that the SBA review the Lender’s decision. Within 5 days of receipt, the Lender must notify the SBA of the Borrower’s request for review. The SBA will notify the Lender if the SBA declines a request for review. If the Borrower does not request SBA review, or if the SBA declines the request for review, the Lender is responsible for notifying the Borrower of the date on which the Borrower’s first payment is due. If the SBA accepts a Borrower’s request for review, the SBA will notify the Borrower and the Lender of the results of its review. If the SBA denies forgiveness in whole or in part, the Lender is responsible for notifying the Borrower of the date on which the Borrower’s first payment is due.
Yes. If an employee’s total compensation does not exceed $100,000 on an annualized basis, the employee’s hazard pay and bonuses are eligible for loan forgiveness.
Non-payroll costs eligible for forgiveness include:
• covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020;
• covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020; and
• covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.
Eligible non-payroll costs must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. It is important to note that the “Alternative Payroll Covered Period,” if applicable, is only to be used in relation to payroll costs and cannot be used to determine non-payroll expenses included in the forgiveness calculation. As a reminder, as a result of the PPP Flexibility Act, eligible non-payroll costs cannot exceed 40% of the total forgiveness amount.
The financial institution has up to 60 days to review the application and if approved, the SBA has up to 90 days to give final approval. You will receive an email notification once your forgiveness application has been reviewed, confirmed complete, submitted to the SBA for final approval and we receive official forgiveness
If you need additional assistance, please email us at business.services@uvacreditunion.org for assistance or contact your financial advisor. Please note, we will only accept forgiveness applications and supporting documentation through our online portal. We will communicate with you via email when we are ready to accept forgiveness applications. We anticipate that to be in early to mid-September pending any further legislative changes.
For additional resources and information please visit the SBA page.
The PPP Application and Loan Forgiveness process FAQs above have not been updated to reflect the December, 2020 legislative updates. Once we have received guidance from the SBA and U.S. Treasury we will update our information. At this time we are not yet accepting PPP Loan Forgiveness Applications.
*Please note the information is based on information we know today, and we will continue to update you as new details are provided by the SBA. This content is for informational purposes only. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.