We're committed to helping you and your members get through the Payroll Protection Program Loan Forgiveness process as smoothly as possible. We learned through the initial loan application process that your members value and appreciate honest and clear communication. In a nutshell, they want to know what you know, when you know it. As we await final instruction from the federal government as it pertains to process, procedures, and automatic forgiveness we've created this page to help formulate your Forgiveness Application strategy. 

In addition to the resources posted below, we've created communication resources that you can use to help inform your PPP borrowers of important timelines, required documentation, and more. You can use these on your credit union's website, social media accounts, or emails. 

The Benefits of Waiting: How Choosing to Use the 24- Week Covered Period Can Help Maximize Forgiveness

With the potential of a loan payment looming overhead, it can be tempting to rush into the PPP loan forgiveness process BUT choosing the best covered period could actually help you get more if not all of your loan forgiven.  Here are some of the advantages of utilizing the 24-week covered period:

  1. As a proprietor with no employees or an independent contractor filing a 1040 Schedule C, the maximum loan amount that can be forgiven using an 8-week covered period is $15,385 which may be less than your PPP loan. Choosing a 24-week covered period will allow for a maximum forgivable amount of $20,833.
  2. If you had reductions in employee pay or wages, you will be penalized in the forgivable amount of your loan if the wages and/or the number of employees was not restored by the time you apply for forgiveness. By using a 24week covered period you are provided more time to restore these employees before applying for forgiveness.
  3. The process is always changing!! As you may remember from your application process, the PPP program has been a moving target since the beginning with rules and guidance are changing, what seems like weekly. Waiting to apply could potentially save you time and effort as new rules come into place for how the loans are forgiven.
  4. You actually have 10-months to apply for forgiveness after the last date of your chosen covered period! No need to rush.
  5. By choosing the 24-week covered period, you have more time to speak with advisors (CPA, payroll company, etc.) who can help you gather the appropriate documentation for forgiveness or even prepare you a professional payroll report which will help expedite your process when you are ready to apply for your loan forgiveness. 

Partner Resources

Member Communications

Applications 

Other Resources

DBLC Lender Dashboard 

DBLC Borrower Dashboard 

Frequently Asked Questions

Payroll requirement

at least 60% of PPP must have been spent on payroll

Non-payroll expenses

no more than 40% includes:

  • mortgage interest
  • rent
  • utilities

Time period to use funds

8 or 24 weeks

  • Borrowers who had a disbursement date of 6/5 or after can only have a 24 week covered period. Those who received their loan disbursement prior to 6/5 can choose an 8 or 24 week covered period. 

Rehire requirements

Workers must be rehired by December 31, 2020
Exceptions:
    • Unable to rehire individual who was an employee on or before 2/15/2020
    • Able to demonstrate the inability to hire similarly qualified employees on or before 12/31/2020
    • Able to demonstrate the inability to return to the same level of business activity as before 2/15/2020

By choosing a 24-week covered period, a person who is an independent contractor or sole proprietor with no employees and files a Schedule C 1040 can have the entire loan forgiven as a payroll expense. By choosing an 8-week covered period, you can only have a maximum forgivable amount of $15,385.

Yes. The SBA has stated that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application.

Any PPP loan money used to pay interest on a mortgage or on a property used for business purposes is eligible and qualifies for forgiveness.

Acceptable examples include interest on a loan to finance the real estate for your primary place of business; auto loan interest on a car you own to make business deliveries; or, mortgage interest on a warehouse you won to store inventory. The Mortgage or loan must have been in place prior to 2/15/2020.

PPP non-payroll uses can include rent or leases for real estate used by the business. The lease must have been in place prior to 2/2020. Note: If you moved your business after 2/2020 and obtained a new lease on the property or leased a new piece of equipment after 2/2020, you cannot use your PPP funds to pay that lease.

No, prepayment of principal is not allowed and is not eligible for forgiveness.

For loan eligibility, the CARES Act defines the term employee as “individuals employed on a full-time, part-time, or other basis.” Borrowers must, therefore, calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold. For example, if a borrower has 50 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 100 employees.
By contrast, for purposes of loan forgiveness, PPP uses the standard of “full-time equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions.

Borrowers that can EITHER rehire their workforce or hire and replace those workers AND maintain at least 75% of the same level of compensation, can be eligible for forgiveness.

No. Under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and the same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. 

Any loan principal not forgiven will carry an interest rate at 1% for the two-year standard maturity (which could be eligible for an extension to five years) for loans made prior to June 5, 2020, and for the five-year period for any loans made after June 5, 2020. Please keep in mind that no payments are due until after the Deferral Period which starts after a forgiven decision is rendered by the SBA.

Check with your accounting professionals, but accounting standards clearly say that you only derecognize debt when you are legally released from the obligation. Based on this guidance, generally accepted accounting principles (GAAP) do not allow recording this income until you have received documentation from that the loan is forgiven. At that point, you would debit the loan account for the amount forgiven and credit an income account for that same amount.

No. Unfortunately, if you received a PPP loan you are no longer eligible for employee retention tax credit. If you still want to maintain those credits, consult with your financial professionals, and consider repaying the PPP loan immediately. For more information, go here: https://www.irs.gov/newsroom/covid-19-related-employee-retention-credits-overview

This is a good question to check with your tax professional as it can be complicated. The IRS recently issued Notice 2020-32, which clarified that no deduction is allowed under the Internal Revenue Code (Code) for PPP loan expenses if the payment of those expenses results in forgiveness of the PPP loan, and that forgiven amount is excluded from gross income via section 1106(i) of the CARES Act. Section 1106(i) of the CARES Act excludes the PPP loan forgiveness amount from gross income, even though it would ordinarily be characterized as “cancellation of indebtedness income” (CODI).
Typically, sections 162 and 163(a) of the Code would allow for deductions for expenses paid related to (1) payroll costs, (2) any payment of interest on any covered mortgage obligation, (3) any payment on any covered rent obligation, and (4) any covered utility payment. Here, absent any further clarification, the IRS has stated they will rely on section 265(a)(1) and the applicable regulations to disallow any otherwise allowable deduction under the Code for the amount of any payment of an eligible PPP expense to the extent of the resulting covered loan forgiveness (up to the aggregate amount forgiven) because such payment is allocable to tax-exempt income. In other words, the IRS is trying to prevent a double tax benefit, i.e., receiving a deduction for spending loan proceeds that are eventually forgiven and excluded from gross income.

No. Check with your tax professionals but per the SBA, any expenses that a borrower claims for forgiveness under the PPP cannot then be deducted from the borrower’s business expenses. A forgivable PPP loan is already tax-free, so the IRS wants to prevent “double-dipping” (i.e, benefiting from both the IRS and SBA).

Interest for your PPP loan begins accruing the day your loan was funded to you.