Paycheck Protection Program

On March 27, 2020, the CARES Act authorized the U.S. Department of the Treasury to issue regulations for the Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA). As an SBA lender, Community National Bank is authorized to originate loans and establish terms and conditions between April, 4, 2020, through August 8, 2020. If you have any questions about this program or are interested in applying, please contact any CNB Business Lender.

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If your business received a Paycheck Protection Program (PPP) Loan in the amount of $150,000.00 or more you may get solicitations from companies offering services to help complete the PPP Loan Forgiveness documentation or with the required calculations. These solicitations may even make claims that the lending institution is unwilling or unable to help with PPP Loan Forgiveness, which in most cases is not true.

In August, the U.S. Small Business Administration published a list of all of the companies that received loans valued at $150,000.00 or more. The list includes the name and mailing address of each company and the financial institution that made the loan. Companies may use this list to drum up business from PPP loan participants. Fraudsters may also try to use this list to lure unsuspecting companies into fraudulent schemes.

If you are tempted to use an offer, first, talk to your lender to find out if they can help with the PPP Forgiveness process. Always take extra precautions when you are looking to purchase services from a new company, especially when large amounts of sensitive information will be shared and if the company is unfamiliar and is located far away. Remember, offers that are “too good to be true” are typically not true.  

On Friday, May 15, 2020, the Small Business Administration (SBA), in consultation with the Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application.

A PPP loan borrower must request forgiveness of PPP loan proceeds by filing one of the appropriate Paycheck Program Loan Forgiveness Application, form 3508, 3508EZ or 3508S. The application has four components:

  • The PPP Loan Forgiveness Calculation Form
  • PPP Schedule A 
  • The PPP Schedule A Worksheet
  • PPP Borrower Demographic Form.

SBA Form 3508S PPP Forgiveness Application/Instructions  $150,000.00 or less. Revised 5/24/2021

SBA Form 3508EZ PPP Forgiveness Application/Instructions Revised 5/24/2021

SBA Form 3508 PPP Forgiveness Application/Instructions Revised 5/24/2021

Community National Bank PPP Forgiveness Checklist

Important Notes and Steps

  • The SBA loan number can be found on the first page of the Note. Please call your lender to confirm the actual funding date.
  • The option for borrowers to use an "alternative payroll covered period" applies only to payroll costs to align with borrowers' regular payroll cycles and not the eligible non-payroll costs
  • If you received an Economic Injury Disaster Loan (EIDL) Advance (the grant portion of EIDL) this information will be inserted in the top section of the application. The amount of the EIDL Advance will reduce Line 11 Forgiveness Amount, as noted.

New Legislation on PPP Restrictions

On June 5, President Donald Trump signed legislation to address restrictions on the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).

While further guidance and clarification from the SBA and Treasury is likely, here is a summary of the provisions that appear in the Paycheck Protection Program Flexibility Act.

Specifically, the law:

Extends the covered period during which the loan may be used for forgivable expenses from eight weeks following disbursement of the loan to 24 weeks from loan disbursement or Dec. 31, 2020, whichever is earlier. Borrowers who received loans before June 5 may elect to continue using the
eight-week covered period.

Lowers the amount that must be spent on payroll costs from 75 percent to 60 percent. SBA and Treasury issued a statement that the new 60 percent threshold is not a cliff, meaning that if a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period,
the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.

Extends the period in which employers may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount of a PPP loan to Dec. 31, 2020. However, the forgivable amount will be determined without regard to a reduction in the number of employees
(compared to Feb. 15, 2020) if the recipient is (1) unable to rehire former employees and is unable to hire similarly qualified employees by Dec. 31, or (2) unable by Dec. 31 to return to the same level of business activity that existed before Feb. 15, 2020, due to compliance with federal requirements or
guidance related to COVID-19.

Replaces the six-month deferral of payments due under PPP loans with deferral until the date SBA pays the lender the amount of loan forgiveness. If a borrower fails to apply for loan forgiveness within 10 months after the last day of the covered period for forgiveness, the borrower must begin to make
payments of principal, interest, and fees on its PPP loan.

Establishes a minimum maturity of five years for new PPP loans as opposed to the current two-year maturity date. The five-year maturity takes effect on the date of enactment and will apply to any PPP loan made on or after June 5. Lenders and borrowers, however, may mutually agree to modify the
maturity terms of prior-disbursed PPP loans.

Eliminates a provision that makes PPP loan recipients who have PPP debt forgiven ineligible to defer payroll tax payments. 

This law will likely be subject to additional guidance by SBA and Treasury. Small-business borrowers should have a firm understanding of the provisions above and any related guidance to ensure they meet the criteria for loan forgiveness.

​If you received your PPP loan from Community National Bank, please submit your completed Loan Forgiveness Application and supporting documentation as soon as possible after your elected coverage period. We want to ensure enough time for our Lenders to review, follow up with you and promptly hit SBA forgiveness deadlines. Your Lender will not be verifying your calculation of loan forgiveness; however they would be happy to assist you in understanding SBA's requirements and will be ensuring that the application is complete and submitted properly. Please use our PPP Forgiveness Checklist to confirm that you have all of the necessary documents included with your application.

Your original PPP loan documents may have shown a payment due date of November or December 2020.  This payment due date was based on the original program guidelines, and those guidelines were later changed by the PPP Flexibility Act of 2020.  The new guidelines say that you will not need to make a payment on any outstanding balances until the earlier of 10 months after the end of your covered period or until receipt of loan forgiveness.

If you do not submit an application for forgiveness to your lender, principal and interest payments will begin 10 months after the end of your covered period (either 8 weeks or 24 weeks).

If you apply for forgiveness and the loan is fully forgiven, no further payments will be due.

If you apply for forgiveness and the loan is partially forgiven, payments on the remaining balance will begin the month following the forgiveness payment.

If you have questions regarding your first payment due date or any other related questions regarding your PPP loan and loan forgiveness, please contact your lender.