As we continue to reopen our banking offices, we encourage you to utilize our drive up or make an appointment for in-lobby service by connecting with your banker or contact us at 844-266-2548.

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As we continue to reopen our banking offices, we encourage you to utilize our drive up or make an appointment for in-lobby service by connecting with your banker or contact us at 844-266-2548.

Explore our contactless banking solutions here.

PPP Loan Forgiveness Application

Frequently Asked Questions as of June 23, 2020

The responses in this FAQ are valid for the “As of” date posted above.  The Administrators of the program (US Small Business Administration and the US Department of the Treasury) have and will continue to release updated guidance.  We will share updated guidance as it becomes available and update this FAQ based on the guidance and instructions provided by the Administrators.

Where can I find my SBA PPP loan number?

  • You can find your SBA PPP number at the top left side of the first page of your note.

What is the PPP Loan Disbursement Date?

  • The PPP Loan Disbursement Date is that date on which the proceeds of the PPP loan were desposited to your account.

When must a borrower apply for loan forgiveness or start making payments on a loan?

  • Payments (principal and interest) on all PPP loans are deferred until the date that the SBA remits the forgiveness amount to the lender. However, each borrower must apply for loan forgiveness within 10 months after the last day of the covered period of the PPP loan is no longer deferred, and the borrower must being paying principal and interest. 

What is my Lender PPP Loan number on the paper application?

  • This field should be left blank.

Do I have to make payments on my PPP loan?

  • Payments (principal and interest) on all PPP loans are deferred until the date that SBA remits the forgiveness amount to the lender. However, each borrower must apply for loan forgiveness within 10 months after the last day of the covered period of the PPP loan is no longer deferred, and the borrower must begin paying principal and interest.

Where can I find guidance, instructions and answers to questions on the Paycheck Protection Program (PPP) and, specifically, the forgiveness process?

What is the Covered Period and when does the Covered Period start and end?

The Covered Period is the time-frame in which the Borrower must use the proceeds of the PPP loan for eligible purposes.  The Covered Period starts either:

  • the date of disbursement of the borrower’s PPP loan proceeds from the Lender (i.e., the start of the covered period); or
  • ​the first day of the first payroll cycle in the covered period (the “alternative payroll covered period”). 

​The Covered Period ends 24 weeks from the start of the Covered Period.  Borrowers approved before June 5, 2020 may elect to use an 8 week Covered Period.

When must a borrower apply for loan forgiveness or start making payments on a loan?

  • A borrower must apply for loan forgiveness within 10 months after the last day of the covered period of the PPP loan is no longer deferred, an the borrower must begin paying principal and interest.

Can I submit my application for forgiveness before the end of my Covered Period?

  • A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan, including before the end of the covered period if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness. If the borrower applies for forgiveness before the end of the covered period and has reduced any employee's salaries or wages in excess of 25 percent (and does qualify under safe harbor for FTE or wages), the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period.

What is the general process to obtain loan forgiveness?

  • To receive loan forgiveness, a borrower must complete and submit the Loan Forgiveness Application (SBA Form 3508, 3508EZ, or lender equivalent) to its lender.  ConnectOne Bank will be using a digital equivalent of each SBA form.  ConnectOne Bank will send borrowers an invitation and instructions for access to the ConnectOne Bank Forgiveness Portal.  It is strongly recommended that each borrower review the instructions and complete the appropriate form before logging in to the ConnectOne Bank Forgiveness Portal.  This will facilitate the transfer of information to the portal and will reasonably ensure compliance with the SBA forgiveness application.  All required supporting documentation, which is itemized in the SBA Form instructions, must be uploaded in the portal.

When must payroll costs be incurred and/or paid to be eligible for forgiveness?

In general, payroll costs paid or incurred during the borrowers covered period (8 to 24 weeks after disbursement) are eligible for forgiveness. Borrowers may seek forgiveness for payroll costs for the covered period beginning on either:

  • the date of disbursement of the borrower’s PPP loan proceeds from the Lender (i.e., the start of the covered period); or
  • ​the first day of the first payroll cycle in the covered period (the “alternative payroll covered period”).

Payroll costs are considered paid on the day that paychecks are distributed, or the borrower originates an ACH credit transaction. Payroll costs are generally incurred on the day the employee’s pay is earned (i.e., on the day the employee worked).  Payroll costs incurred during the borrower’s last pay period of the covered period or the alternative payroll covered period are eligible for forgiveness if paid on or before the next regular payroll date. For employees who are not performing work but are still on the borrower’s payroll, payroll costs are incurred based on the schedule established by the borrower (typically, each day that the employee would have performed work).

When must nonpayroll costs be incurred and/or paid to be eligible for forgiveness?

A nonpayroll cost is eligible for forgiveness if it was:

  • paid during the covered period; or
  • incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period.

Example: A borrower’s covered period begins on June 1 and ends on July 26. The borrower pays its May and June electricity bill during the covered period and pays its July electricity bill on August 10, which is the next regular billing date. The borrower may seek loan forgiveness for its May and June electricity bills, because they were paid during the covered period. In addition, the borrower may seek loan forgiveness for the portion of its July electricity bill through July 26 (the end of the covered period), because it was incurred during the covered period and paid on the next regular billing date.

Are there caps on the amount of loan forgiveness available for owner-employees and self employed individuals' own payroll compensation?

  • Yes. For borrowers that received a PPP loan before June 5, 2020 and elect to use an eight-week covered period, the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation is capped at eight weeks’ worth (8/52) of 2019 compensation (i.e., approximately 15.38 percent of 2019 compensation) or $15,385 per individual, whichever is less, in total across all businesses.

    For all other borrowers (that received a PPP loan after June 5, 2020), the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation is capped at 2.5 months’ worth (2.5/12) of 2019 compensation (i.e., approximately 20.83 percent of 2019 compensation) or $20,833 per individual, whichever is less, in total across all businesses.  Furthermore, C-corporation owner-employees are capped by the amount of their 2019 employee cash compensation and employer retirement and health insurance contributions made on their behalf.  S-corporation owner-employees are capped by the amount of their 2019 employee cash compensation and employer General partners are capped by the amount of their 2019 net earnings from self-employment (reduced by claimed section 179 expense deduction, unreimbursed partnership expenses, and depletion from oil and gas properties) multiplied by 0.9235.

    For self-employed individuals, including Schedule C or F filers and general partners, retirement and health insurance contributions are included in their net self-employment income and therefore cannot be separately added to their payroll calculation.

    The Administrator, in consultation with the Secretary, determined that it is appropriate to limit the forgiveness of owner compensation to either eight weeks’ worth (8/52) of their 2019 compensation (up to $15,385) for an eight-week covered period or 2.5 months’ worth (2.5/12) of their 2019 compensation (up to $20,833) for a 24-week covered period per owner in total across all businesses.  This approach is consistent with the structure of the CARES Act and its overarching focus on keeping workers paid and will prevent windfalls that Congress did not intend. Specifically, Congress determined that the maximum loan amount is generally based on 2.5 months of a borrower’s average monthly payroll costs during the one-year period preceding the loan.

    For example, a borrower with one other employee would receive a maximum loan amount equal to 5 months of payroll (2.5 months of payroll for the owner plus 2.5 months of payroll for the employee). If the owner laid off the employee and availed itself of the exemption in the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) related to reductions in business activity described in e. below, the owner could treat the entire amount of the PPP loan as payroll, with the entire loan being forgiven. This would not only result in a windfall for the owner, by providing the owner with five months of payroll instead of 2.5 months, but also defeat the purpose of the CARES Act of protecting the paycheck of the employee. For owners with no employees, this limitation will have no effect, because the maximum loan amount for such borrowers already includes only 2.5 months of their payroll.

Are there exemptions or Safe Harbors from forgiveness reduction due to FTE?

  • Yes. Borrowers are eligible for loan forgiveness for certain expenditures during the Covered Period or the Alternative Payroll Covered Period. However, the actual loan forgiveness amount that the Borrower will receive may be less, depending on whether the Borrower’s average weekly number of FTE employees during the Covered Period or the Alternative Payroll Covered Period was less than during the Borrower’s chosen reference period (see Instructions to PPP Schedule A, Line 11). The Borrower is exempt from such a reduction if any exemption or either of the FTE Reduction Safe Harbors applies:

 

  • FTE Reduction Exceptions:
    1. Any positions for which the Borrower made a good-faith, written offer to rehire an individual who was an employee on February 15, 2020 and the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020;

    2. Any positions for which the Borrower made a good-faith, written offer to restore any reduction in hours, at the same salary or wages, during the Covered Period of the Alternative Covered Period and the employee rejected the offer, and

    3. Any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for causer, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours.
     
  • FTE Reduction Safe Harbors:
    Two separate safe harbors exempt certain borrowers from any loan forgiveness reduction based on a reduction in FTE employee levels: 
    1. The Borrower is exempt from the reduction in loan forgiveness based on a reduction in FTE employees if the Borrower, in good faith, is able to document that it was unable to operate between February 15, 2020, and the end of 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 for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

    2. The Borrower is exempt from the reduction in loan forgiveness based on a reduction in FTE employees described above if both of the following conditions are met: (a) the Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and (b) the Borrower then restored its FTE employee levels by not later than December 31, 2020 to its FTE employee levels in the Borrower’s pay period that included February 15, 2020.

What is the "EIDL Advance Amount"?

  • The EIDL Advance Amount is the non-grant portion of an SBA Economic Injury Disaster Loan (EIDL) loan received between January 31, 2020 and April 3, 2020, that you are refinancing with your PPP proceeds.

What must [and must not] Paycheck Protection Program (PPP) loan proceeds must be used to refinance U.S. Small Business Administration (SBA) Economic Injury Disaster Loans (EIDL)?


1. An EIDL loan is not required to be refinanced with a PPP loan when:

  • The PPP Borrower received funds from an EIDL loan from January 31, 2020 through April 3, 2020; and
  • The PPP Borrower used the EIDL loan for purposes other than payroll costs.​

2. A PPP loan must be used to refinance the full amount of the EIDL loan when:

  • The PPP Borrower received funds from the EIDL loan from January 31, 2020 through April 3, 2020; and
  • The PPP Borrower used the EIDL loan funds to pay payroll costs.

3. An EIDL loan may not be refinanced with PPP loan when the PPP borrower received the EIDL loan before January 31, 2020 or after April 3, 2020.

Note: The amount of EIDL loan to be refinanced does not include the amount of any EIDL "advance" (also referred to as anm EIDL "grant") received by the PPP Borrower, because the EIDL advance does not need to be repaid.

How can we help you?

Contact a ConnectOne Bank representative to learn more.

Disclaimer: ​The Borrower is ultimately responsible for the determination of eligibility for a loan and for the forgiveness such loan under the Paycheck Protection Program.  Borrowers are reminded to carefully consider all required representations and certifications.  The Administrator (the US Small Business Administration (SBA) and the U.S. Department of the Treasury) allows lenders to rely on certifications of the borrower and to rely on specified documents provided by the borrower to determine qualifying loan amount and eligibility for loan forgiveness.  Information contained herein does not constitute legal advice or a determination of eligibility.  If you have specific questions regarding a particular circumstance, we urge you to consult competent legal counsel.

The Paycheck Protection Program is governed by certain sections of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) as clarified by interim final rules of April 3, 2020, April 14, 2020, April 24, 2020, April 28, 2020, April 30, 2020, May 5, 2020, May 8, 2020, May 13, 2020, May 14, 2020, May 18, 2020, May 20, 2020, and May 22, 2020, and by through FAQ’s published by the Administrator.  The conditions and parameters for loan forgiveness are subject to change based on rules and guidance provided by the Administrator.  For more information, please visit the U.S. Department of Treasury’s Paycheck Protection Loan website at https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses or the SBA’s Paycheck Protection Program website.

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