SBA Paycheck Protection Program | Byline Bank

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Paycheck Protection Program (PPP) Loan Forgiveness

If you’ve received a loan through the Paycheck Protection Program (PPP), you may be eligible to request full or partial forgiveness of that loan from the SBA. We know this is a critical priority for many of you, and you may have questions regarding this forgiveness and how to apply for it.

The SBA recently released the PPP loan forgiveness application, along with some instructions for borrowers on how to complete the application; however, we’re still awaiting guidance from the SBA on the forgiveness process.
We’ll begin to accept forgiveness applications, within the timing already outlined by the SBA, and once they have finalized their guidance. We will provide additional information to Byline PPP loan customers as we receive it.

We’ve compiled a list of frequently asked questions, which we’ll continue to update throughout the forgiveness process.

*The above discussion and the following FAQs have been provided for informational purposes only, and are not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors in addressing any of the matters discussed herein. Please note, the SBA and the Department of Treasury may be considering changes to the PPP affecting loan forgiveness, and have not yet issued a Final Rule for the program.

COVID-19 SBA Loan Programs Resources

We know there’s a lot to understand about the resources available to you. Here’s more information that can help.

Details on Forgiveness

Continue to check our website as well as

Should I begin to fill out the Forgiveness Application that’s available on the SBA website?

Not yet. We will provide additional guidance on our process soon, but rest assured that we’re working to make it automated and user friendly. Our goal is to simplify the questions and help to populate the forms. We hope to have additional instructions shortly.

Where do I request loan forgiveness for my PPP loan?

If you have received a PPP loan through Byline Bank you must submit an application for forgiveness through Byline. We are setting up a process to handle the applications and will provide you with additional information and let you know how to submit your forgiveness application to us as we get additional SBA guidance.

When can I submit my application for forgiveness?

Forgiveness applications cannot be submitted to Byline until at least 8 weeks following PPP loan disbursement. We will provide you with additional information and let you know how to submit your forgiveness application to us as we get additional information from the SBA.

Is loan forgiveness automatic?

No. You must submit an application for forgiveness through Byline.  We’re setting up a process to handle the applications and will keep you informed as we get additional SBA guidance.

When will I receive a decision on my loan forgiveness application?

We don’t know yet. We will keep you informed as we get additional SBA guidance. It may take some time to review forgiveness applications and obtain a final determination from the SBA.

What are eligible forgiveness expenses?

  • Payroll costs, as defined by the SBA (currently, at least 75% of loan proceeds must be used for payroll costs for a loan to be fully forgiven)
  • Mortgage interest (for mortgages in existence on or before 2/15/20)
  • Rent (lease agreements in place on or before 2/15/20)
  • Utilities (servicing on or before 2/15/20)
  • Refinancing an SBA EIDL loan made between 1/31/20 – 4/3/20

What if I don’t meet the requirements for forgiveness?

You must repay the principal and interest amount of the unforgiven portion over a 24 month period per the SBA requirements.

Do I have to repay the part of the loan that wasn’t forgiven?

Yes. The outstanding principal and interest on that portion of the loan which was not forgiven must be repaid 2 years from the date of the loan.

When do I need to use the loan proceeds to be eligible for loan forgiveness?

Currently, within 8 weeks of loan disbursement (i.e., when loan funds were deposited into your account).

When does the 8 week period begin for determining “payroll costs?”

The 8 week period for determining eligible payroll costs begins, at a qualifying borrower’s election, either on (i) the date the PPP loan is disbursed (“Covered Period”) or (ii) the first day of the borrower’s first payroll period following the day of the PPP loan disbursement (the “Alternative Period”). The SBA has provided certain borrowers with administrative flexibility to ensure covered payroll costs are eligible for loan forgiveness.  Please reference the SBA’s FAQs for Lenders and Borrowers for specific examples.

How is the limit on employee cash compensation in excess of $100,000 calculated?

Under the CARES Act, payroll costs exclude the amount of an employee’s compensation in excess of an annual salary of $100,000, as prorated for the applicable period.

The SBA previously determined that this $100,000 limitation “applies only to cash compensation, not to non-cash benefits” includible as payroll costs, such as health and retirement plan contributions made on behalf of employees. The SBA has clarified that borrowers are to cap cash compensation eligible for forgiveness at $15,385 (the 8 week equivalent of $100,000 per year) for each employee.

Compensation for owner-employees, self-employed individuals and general partners of businesses is limited to the lesser of $15,385 or the 8 week equivalent of their applicable compensation in 2019. The prior guidance excluding from payroll costs health and retirement plan contributions made on behalf of such individuals remains unchanged.

What is included in “cash compensation” for eligible payroll costs?

The Instructions to Schedule A to the Application define “cash compensation” to include “the sum of gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or sick leave, not including leave covered by the Families First Coronavirus Response Act), and allowances for dismissal or separation paid or incurred during the Covered Period or the [Alternative Period].”

What non-cash components are considered eligible payroll costs?

According to Schedule A of the Application, the following costs are considered eligible payroll costs:

  • Employer contributions for employee health insurance, including employer contributions to a self-insured, employer-sponsored group health plan, but excluding any pre-tax or after-tax contributions by employees.
  • Employer contributions to employee retirement plans on behalf of employees, but excluding any pre-tax or after-tax contributions by employees.
  • Employer state and local taxes assessed on employee compensation, but excluding any taxes withheld from employee earnings.

What if a borrower’s eligible non-payroll costs are incurred during the Covered Period, but are required to be paid after the Covered Period ends?

Eligible non-payroll costs that are either 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, are eligible for loan forgiveness.

How are FTEs calculated for purposes of the FTE headcount reduction calculation?

According to the application, an average full-time equivalent (“FTE”) employee headcount during the Covered Period or the Alternative Period is calculated as follows:

  • For each employee, the borrower is required to divide the average number of hours paid per week by 40, and round the total to the nearest tenth (the maximum for each employee is capped at 1.0); or
  • A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the borrower.

What if employees refuse to return to work, resign, or are terminated?

According to the Application, a borrower may exclude the following employees for purposes of the FTE reduction calculation:

  • Employees to whom the borrower made a good-faith, written offer to rehire during the Covered Period or the Alternative Period which was rejected by the employee
  • Employees who, during the Covered Period or the Alternative Period, (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours as properly documented by the borrower.

How is the salary/wage reduction calculated?

The Application contains a detailed worksheet for borrowers to use in determining if an applicable employee’s average salary/wages during the Covered Period or Alternative Period, as applicable, was reduced by more than 25% compared to the employee’s average salary/wages for the period of January 1, 2020 through March 31, 2020. This calculation is to be performed for each employee who received compensation at an annualized rate of less than or equal to $100,000 for all pay periods in 2019, or who was not employed during 2019.

What documentation is needed for payroll, eligible non-payroll expenses, and FTEs?

Please reference the Application and the SBA’s FAQs for Lenders and Borrowers for a description of the documentation needed.

What documentation is needed for the SBA to audit borrower certifications with respect to PPP loans above $2million?

At this time, the SBA has issued no guidance that outlines how it will “audit” relevant borrower certifications for loans above $2million.

What certifications need to be made when submitting the forgiveness application?

The borrower is required to make a variety of certifications in submitting the Forgiveness Application, including but not limited to the following:

  • Certification that the dollar amount for which forgiveness is requested was used to pay costs that are eligible for forgiveness and that, if the funds were knowingly used for unauthorized purposes or the borrower knowingly makes a false statement to obtain forgiveness, the federal government may pursue recovery of loan amounts and/or civil or criminal fraud charges.
  • Certification of the borrower’s understanding and agreement that the SBA may request additional information for the purposes of evaluating the borrower’s eligibility for both (i) the PPP loan and (ii) loan forgiveness.

Also, the borrower must acknowledge that if it fails to provide information requested by the SBA, it may result in either a determination that the borrower was ineligible for the PPP loan or a denial of the borrower’s loan forgiveness application.

These questions are meant to provide some helpful guidance as you navigate PPP Forgiveness issues, but they are not inclusive and are subject to change. Please remember to:

  • Maintain accurate recordsof all disbursements and payments made from PPP loan funds including dates of disbursements and payees
  • Keep records of any changes to full-time employee staffing, or reduction of employee compensation
  • Reviewthe SBA’s FAQs for PPP Lenders and Borrowers for additional information, as the SBA continues to update this

We will provide updates here, as they become available. Thank you in advance for your support and patience as we wait on the SBA’s guidance.