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  • Forgiveness Webinar For Borrowers With PPP Loans $150k or Less
    • Webinar Presentation Slides
    • Our Presenters

Forgiveness Webinar For Borrowers With PPP Loans $150k or Less

Webinar Presentation Slides

Forgiveness Webinar for Borrowers with PPP Loans of $150K or Less

Harold Lichtenstein, NEWITY's SVP of Credit & Underwriting, walks through the submission of Form 3508S via the NEWITY Smart Portal.

Webinar Presentation Slides

Our Presenters

Harold Lichtenstein

SVP of Credit & Underwriting

Bringing 30+ years of experience in finance, accounting and financial analysis and serves as SVP, Credit & Underwriting at NEWITY, focused on daily loan management and verification operations.

Adam Zaabel

EVP, Head of Credit & Underwriting

Bringing 7+ years of experience in direct lending, lender services, and financial due diligence, Adam Zaabel leads Origination and Forgiveness Process Management & Financial Analysis.

Webinar Questions & Answers

To properly calculate payroll costs, you must first determine the following:

  • Was the loan amount calculate based on 2019 earnings or 2020 earnings? Payroll cost would be calculated based on the same year used to calculate the loan amount.
  • Was the loan amount calculated based on the Net or Gross method? If your loan was funded prior to March 3, 2021, the amount would have been calculated using the Net method (based on Line 31 of Schedule C).  If funded March 3 or later, it may have been funded using either the Net or Gross method (based on Line 7 of Schedule C). You would calculate payroll costs in the same manner as was used to calculate the loan amount.

The calculation would be as follows:

Line 31 (if Net method) or Line 7 (if Gross method) of 2019 or 2020* Form 1040 Schedule C (capped at $100,000) x Lesser of (2.5/12 or Number of Weeks in Covered Period/52)

If you elect a covered period of 11 weeks or more, your payroll costs would equal the original loan amount.

* Use W-2 from year used to calculate original loan amount

Yes.  The per employee cap is calculated as follows:

$100,000 x (Number of Weeks in Covered Period/52)

Yes.  The cap applied to employee-owners is calculated based on entity type as follows:

  • Owner of 5% or more of C-Corporation or S-Corporation:
    Cap = 2019 or 2020* W-2 Box 5 (capped at $100,000) x Lesser of (2.5/12 or Number of Weeks in Covered Period/12)

* Use W-2 from year used to calculate original loan amount

  • Partner of a Partnership:
    Cap = 2019 or 2020* Form 1065 K-1 Line 14A x .9235 (capped at $100,000) x Lesser of (2.5/12 or Number of Weeks in Covered Period/12)

* Use W-2 from year used to calculate original loan amount

  • Independent Contractor, Self-Employed Individual or Sole Proprietor with no employees:
    The calculation of the cap would be identical to the calculation of the payroll amount noted above.

You should count yourself as an employee.  Therefore, input 1 for both the number of employees at time of loan application and number of employees at time of forgiveness application.

Yes.  You will submit two separate forgiveness applications, one for each loan, and each application will be completed on Form 3508S.  Keep in mind that our Forgiveness Portal will automatically prepare your application on the correct form based on your loan amount and/or your answers to specific questions.

No.  You may only apply for forgiveness on Form 3508S if your loan amount does not exceed $150,000.

No.  Submitting the application via the Forgiveness Portal sends the application to our NEWITY review team.  Our team will review your application and reach out to you if additional information or documentation is needed.  After we complete our review, you will be sent a request (via email) to complete the e-sign of your final forgiveness application.  After you’ve completed the e-sign, your application will be automatically submitted directly to the SBA.

Upon your completion of the e-sign your forgiveness application is automatically submitted directly to the SBA.

The e-sign request is sent via DocuSign to the email address of the Principal that is listed first in the portal.

The loan forgiveness application can be signed by any authorized representative of the borrower.

Unless you are requested to provide documentation that your business experienced the required revenue decline of 25% or more, no documentation will be submitted with your forgiveness application.  However, you should retain documentation in case ultimately requested by the SBA as part of a formal review.

Per instructions to Form 3508S, borrowers with loan amounts of $150,000 or less must retain all employment records/payroll documentation for 4 years and all other documentation for 3 years after the date the loan forgiveness application is submitted to the lender.

Per instructions to Form 3508 and Form 3508EZ, borrowers with loan amounts in excess of $150,000 must retain all documentation for 6 years after the date the loan is forgiven or repaid in full.

The covered period is the period during which you must spend your PPP loan funds on eligible expenses so your loan, or a portion thereof, may be forgiven.

You have the option to choose a covered period of any number of weeks from 8 to 24. Assuming your goal is to achieve full forgiveness, the length of the covered period you choose should be at least as long as the amount of time it took you to spend all PPP loan funds on eligible expenses.

If uncertain, the safest approach would be to select a covered period of 24 weeks.

No.  The first day of your Covered Period must be the date on which you received your PPP loan proceeds.

As noted above, the primary consideration is choosing your covered period should be to ensure the length of the Covered Period is sufficient to include all expenditures required to support the amount of forgiveness you are requesting.  There are a few additional items to be considered when electing your Covered Period as follows:

  • Your covered period for your 1st and 2nd draw loans cannot overlap.
  • A Self-Employed Individual, Independent Contractor, or Sole Proprietor with no employees may not receive unemployment benefits during his or her covered period.

A Self-Employed Individual, Independent Contractor, or Sole Proprietor with no employees must elect a covered period of at least 11 weeks if applying for full forgiveness on payroll alone.

Technically, the deadline for submitting a loan forgiveness application is the maturity date of your PPP loan.  If you have not yet applied for forgiveness before your deferral period end date, you will be required to begin making principal and interest payments on your PPP loan.  Your deferral period end date is 10 months after the maximum covered period of 24 weeks.

For example, if you received your PPP loan funds on February 15, 2021, your covered period would begin on that date, the last day of the maximum 24 week Covered Period would be August 1, 2021. Your deferral period end date would be 10 months later on June 1, 2022.  If your forgiveness application is submitted to the SBA by June 1, 2022, you will not be required to make any principal or interest payments until the SBA issues their final decision and then, only if SBA decision is for less than full forgiveness.

No, both the application deadline and deferral period end date are determined as noted on the previous question no matter the loan amount or type of entity.

Our portal saves all information as soon as it is entered.  You may leave and come back and pick up where you left off at any time.

Yes.  Total number of employees at time of loan and forgiveness applications represents total head count of all employees at those times.  You should count both full-time and part-time employees.

You should input combined total of full-time and part-time employees.

Enter total number of employees on the date you submit the forgiveness application.

For borrowers with loan amounts of $50,000 or less, a change in headcount or FTE’s will not have any impact on forgiveness.  For borrowers with loan amounts above $50,000 a change in the number of employees will not directly impact the amount of forgiveness, but a reduction in FTE’s may reduce the amount of forgiveness.  The amount of the reduction, if any, would be based on circumstances specific to each borrower.  A member of our review team would be happy to help with the calculation.

Per SBA instructions, you should enter the same address as on your Loan Application Form, unless there has been a change in address since that time.

Enter the NAICS that was included on your PPP loan application.

In addition to W-2 wages paid to employees and certain forms of owner compensation, payroll costs include the following:

  • Healthcare Benefits – Payments by employers for employee group Medical, Dental, Vision, Disability and Life Insurance. Includes employer contributions to self-insured, employer-sponsored group health plans.  Eligible amount is net of any amounts paid by employees.
  • Retirement Benefits – Contributions by employers to employee retirement plans, excluding any pre-tax or after-tax contributions by employees.
  • State/Local Payroll Taxes – State and local taxes paid by the borrower and assessed on employee compensation (e.g., state unemployment insurance tax), excluding any taxes withheld from employee earnings.

No.  Only wages paid by the business to its W-2 employees are eligible.

The following nonpayroll costs are eligible for forgiveness:

  • Mortgage Interest payments (excluding any prepayments) on any business mortgage obligation on real or personal property incurred before February 15, 2020.
  • Business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020.
  • Utility payments for electricity, gas, water, telephone, transportation, or internet access for which service began prior to February 15, 2020.
  • Covered Operations Expenditures – Payments for any business software or cloud computing service that facilitates business operations, product or service delivery, processing, payment or tracking of payroll expenses, human resources, sales and billing functions, or accounting of tracking of supplies, inventory, records, and expenses.
  • Covered Property Damage Costs – Costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation.
  • Covered Supplier Costs – Expenditures made to a supplier of goods for the supply of goods that are essential to the operation of the Borrower at the time at which the expenditure is made, and made pursuant to a contract or purchase order in effect prior to the beginning of the Covered Period. For perishable goods, the contract or purchase order may have been in effect before or at any time during the Covered Period.
  • Covered Worker Protection Expenditures – Operating or capital expenditures that facilitate the adaptation of the business activities of an entity to comply with mandated COVID-19 related requirements.

Documentation proving the business was forced to shut down or was otherwise unable to operate at full capacity due to COVID-19 is NOT required to be submitted with your forgiveness application.  However, such documentation should be maintained in case requested by the SBA in conjunction with a review of your loan and forgiveness application.

Instructions to Form 3508 and Form 3508EZ note only that “this documentation must include copies of the applicable requirements for each borrower location and relevant borrower financial records.”  In practice, the SBA has asked for newspaper or similar articles or other communications evidencing that the business was forced to shut down or operate at less than full capacity at some point between February 15, 2020 and the end of the covered period due to compliance with requirements established by the Secretary of Health and Human Services, Director of the Centers for Disease Control and Prevention, Occupational Safety and Health Administration, or other governmental entity, related to maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

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