Academy Bank has been honored to participate in the Paycheck Protection Program, through which we have successfully helped more than 1,300 clients receive loans crucial to assisting small businesses. As applications are currently closed, we will now turn our attention to the Loan Forgiveness portion of the program. We will provide as much information possible to our clients to help them in full forgiveness on their loans.
Update - October 9, 2020
On October 8, the Small Business Administration released a streamlined loan forgiveness application for Paycheck Protection Program loans totaling $50,000 or less. The new application is form 3508S and includes a set of instructions as to how to complete the form. The 3508S is a two-page application that includes borrower certifications and optional demographic information. Of note, the 3508S does not include any calculations, the borrower must certify they spent 60% on payroll, and supporting documentation still has to be submitted to the bank. Over the next few weeks, Academy Bank will begin the process of incorporating this third forgiveness method into our online forgiveness platform. Additionally, the SBA will have to update their forgiveness platform to allow submission of the 3508S.
As many of you are certainly aware of, Congress is still negotiating an additional COVID stimulus package that many of our clients desperately need. Proposed legislation still includes language that would simplify the forgiveness process for PPP loans less than $150,000. Barring additional changes from the SBA, when our online forgiveness platform has been updated/tested to allow for the acceptance and submission of the Form 3508S, we will look to begin the process of inviting our PPP clients with loans less than $150,000 to apply for forgiveness. Academy Bank will only accept PPP Forgiveness applications through its online platform.
During the first week of October, Academy Bank updated the first payment due date on all of our outstanding PPP loans to reflect the new payment deferment period (10 months after end of covered period) that was included in the Paycheck Program Flexibility Act passed in June.
On October 2, 2020, the SBA issued a new Procedural Notice covering changes in ownership. This document covers procedures a PPP borrower must follow if there is a change in ownership.
If you have any questions, please contact us at firstname.lastname@example.org.
Previous website updates contain useful information that will help you prepare for the forgiveness process. Please continue to check our website for updates regarding the PPP Forgiveness process.
Update - September 9, 2020
Academy Bank continues to closely monitor ongoing negotiations in Congress regarding a new COVID stimulus package that would make it easier for many of our clients to request forgiveness.
Academy Bank has built out its PPP forgiveness platform. If legislation is passed by Congress that streamlines the forgiveness process, we will incorporate those changes into our forgiveness platform. PPP payments are generally deferred until 10 months after your 8-week or 24-week Covered Period ends. Accrued interest on the approved forgiven amount of the PPP loan is paid by the SBA through the date payment is issued.
In the upcoming weeks, if Congress fails to reach an agreement on a COVID stimulus package, we are planning to invite customers in waves to request forgiveness based on the PPP guidelines as currently written. We will be starting with customers who received funding first. It will take several weeks for all of the invitations to be sent out. The invitation email will include specific instructions and a link for you to begin the forgiveness process. Applications for forgiveness will only be accepted through our online PPP application platform.
Update - August 21, 2020
As many of you are certainly aware of, Congress is still negotiating an additional COVID stimulus package that many of our clients desperately need. Both the Republican and Democratic versions contain provisions for additional PPP loans and provisions that would simplify forgiveness on existing PPP loans of $150,000 and less. Here at Academy Bank, 82% of the PPP loans we funded are $150,000 or less.
Most of the banking industry is waiting to commence the PPP Forgiveness process until there is more clarity as to approval of an additional COVID stimulus package and how the PPP Forgiveness process will work for all loans. The enormous volume of PPP applications coupled with the complicated, ever-changing forgiveness rules present an operational challenge for the industry.
Academy Bank has built out and pilot-tested its PPP Forgiveness platform with live PPP loans. We have successfully uploaded approved applications to the SBA for their approval.
Our plan, at this time, while Congress is still negotiating an additional COVID stimulus package is as follows:
1. PPP loans of $150,000 or less
The applications process for these loans is not open at this time while we wait for additional clarity from Congress and the SBA that, if passed, will be extremely beneficial to our borrowers and the bank. The amount of time needed for borrowers to complete the PPP application and to gather and provide supporting documentation -- as well as for the bank to review applications, supporting documentation, and forgiveness calculations -- is significant.
Based on current SBA rules, PPP borrowers have up to 24 weeks to utilize the funds, and then up to 10 months after this period to apply for forgiveness. Accrued interest during this time on the amount of the loan forgiven will be paid by the SBA. If Congress passes one of the currently proposed stimulus packages, Academy Bank will update our forgiveness process to reflect the new rules. If in the upcoming weeks there is no progress in Congress, we will look to open up the forgiveness process based on current rules.
2. PPP loans greater than $150,000
We will be sending your invitation to apply for forgiveness soon. We are currently wrapping up pilot testing and fine tuning our forgiveness process. The current Bills before Congress do not appear to change the application process for PPP loans over $150,000. With the exception of loans less than $2 million, the borrower would be required to maintain supporting documentation for three years and would not have to provide the documentation to the bank as currently required. With up to 24 weeks to utilize your PPP funds, please make sure that you have appropriately spent 100% of the funds to ensure 100% forgiveness.
Useful Tips for the Application Process
Fully review the applicable SBA Forgiveness instructions and have them ready for reference as you complete the online application process. Here are Form 3508 Instructions and here are Form 3508 EZ Instructions.
The PPP Flexibility Act passed in June extended the covered period from 8 weeks to 24 weeks and allows borrowers with loans originated prior to the Act the option to select the 24 week covered period. This has allowed borrowers who were unable to utilize 100% of the PPP funds in the original 8 weeks more time to achieve full forgiveness. Also, by using the 24-week period, some borrowers have been able to use 100% of the PPP funds on payroll, thereby eliminating the need to provide supporting documentation on lease payments, mortgage payments or utility payments.
For our borrowers who need to complete the full schedule A worksheet, the following resources are helpful:
PPP.Bank - This free website walks you completely through the forgiveness process and results in a PDF you can print for your records and use when completing the Academy Bank online application.
The American Institute of CPAs (AICPA) website contains an extensive collection of PPP related resources, including a detailed Excel based PPP Forgiveness Calculator.
The documentation listed below is based on current PPP rules and guidelines which are subject to change. The HEALS act currently before Congress, if passed, would exempt borrowers with loans under $2 million from providing supporting documentation to their lender. During testing this was identified as the most time-consuming part of the application process. Please work on gathering the appropriate documentation prior to applying for forgiveness. We will not be able to process and approve your application until all documentation is provided.
Bank statements or third-party payroll provider documenting cash compensation to employees
Tax forms – payroll tax filings (941s) which overlap covered period, state wage earning and unemployment reports
If only the second box is checked on page one of 3508 EZ instructions, provide average FTEs by Borrower on Jan. 1, 2020 and at the end of the Covered Period.
IF NECESSARY - Payment receipts, cancelled checks, or account statements documenting employer contributions of employee health insurance or retirement plans
Nonpayroll – Documentation verifying obligations/services prior to 2/15/20
Business mortgage interest payments – copy of lender amortization schedule along with receipts or cancelled checks; or lender Feb 2020 account statement to prove in place at 2/15/20 along with statement during covered period and one past covered period.
Business Rent or Lease – Copy of current lease and receipts or cancelled checks verifying payments in covered period or lessor account statements from Feb 2020 to one month after covered period.
Business utility payments – copy of invoices from Feb 2020 and those paid during the covered period along with receipts, cancelled checks or account statements verifying eligibility.
Update - July 29, 2020
On July 24, 2020, the SBA issued a new procedural notice containing the procedures for PPP lenders to submit processed forgiveness decisions to the SBA through a third-party website. Per the SBA notice, the target date for the SBA to start accepting forgiveness decisions is August 10, 2020. However, the aforementioned date may be delayed if any additional legislation is passed that impacts the PPP forgiveness process. At Academy Bank, we have been working and will continue to work to convert the SBA 3508 Forgiveness Application, the 3508 EZ Application, and the newly issued forgiveness procedures into an easy to use online platform. We will only accept applications originated through our online platform. Our goal is to open the Academy Bank online forgiveness process for our clients approximately the same time the SBA starts accepting forgiveness applications (mid-August). To start the forgiveness process, all of Academy Bank’s PPP borrowers will receive an email with a personalized link to the online forgiveness platform.
The Paycheck Protection Small Business Forgiveness Act is a new law being considered by Congress. If passed, PPP loans of $150,000 and less can be fully forgiven by completing and submitting a one-page certification to the lender. The form will certify that the borrower complied with requirements under section 7(a)(36) of the Small Business Act. If the Act becomes law, the SBA will have up to 7 days to develop and issue this new certification. If passed, Academy Bank will incorporate this new certification into its online forgiveness platform and the email you will receive inviting you to apply for forgiveness. If you do not qualify for the automatic forgiveness, you will be able to access the full forgiveness application.
We recommend you start preparing now for the upcoming forgiveness process. For up-to-date rules, the SBA Form 3508 Forgiveness Application, and the SBA Form 3508 EZ, please visit the SBA website. The instructions for the forgiveness applications include guidance as to which borrowers qualify for the EZ form and what documentation you are required to collect and submit. If you do not qualify for the 3508 EZ, we recommend you complete the 3508 Schedule A worksheet prior to completing the online application process. Several third parties have developed online tools to help with the overall forgiveness application process, such as PPP.Bank.
July 8, 2020
We continue to incorporate the latest SBA guidance and expect additional guidance to be forthcoming. We expect to start accepting online PPP Forgiveness applications in August.
On June 16, the SBA released an updated PPP Forgiveness application and a new EZ application. These applications can be reached by following the US Treasury or SBA links below.
Per current guidance, there is no requirement for PPP borrowers to immediately submit a forgiveness application at the end of their 8 or 24 week covered period.
Payments are generally deferred until 10 months after your 8-week or 24-week Covered Period ends.
- If you apply for Forgiveness in the deferral period, you won’t have to start making payments on unforgiven amounts until the SBA provides a decision on your request or remits funds.
- If you do not apply for Forgiveness within the deferral period, you must begin making payments after your deferral period.
- Accrued interest on the approved forgiven amount of the PPP loan is paid by the SBA through the date payment is issued.
Please continue to check our website for updates.
June 9, 2020
The Paycheck Protection Flexibility Act was signed into law on June 5. On June 10, the SBA published an Interim Final Rule to implement significant changes contained within this act that are beneficial for a majority of PPP borrowers. The PPP forgiveness application that was issued by the SBA on May 15, the May 22 Interim Final Rules related to Loan Forgiveness and Lender Responsibilities, and previously issued FAQs will all need to be updated to reflect these changes. The SBA has not yet released instructions or final guidance to lenders on how loan forgiveness will work going forward, but we will continue to keep our website updated as we receive information. Please continue to monitor the U.S. Treasury, SBA and Academy Bank websites for additional information related to the forgiveness process.
Please do not submit a Loan Forgiveness Application at this time. We will have a formal and electronic process in place at a later date. You will receive an email from us with a link to your Loan Forgiveness Application when the SBA allows us to begin accepting applications for forgiveness. As we wait for further guidance, you should gather the documentation verifying eligible expenses, including the number of full-time equivalent employees on your payroll and their pay rates for the time frame used to verify you met the staffing and pay requirements. A helpful guide developed by AICPA can be found here.1
Please continue to check Academy Bank’s website for updated information that we will include on the site as it becomes available. For specific questions about loan forgiveness, contact email@example.com.
1As of June 9, the guides from AICPA and U.S. Chamber of Commerce had not been updated to reflect the Paycheck Protection Flexibility Act.
The borrower may apply to the lender for loan forgiveness subject to specific conditions:
- The employer maintaining or quickly rehiring employees and maintaining salary levels.
- Sixty percent (60%) of the forgiven amount must have been used for payroll costs. Current PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. New PPP borrowers will have a 24-week covered period, but the covered period can’t extend beyond Dec. 31, 2020.
- Paycheck Protection Program loan proceeds must have been used for these types of costs, and payments made, between February 15, 2020 and December 31, 2020.
- Payroll costs, excluding the prorated portion of any compensation above $100,000 per year for any person.
- Group healthcare benefit costs and insurance premiums.
- Mortgage interest (but not prepayments or principal payments) and rent payments on leases in existence before February 15, 2020.
- Certain utilities, including electricity, gas, water, transportation, and telephone and Internet access for service that began before February 15, 2020.
- Additional wages paid to tipped employees.
The loan amount forgiven is reduced if the average number of full-time employees is reduced or any employee compensation is reduced by more than 25% as a result of COVID-19. Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. This must be done by Dec. 31, a change from the previous deadline of June 30. The Paycheck Protection Flexibility Act includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions.
Once the SBA allows us to begin accepting Loan Forgiveness Applications, we will process them and submit a recommendation within 60 days of receipt of the application. We will notify you of our recommendation to the SBA. The SBA then has 90 days to process your application and determine your forgiveness eligibility. The SBA has the right to review any loan at any time. We will notify you within 5 days if the SBA reviews your loan and requests additional information. Otherwise, we will notify you when we receive the SBA’s final determination of forgiveness.