Key Updates for PPP

To keep you up to date, we will provide chronological updates for you here.

December 27, 2020

Crest Savings Bank is currently evaluating the COVID-19 relief bill that was signed into law on December 27, 2020, which includes another round of funding for Paycheck Protection Program (PPP) loans. We are hard at work preparing to reopen our PPP application process and awaiting necessary operational guidance from the Small Business Administration (SBA).
The legislation also contains changes to the PPP forgiveness process, which may enable customers with loans of $150,000 or less to use a more streamlined process for their forgiveness application. We will update the PPP page on our website about any changes to the forgiveness process once we have received operational guidelines from the SBA.

December 11, 2020

• On December 1, the Small Business Administration (SBA) released public data about Paycheck Protection Program borrowers—specifically, the borrowers’ names, addresses, exact loan amounts and who their PPP lenders were. This was done by court order following lawsuits brought by media organizations seeking the data.
• We want you to know that we, as your bank, did not publicly disclose the data and played no role in the court decision. Our commitment to protect your privacy is paramount, and we follow all applicable laws and regulations.
• Unfortunately, we have heard that some third-party businesses are using information from the court-ordered data release to market themselves to PPP customers. Be wary of companies you have never heard of, especially those who initiate unsolicited contact. These communications may reference Crest Savings Bank’s name and may even imply that we have some kind of relationship. We advise you not to share any private information or details of your PPP loan with businesses or individuals not affiliated with Crest Savings Bank.
• You should be aware that Crest Savings Bank will communicate with you directly about your PPP loan and the forgiveness process. If you have any doubt, please contact us at ppp@crestsavings.com.
• As always, our commitment is to your business’ financial health. We will continue to support our small business customers and do our part to help spur the economic recovery and limit the economic damage from this pandemic. We thank you for your ongoing partnership.

PPP Data Release Letter     

• October 16, 2020
• The Small Business Administration released a much-anticipated, streamlined PPP Loan Forgiveness Application Form for Paycheck Protection Program loans totaling $50,000 or less. Here are the instructions supplied by the SBA:
  • “You (the Borrower) can apply for forgiveness of your Paycheck Protection Program (PPP) loan using this SBA Form 3508S only if the total PPP loan amount you received from your Lender was $50,000 or less. However, a borrower that, together with its affiliates (see 85 FR 20817 (April 15, 2020) regarding application of SBA’s affiliation rules and the exemption of otherwise qualified faith-based organizations from SBA’s affiliation rules), received PPP loans totaling $2 million or more cannot use this form. If you are not eligible to use this form, you must apply for forgiveness of your PPP loan using SBA Form 3508 or 3508EZ (or lender’s equivalent form).
    
    SBA Form 3508S requires fewer calculations and less documentation for eligible borrowers. Borrowers that use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, SBA may request information and documents to review those calculations as part of its loan review process.
    
    Complete this SBA Form 3508S in accordance with the instructions below, and submit it to your Lender.”
• According to the Interim Final Rule published 10/08/2020, When a borrower submits SBA Form 3508S or lender’s equivalent form, the lender shall:
  • Confirm receipt of the borrower certifications contained in the SBA Form 3508S or lender’s equivalent form.
  • Confirm receipt of the documentation the borrower must submit to aid in verifying payroll and nonpayroll costs, as specified in the instructions to the SBA Form 3508S or lender’s equivalent form.

“Providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower, and the borrower attests to the accuracy of its reported information and calculations on the Loan Forgiveness Application.”

Download Application Form 3508S     Download Instructions for Form 3508S

• October 1, 2020
  PPP and EIDL Loan borrowers, please be aware of various scams that have been circulating regarding SBA Loans. Fraud is attempted in many forms, and the Secret Service’s Cyber Fraud Task Force continues to release bulletins to help borrowers spot scams and fraud indicators. Some of these indicators include:
  • Fraudulent websites including fake brokers, loan agents, lenders, or other entities posing as gatekeepers to SBA loans

  • Attempts to elicit personally identifiable information (PII) or proprietary financial information

  • Misuse of SBA logo or insignia

  • Request for upfront payments

  • Offers for high-interest bridge loans

  • Fees in excess of SBA limits

    
    Here is a link to a sample of a recent fraudulent email. This email is an attempt to trick you into providing information and/or payment to scammers. If you receive an unexpected email or text message, do not reply and do not click on any links or attachments in the message.

     

    If you suspect a fraudulent correspondence, contact the company using a phone number or website you know is real. Not the information in the email or text.

    To keep up to date on the latest developments, refer to the Secret Service Website: www.secretservice.gov/coronavirus.

Paycheck Protection Program (PPP) at a glance

• What is the program?
  Paycheck Protection Program (PPP) Loans are managed by the Small Business Administration (SBA) and have limited authorized funding. The SBA has indicated that loans under the PPP will be made available on a “first come first served” basis.
• Who is eligible?
  • First Draw Loans:
    • You may be eligible to apply for a PPP Loan for the first time if you:
      • are a business, certain type of non-profit organization, housing cooperative, veterans’ organization, tribal business, self-employed individual, sole proprietor, independent contractor, or small agricultural co-operatives;
      • employ not more than 500 employees or qualify under other SBA rules;
      • have not previously received a PPP loan
    • Businesses that are not eligible to apply include:
      • entities listed in (External) 13 CFR 120.110 (note that non-profits and religious organizations are eligible);
      • entities in which certain federal officials or their spouses (refer to SBA rules), directly or indirectly, hold a controlling interest;
      • entities involved in political and lobbying activities, as well as think tank entities, public policy or political strategy advocacy businesses;
      • entities that have permanently closed;
      • entities that receive a grant under the Shuttered Venue Operator Grant program; and
      •  publicly traded companies.
  • Second Draw Loans:
    • You may be eligible to apply for a PPP Loan for the second time if you:
      • are a business, certain type of non-profit organization, housing cooperative, veterans’ organization, tribal business, self-employed individual, sole proprietor, independent contractor, or small agricultural co-operative;
      • employ not more than 300 employees;
      • have used or will use the full amount of your first PPP loan on eligible expenses; and
      • demonstrate at least a 25 percent reduction in gross receipts in the first, second, third or fourth quarter of 2020 relative to the same 2019 quarter (or under the applicable timelines for businesses that were not in operation in Q1, Q2, and Q3, and Q4 of 2019).
• How does loan forgiveness work?
  After disbursement of the loan, a borrower is eligible for loan forgiveness subject to PPP guidelines. Not more than 25% of the loan forgiveness request maybe attributable to non-payroll costs. A borrower will apply to a lender by submitting all the relevant paperwork, at which time a lender will have up to sixty days to approve or deny the application for forgiveness.
• The amount of forgiveness of the PPP loan depends on my payroll costs over an eight-week or twenty-four week period; when does that period begin?
  The eight-week or twenty-four week period begins on the date we make the disbursement of the PPP loan to you. Crest Savings Bank must make the disbursement of the loan to you no later than ten calendar days from the date of loan approval.
• What are the loan terms?
  These first-come, first-served loans are offered until March 31, 2021, or until the program runs out of funds. Loans are capped at the lesser of 250% of a borrower’s average monthly payroll costs, or $10 million. Payroll costs include, but are not limited to, salary, paid leave, medical, and healthcare. Further, salary for employees making more than $2 million is capped at that level for the calculation of loan size. All loans have a 1% interest rate and a five-year term. Loans are 100% guaranteed by the SBA. E-signatures or e-consents may be used. Loan payments may be deferred for up to 10 months.
• What can the loans be used for?
  PPP loans may be used to pay for payroll costs, mortgage interest obligations, rent obligations, utilities, and any other interest payment on debt obligations accrued before February 15, 2020. SBA requires 75% of the loan to be used for payroll costs, while the remaining 25% can be used for the other expenses. Funds used for purposes other than those outlined above must be repaid by the borrower.
• Will there be any fees?
  SBA will not collect any participation or pre-payment fees from either the borrower or the lender.
• What is the timing of disbursement?
  Timing will be dependent on your accurate completion and submission of information to Crest Savings Bank and volume of requests. Once Crest Savings Bank approves your loan, the SBA registers it and an executed promissory note is delivered to Crest Savings Bank, funds can be disbursed as fast as possible by wire transfer or ACH payment directly into your Crest Savings business deposit account.

Information from the US Department of Treasury

 The Small Business Administration (SBA), in consultation with the Department of the Treasury, intends to provide timely additional guidance to address borrower and lender questions concerning the implementation of the Paycheck Protection Program (PPP), established by section 1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). This document will be updated on a regular basis.

PPP - FAQs

Forgiveness Updates

As of July 8, 2020

•  There are many calculators available to aid in your determination of forgiveness. Here is a comprehensive excel spreadsheet provided by the Association of International Certified Professional Accountants 
  • The Loan Forgiveness Calculator uses available guidance from the Small Business Administration and Treasury, along with interpretations of that guidance (see notes throughout) to estimate the amount of a PPP loan that may be eligible for forgiveness.

As of June 16, 2020

• The Small Business Administration and Treasury Department released an interim final rule to reflect changes made by H.R. 7010, the Paycheck Protection Program Flexibility Act. https://home.treasury.gov/system/files/136/PPP-IFR--Additional-Revisions-to-First-Interim-Final-Rule.pdf
• The interim final rule codifies several changes to the program. Specifically, it:
  • Confirms that borrowers that use less than 60% of their PPP loan amount for payroll costs during the forgiveness covered period will still be eligible for partial loan forgiveness.
  • Extends the end date of the “covered period” for a PPP loan from June 30, 2020 to Dec. 31, 2020.
  • Provides a five-year maturity for loans made on or after June 5, 2020, and provides an option for loans made prior to that date to extend maturity from two years to five years at the mutual agreement of the borrower and lender.
  • Extends the loan forgiveness period from eight weeks to 24 weeks. (For loans made prior to June 5, 2020, borrowers may opt to keep the forgiveness period at eight weeks.) 
  • Clarifies that if a borrower submits its forgiveness application within 10 months of the end of the loan forgiveness period, the borrower will not have to make any payments on the loan before the date SBA remits the forgiven amount to the lender.
  • Reiterates that the last day a lender can obtain an SBA loan number for a PPP loan is June 30, 2020.

Crest Savings Bank is currently working on establishing a process of how we will accept the Forgiveness Applications and supporting documents. Please monitor this website for further details.

NOTICE: The information in this article is not definitive and requirements can change as new guidance is issued. As necessary, you should consult with your accountant, attorney or lender on questions regarding forgiveness of your PPP loan.

Loan Forgiveness Explained

Here are some important things you need to know when requesting Paycheck Protection Program loan forgiveness under the CARES Act.

Be sure to keep close track of all your eligible expenses over the 8-week or 24-week covered period after your loan has been funded. PPP loans are eligible for full or partial forgiveness if the loan proceeds are used in accordance with forgiveness rules and guidelines.

Who is responsible for documenting my eligible costs?
As the loan recipient, you are responsible for documenting your eligible expenses.

When does the  clock start?
The 8-week/24-week covered period begins on the date the lender makes the first disbursement of the PPP loan to the borrower.

Where do I submit my potentially forgivable expenses?
At the end of the 8-week/24-week covered period, you will need to provide the necessary documentation to your lender when applying for loan forgiveness. The proper documentation must be submitted within 10 months after the final day of the covered period. Applications won’t be accepted after that time. Your lender is required to respond to your request within 60 days.

What documents will be required for forgiveness?
Here are the documents you should be collecting during the eight week/twenty-four week period (subject to any additional guidance provided by the SBA):

• Verification of full-time equivalent employees and their pay rates, including:
  • Payroll reports
  • Payroll tax filings (Form 941)
  • Payroll, income and unemployment insurance filings from your state
  • Verification of any health insurance and retirement contributions
• Verification (payment receipts, account statements, canceled checks) of eligible utility, rent and mortgage interest payments.
• You will need to certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible utility, mortgage interest and rent payments.

How do the loan numbers break down?
Small businesses were eligible to borrow 2.5 times their average monthly payrolls costs, but the amount could not exceed $10 million. To maximize forgiveness, at least 60% of the loan must be used for payroll costs, plus health and retirement benefit costs. If the number is below 60%, the amount of forgiveness will be reduced. Up to 40% can be spent on approved expenses such as utilities, mortgage interest or rent. Any amount above this percentage will not count toward forgiveness. Money used for other purposes will not qualify for forgiveness.

What eligible costs should I be tracking?

• Payroll costs: These costs include:
  • Salary and wages (not to exceed $100,000 for any individual employee as prorated during the covered period), commissions and other compensation.
  • Cash tips
  • Retirement contributions
  • Parental, family, medical or sick leave
  • Payments for vacation
  • Group health care coverage, including insurance premiums
  • Separation or dismissal allowance
  • State and local payroll taxes
• Utilities: You can include the costs of the following services if established before Feb. 15, 2020: Electricity, water, gas, internet, telephone, and fuel costs for business vehicles.
• Mortgage interest: If mortgage was signed prior to Feb. 15, 2020.
• Rent: If leasing agreement was in effect prior to Feb. 15, 2020.

How should I record my expenses?
You should keep careful records for all qualifying forgiveness expenses. While some experts advise converting all records to digital files, you should ask your lender how it prefers to receive documentation and plan accordingly.

What are the top considerations for PPP loan forgiveness?
Employee retention and salaries or wages paid to employees are the primary considerations. It is important that you maintain your staff headcount and compensation levels to maximize loan forgiveness.

Do employees who refuse to return to work count against my numbers?
You may be allowed to exclude an employee who was furloughed or laid off if they do not wish to be rehired when calculating loan forgiveness. Should this happen, be sure to prove you have made a written offer to rehire the employee at the same wage or salary they were earning and be sure to document the denial of the offer. A FAQ released by the Treasury Department warns employees that if they reject a
re-employment offer, they may forfeit eligibility for continued unemployment compensation.

What happens if I’m not OK’d for PPP loan forgiveness?
If you do not qualify for full or partial forgiveness based on the documentation you provide, the amount of your outstanding PPP loan balance will need to be repaid over a 2-year period/5-year period at a 1% interest rate from the time the loan was funded. No payment of principal, interest and/or fees are due on this loan until the date, whichever is earlier, (i) on which the amount of forgiveness is determined under the CARES Act (as defined below) or (ii) ten (10) months from the end of the Covered Period if Borrower fails to apply for forgiveness within ten (10) months of the final day of the Covered Period. Interest will continue to accrue during the deferment period.

What about forgiveness for sole proprietors and independent contractors?
For your loan to be forgiven, you must have spent at least 60% of the funds on payroll costs, which include an amount for owner compensation based upon 2019 net earnings. The remaining amount, which cannot exceed 40% of the loan, must be spent on interest on a mortgage, a loan secured by personal property used in the business, rent, and utilities. To the extent that these expenses are incurred in connection with a home office, only the tax-deductible portion will apply. These expenses must have occurred within the 8 weeks after the loan is funded.

Forgiveness Phase Application

Prepare

To qualify for loan forgiveness, the funds must be used for eligible costs incurred or paid during a 24-week (168 day) covered period ending December 31, 2020, at the latest; if you received your loan before June 5, 2020, then you can choose an 8-week (56 day) or 24-week (168 day) covered period.

You will want to use the funds for eligible expenses, ensuring that you:

• Spend at least 60% of the funds on payroll;
• Use the remainder of the funds on eligible expenses (examples include mortgage interest, rent, lease payments, and utilities based on current SBA criteria for PPP loan forgiveness);
• Collect the required documents you will need to complete the PPP loan forgiveness application.

 There are many calculators available to aid in your determination of forgiveness. Here is a comprehensive excel spreadsheet provided by the Association of International Certified Professional Accountants 

• The Loan Forgiveness Calculator uses available guidance from the Small Business Administration and Treasury, along with interpretations of that guidance (see notes throughout) to estimate the amount of a PPP loan that may be eligible for forgiveness.

Important Note: Your covered period begins on the day your PPP loan was funded. If you have a biweekly (or more frequent) payroll cycle, you may choose to start your covered period on the first day of your next payroll cycle, if that is preferred

Apply

You have time — there is no immediate need to apply for PPP loan forgiveness. You will want to apply once you have all the required documents to substantiate the use of your PPP loan. Consider discussing with your financial and/or tax advisor before applying for forgiveness.

• Complete either the regular Form 3508 or Form 3508EZ.
  • The form you use will depend on your circumstances. You should use Form 3508EZ if you meet these conditions:
    • The Borrower is a self-employed individual, independent contractor, or sole proprietor 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 (SBA Form 2483);   OR
    • The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);   AND
    • The Borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. Also ignore reductions in an employee’s hours that the Borrower offered to restore and the employee refused. See 85 FR 33004, 33007 (June 1, 2020) for more details;  OR
    • The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);  AND
    • The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.
  • If you do not meet the above requirements, you should use the regular Form 3508.
  • Documents to be filed with the Regular Form 3508:
    • The PPP loan forgiveness application includes the PPP loan forgiveness calculation form and Schedule A, which you will need to complete. You’ll also be required to submit documentation, including:
      • Payroll documentation verifying eligible payments, consisting of the following:
        • Bank account statements or third-party payroll service provider reports
        • Tax forms including IRS Payroll tax filings (typically Form 941) and state quarterly business and individual wage reporting and unemployment insurance tax filings
        • Payment receipts, cancelled checks, or account statements documenting employer benefits contributions
        • FTE documentation showing the number of FTE employees for the FTE reduction reference period selected.
      • Non-payroll documentation verifying the existence of obligations/services prior to February 15, 2020, and eligible payments, consisting of the following:
        • Business mortgage interest payments: account statements or amortization schedules and receipts or cancelled checks
        • Business rent or lease payments: account statements or current lease and receipts or cancelled checks
        • Business utility payments: account statements or invoices and receipts or cancelled checks
  • Documents to be filed with Form 3508EZ:
    • The documents required with the 3508EZ are the same as listed above except for the following differences:
      • Form 3508EZ does not have a Schedule A
      • The FTE report is not required
• You have until the maturity date of the loan to apply for loan forgiveness, but if you submit your loan forgiveness application within 10 months of the covered period, you will not have to make any payments of principal or interest on your loan before the date the SBA makes a final decision on the loan forgiveness amount.
• If you retained your Secure Email Username and Password from the Origination portion of the process, please send an email (securely) to PPP@Crestsavings.com with the completed application and supporting documentation.
• If you did not retain or have forgotten your Secure Email Username and Password from the Origination portion of the process, please send an email to PPP@Crestsavings.com to request a returned Secure Email that you can then forward the completed application and supporting documentation.

Receive confirmation

After you have submitted your PPP loan forgiveness application, we will review it and work with you to ensure everything is complete. We have up to 60 days to submit the forgiveness amount to SBA

• Once we have verified your application and documentation are complete, we’ll confirm with you the PPP loan forgiveness amount we will be submitting to the SBA.
• SBA will then have up to 90 days to review and pay the forgiven amount to Crest Savings Bank.
• If your loan is not completely forgiven, you will receive a statement with the amount and date of your first payment for the unforgiven portion. Your PPP loan will operate just like a traditional term loan with monthly payments. 

Additional Resources

The following resources are not facilitated by Crest Savings Bank. They are stand-along programs. Applications are submitted via the sponsored agency. No bank intervention is required.

• SBA
  Economic Injury Disaster Relief (EIDL). Working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.

Go to sba.gov

SBA PPP Page

• New Jersey Economic Development Authority
  NJEDA announces expansion of grant program for businesses impacted by COVID-19. Funding available for home-based businesses and sole proprietorships, some funds reserved for businesses in low-income communities

View Release  Go to NJEDA.com