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August 21, 2020

SBA PPP Loan Forgiveness Application Process

Loan Forgiveness Application and Process

Virginia National Bank is now accepting SBA PPP loan forgiveness applications from customers.

VNB will send PPP loan customers an email to let you know we are accepting Loan Forgiveness Applications. To begin the process, you will be asked to complete the Loan Forgiveness Application and email supporting documentation, similar to how your loan application was completed and processed.  

Only those businesses who received a PPP Loan from Virginia National Bank are eligible to apply for Loan Forgiveness with us. If your PPP loan was approved and funded by another financial institution you must submit your Loan Forgiveness Application with them.

Here is a summary of the PPP Loan Forgiveness Application process that you will need to follow, and information on the documents you will need.

STEP 1 – PREPARATION

  • Covered Period:
    • To qualify for loan forgiveness, your loan funds must be used for eligible costs incurred or paid during your covered period. Your covered period is, at your discretion, either 8 weeks or 24 weeks, ending no later than December 31, 2020. If your loan was approved on or after June 5, 2020, you must choose the 24 week covered period option.
    • You do not need to opt-in or otherwise notify us in advance of your choice of covered period terms.
    • If eligible payroll costs are incurred during your covered period but paid after the end of your covered period, they are still eligible for forgiveness if paid on or before the next regularly scheduled payroll date (please note that “incurred” means the date the pay was earned).
    • Other Covered Period Options: Your covered period begins on the day of your first PPP loan disbursement. 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 regular payroll cycle after your first PPP loan disbursement, if that is preferred.
  • Use the funds for eligible expenses (if paid or incurred during the covered period), including:
    • Payroll Expenses:
      • Spend at least 60% of the funds on eligible payroll expenses in order to receive the full amount of forgiveness. You may spend more, but spending less may decrease your forgiveness amount.
      • Include only payroll costs for employees whose principal place of residence is in the United States. Do not include payroll costs for independent contractors (they should apply for forgiveness with their PPP lender).
      • Your forgiveness amount may be subject to the SBA’s FTE Reduction Rules.
    • Non-Payroll Expenses:
      • Use the remainder of the funds on other eligible covered business expenses (business mortgage interest or rent or lease payments if your agreement was in place before 02/15/2020, and eligible business utility payments if your service began before 02/15/2020).
      • These costs may not exceed 40% of your total forgiveness amount.
  • Gather the required supporting documents that you will need to submit along with your PPP Loan Forgiveness Application.

STEP 2 – APPLY

  • Only those businesses who received a PPP Loan from Virginia National Bank are eligible to apply for Loan Forgiveness with us. If your PPP loan was approved and funded by another financial institution you must submit your Loan Forgiveness Application with them.
  • You will complete either the Form 3508 Loan Forgiveness Application or streamlined Form 3508EZ Loan Forgiveness Application, depending upon your circumstances. Instructions for completing these forms, including details on required supporting documents, can be found on the following pages:

    PPP Loan Forgiveness Application Form 3508 instructions
    PPP Loan Forgiveness Application Form 3508

    PPP Loan Forgiveness Application Form 3508EZ instructions
    PPP Loan Forgiveness Application Form 3508EZ
     
  • More information on SBA PPP loan forgiveness eligibility and criteria can be found on the SBA or U.S. Department of Treasury website.
  • Please wait to submit your PPP Loan Forgiveness Application until you have collected all required documents.
  • You have time — there is no immediate need to apply for PPP loan forgiveness. Your loan payments are automatically deferred until your forgiveness amount is received by us from the SBA or, if you do not apply for forgiveness, 10 months after the end of your covered forgiveness period (either 8 weeks or 24 weeks).
  • Correspondence will come from vnbnews@vnb.com (please be sure to check your spam folder or white list the email address with your email provider). You may receive additional emails from Bank personnel who are reviewing your Loan Forgiveness Application requesting to speak with you, or to validate information or documentation you provided.

STEP 3 - CONFIRMATION & APPROVAL TIMING

  • After you’ve submitted your PPP Loan Forgiveness Application, we will contact you if it is not complete.
  • Once you have completed the Application and submitted all required documentation, your Application will be reviewed and an approval decision will be made by us (within 60 days of receipt of your completed Application). Your Application and our decision will then be submitted to the SBA for their final eligibility decision.
  • The SBA may take up to 90 days from our submission to issue their eligibility decision. We will notify you of remittance by the SBA of your loan forgiveness amount (or that the SBA determined that a lesser or no amount is eligible for forgiveness).
  • 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.

 

The information above is based on the Bank’s interpretation of laws, rules, regulations, and guidance provided by the SBA and U.S. Department of Treasury regarding the Paycheck Protection Program at the time this page was authored. While the information provided is intended to be accurate it should not be considered and is NOT INTENDED TO BE FINANCIAL OR LEGAL ADVICE. This page and its content may be updated periodically if there are changes to the Program. However, the Program is rapidly evolving and the Bank cannot be held responsible for any errors or omissions as a result of this. Please consult the SBA’s and U.S. Treasury’s websites for updated information. In the event of any discrepancies between the information on this site and the SBA’s or U.S. Treasury’s site, please follow official SBA or U.S. Treasury guidance.


REQUIRED SUPPORTING DOCUMENTATION

The following is a list of supporting documentation you must submit, as applicable, with your PPP Loan Forgiveness Application.

While we may have some of these documents on file from your PPP Loan Application, we require you to supply these documents with your Loan Forgiveness Application to validate your expenses. We will not consider your Loan Forgiveness Application complete without applicable documentation, which may slow your forgiveness process.

In the event of any discrepancies between the information on this site and the SBA’s site, please follow official SBA guidance. Please also see the SBA’s Loan Forgiveness Application Instructions for additional details.

PAYROLL DOCUMENTS

Documents verifying the eligible cash compensation and non-cash benefit payments from your covered period.

1. Cash Compensation:

  1. Payroll report from third-party payroll service provider (such as Paychex, BenefitMall, ADP, etc.) documenting the amount of cash compensation paid to employees. Also, please provide payroll tax forms (such as Form 941), plus state quarterly wage reporting and unemployment insurance filing for the quarter(s) in which the covered period falls.
  2. Or, all of the following:
    1. Payroll tax forms (such as Form 941), plus state quarterly wage reporting and unemployment insurance filing
    2. Proof of payment (e.g., bank statement)
    3. Self-prepared payroll report or schedule

Notes on Payroll Reports:

  • Payroll Reports should include all periods overlapping the 8-week or 24-week covered period, and show figures for each of the following eligible costs:
    • Cash compensation
    • Employer contributions for employee health insurance
    • Employer contributions to employee retirement plans
    • Employer state and local taxes assessed on employee compensation (e.g., SUI - state unemployment insurance tax)
  • Payroll reports should also show separate cash compensation figures for:
    • Employees who received compensation at an annualized rate less than or equal to $100,000 for all pay periods in 2019; and
    • Employees who received compensation at an annualized rate greater than $100,000 for all pay periods in 2019 (for Form 3508EZ, there is no need to separate employees by 2019 compensation level).

Notes on Cash Compensation

  • Eligible cash compensation includes: gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or sick leave), and allowances for dismissal or separation. This may include bonus; hazard pay; and salaries to furloughed employees.
  • Do not include compensation in excess of an annual salary of $100,000 annualized, as prorated for the covered period. Therefore, the payroll schedule should show no employee with more than $46,154 in compensation if selecting the 24-week period (or $15,385 for the 8-week period, if eligible and selected).
  • Do not include payments to independent contractors, or compensation to employees whose principal place of residence is outside the US; or qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

2. Non-cash Benefit Payments:

  1. Account statements or payment receipts from insurance or plan administrator verifying eligible payments or proof of payments made by the employer

FULL-TIME EQUIVALENCY (FTE)

Documents showing average Full-Time Equivalency

1. Average full-time equivalency (FTE) - Form 3508

  1. FTE report showing average number of FTE during one of these periods:
    1. February 15, 2019 to June 30, 2019
    2. January 1, 2020 to February 29, 2020
    3. If you are a seasonal employer, select a period above or any consecutive 12-week period May 1, 2019 and September 15, 2019

2. Average full-time equivalency (FTE) for Form 3508EZ

  1. FTE report showing average number of FTE employees on January 1, 2020 and at the end of covered period selected
  2. IF USING FORM 3508EZ: a FTE report is required if you met the following conditions:
    1. You 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; and
    2. You 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

Notes on Full-Time Equivalency (FTE):

  • FTE counts both full-time (FT) and part-time (PT) employees. An FT employee is counted as 1.0 FTE, and a PT employee is counted by average number of hours per week divided by 40. For example, a PT employee working 32 hours would count as 0.8 FTE. SBA also offers a simplified method that assigns all PT employees as 0.5, if that is preferable.

NON-PAYROLL DOCUMENTS

1. Documentation verifying the existence of the obligations/services prior to February 15, 2020, and eligible payments for the Covered Period

  1. Business Mortgage Interest payments: Lender Amortization Schedules and receipts or cancelled checks verifying payments; or Lender account statements from February 2020 through one month after the end of your covered period verifying interest amounts and payments;
  2. Business Rent or Lease payments: Copies of lease agreement and receipts or cancelled checks verifying payments; or Lessor account statements from February 2020 through one month after the end of your covered period verifying payments;
  3. Business utility payments: Copies of invoices from February 2020, and those paid during your covered period and receipts, cancelled checks, or account statements verifying payments.

 

Instructions to follow when you are ready to submit:

1. Click HERE for VNB's Secure File Exchange.

2. Click SECURE UPLOAD

3. Enter Recipient Email as > forgiveness@vnb.com 
IT IS EXTREMELY IMPORTANT THAT YOU DO NOT ENTER AN INDIVIDUAL’S EMAIL ADDRESS.

4. Upload completed application and all required documents (instructions above) into one email for all entities.


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