Paycheck Protection Program
The Small Business Administration (SBA) has indicated that August 8, 2020 is the last date on which the SBA will approve a Paycheck Protection Program (PPP) loan application. In order to ensure the necessary time for submission and approval, we are no longer accepting new PPP loan applications effective August 6, 2020.
We encourage all Members and local businesses to investigate other available Financial Assistance Programs, including those available through Frontwave Credit Union as well as other local, state and national institutions and agencies.
Already have a Paycheck Protection Program loan with Frontwave?
Loans issued prior to June 5, 2020, have a maturity of 2 years. Loans issued after June 5, 2020, have a maturity of 5 years. In general, the loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (at least 60% of the forgiven amount must have been used for payroll). We are not yet accepting forgiveness applications as we await additional information from the Small Business Administration (SBA) to finalize our process. We will notify Members with next steps once our process is finalized. No payment will be due until forgiveness applications are fully reviewed.
Effective June 5, 2020, the SBA published new rules to give business owners greater flexibility:
More time to spend the money: Instead of 8 weeks, businesses now will have 24 weeks from the day they get their PPP funds to use them, but all funds must be used no later than December 31, 2020.
Less money must be dedicated to payroll: To qualify for full forgiveness of their loans, the amount a business is required to spend on payroll costs has been relaxed from 75% to 60% of total PPP loan proceeds. Businesses must allocate at least 60% of their PPP funds for payroll expenses and may use the rest to pay for overhead costs, such as rent, mortgage interest and utilities. If a business owner spends less than 60% on payroll, they may still qualify for partial forgiveness.
More time to rehire staff: To qualify for full forgiveness under the old rules, business owners had to maintain the average number of employees they had on staff as of February 15, 2020, and pay them at their same rate by June 30, 2020. The new rules extend the date to December 31, 2020, and also add two additional safe harbors. Full forgiveness may be available if:
- A business cannot hire back their full staff due to government mandated COVID-related workplace safety requirements that they operate at less-than-full capacity.
- A business is unable to hire back previous employees and unable to hire similarly qualified employees.
Delayed repayment: Instead of deferring payments for 6 months after receipt of loan proceeds, businesses are not required to make payments until the SBA makes a determination on the business’s forgiveness application.
While you have plenty of time to complete the forgiveness process, please continue to track and retain documentation for all expenses paid using PPP loan proceeds. The required items include verification of the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. Once the SBA has issued additional guidance, you will be notified of the next steps. For additional details, contact your Frontwave loan representative.
PPP Loan Forgiveness Update (11/23/20)
If you received your PPP loan through Frontwave Credit Union, you’ll need to apply for forgiveness through us as well.
Note that all communication regarding the PPP forgiveness application process will come directly from a Frontwave (@frontwavecu.com) email address.
Step 1: Gather supporting documentation
Although you can apply for forgiveness at any time, to maximize your loan forgiveness, you’ll want to be sure you’ve used as much of the funds as possible for eligible costs within the covered period. This includes costs incurred or paid during the 24 weeks (168 days) after you received your PPP loan proceeds, but no later than December 31, 2020.
You should be ready to provide documentation for all your eligible expenses when you complete your application for forgiveness
Recommended documentation to verify eligible payroll compensation consist of the following:
- Bank account statements or third-party payroll service provider reports documenting the amount paid to employees.
- Tax forms (or equivalent third-party payroll service provider reports), including:
- 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.
- Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans.
Recommended documentation to verify eligible non-payroll costs consist of the following:
- Business mortgage account statements from February 2020 and the months of the covered period verifying interest amounts and eligible payments.
- Copy of current lease agreement, and receipts or cancelled checks verifying eligible payments from the covered period.
- Business utility invoices (electricity, gas, water, telephone, internet access) from February 2020 and the months of the covered period, along with receipts and cancelled checks.
Step 2: Apply online
Starting the week of November 30, we will begin sending emails to PPP loan recipients with a unique link to apply for forgiveness online. These emails will be sent in phases based on the date of your original PPP loan application. You’ll receive an email from us when your online application is available.
Once you start your online application, you’ll be able to save and come back to it as you fill out the necessary details. You should wait to submit your application until you have collected and uploaded all your required documents.
Step 3: Receive confirmation
We’ll review your loan forgiveness application and supporting documents, then submit the completed application to the U.S. Small Business Administration (SBA). We’ll let you know when we receive a response from the SBA, which is currently taking around 60-90 days.
If you have any questions, feel free to contact your Frontwave loan representative.
U.S. Small Business Administration
California Governor’s Office of Business and Economic Development