Customer Assistance

The SBA guidance included a few tweaks to improve the forgiveness process for small businesses, from allowing closer alignment to regular payroll cycles to an additional safe harbor. Here are some key points from the guidance: 

• Alternative eight-week period. Original guidance stated that the eight-week period to use PPP funds would begin the day the borrower received their funds. However, as detailed in the forgiveness application, borrowers are now permitted to calculate payroll costs using an “alternative” eight-week period that aligns with their regular payroll cycles.
• Exemption from forgiveness reduction. According to the new guidance, borrowers who can provide proof that a worker or workers declined a good-faith, written offer of rehiring can avoid a loan forgiveness reduction on these workers.
• Incurred versus paid. New guidance states that any payroll and eligible nonpayroll expenses incurred – but not paid – during the covered period are eligible to counted in the loan forgiveness calculations, as long as they are paid by the next regular payroll or billing date.
• Additional safe harbor. Borrowers who demonstrate a restoration of workforce by June 30 to their workforce level that was in place on Feb. 15 can obtain safe harbor from forgiveness reduction.

Page 10 of the PPP Loan Forgiveness Application includes a listing of all the documents you will need to submit with your loan forgiveness application. It also includes a list of other records you will need to maintain for audit and recordkeeping purposes.

You will need to collect both sets of documents before you are able to complete the rest of the application document.

As you work to complete this application, look to your business banker as a resource and reference for questions you have. Bremer is offering an online tool to streamline our customers’ loan forgiveness process once the application and supporting documents are ready to submit to the SBA. You may also want to consult with other advisors such as a CPA and partners who know your specific circumstances to support you in finalizing this the application.

Additional details on the forgiveness process will be shared with you as they are available. In the meantime, you may wish to read this Insight piece, "PPP loan forgiveness details begin to emerge."

As part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Paycheck Protection Program (PPP) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.

The loan amounts will be forgiven as long as:

• The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
• Employee and compensation levels are maintained.

Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

Loan payments will be deferred for 6 months.

Paycheck Protection Programs loan applications are currently open to small businesses, sole proprietorships, independent contractors and self-employed individuals.  

We are here to work with you to start your application path. Contact your banker to talk through your options and to obtain application materials. Please note that PPP funds are limited, and we cannot guarantee that all applications will make it through the queue before funds run out at the federal level.

Contact your banker to obtain application materials and a full checklist of materials needed. You will need to gather the following information to apply for a PPP loan:

• Payroll processor records, payroll tax filings (such as Form 941 or Form 944), or Form 1099- MISC.
• If you are a sole proprietor, income and expenses documentation.
• For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount.

All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries. 

Farms, agribusinesses and agriculture cooperatives are also eligible, so long as they meet the size and other standards set forth by the SBA. 

For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries; or (2) that are franchises in the SBA’s Franchise Directory; or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.

Yes. The federal government has recently emphasized the requirement that borrowers certify the necessity of a PPP loan to support the ongoing operations of an applicant's organization.

Any borrower who obtained a PPP loan based on a misunderstanding or misapplication of this requirement has until May 14, 2020 to repay the loan. Update: On May 13, the SBA issued guidance around an automatic safe harbor to borrowers with an original principal amount less than $2 million. These borrowers will be deemed to have made the required certification. 

Updated SBA guidance states that borrowers that received PPP loan amounts over $2 million will be subject to review by the SBA for compliance with program requirements, including certification of economic need. If the SBA determines a borrower does not meet the certification requirements, they will seek repayment of the outstanding PPP loan balance and inform the lender that the loan is not eligible for forgiveness. 

We recommend all PPP loan recipients maintain all records that demonstrate the need for the loan and document how the loan was used.

For more information, see these FAQs from the SBA. Question #46 relates particularly to these points of interest.

The CARES Act defines that the Paycheck Protection Program is available through June 30, 2020, however funds are limited. We cannot guarantee that all applications will make it through the queue before funds run out at the federal level.

This program can be used on your payroll costs including:

• Payroll costs, including benefits;
• Interest on mortgage obligations, incurred before February 15, 2020;
• Rent, under lease agreements in force before February 15, 2020; and
• Utilities, for which service began before February 15, 2020.

Payroll costs include:

• Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
• Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
• State and local taxes assessed on compensation; and
• For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

To receive loan forgiveness, you will need to request it and provide documentation. You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll.

• Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
• Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
• Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

On May 15, 2020, the SBA issued detailed instructions and loan forgiveness application forms. Read the press release. 

For customers who received their PPP loan through Bremer, your banker will be in contact with you regarding next steps. We recommend you start collecting required documentation now, which are laid out in detail in the SBA's PPP Loan Forgiveness Application. Download the PDF. 

On the evening of April 2, the Treasury announced that the fixed rate for these loans is 1%. Previous guidance from Treasury stated a fixed rate of 0.50%. This rate is set by the federal government and cannot be modified by Bremer Bank.

All payments are deferred for 6 months; however, interest will continue to accrue over this period.

No collateral is required, nor is a personal guarantee required. 

As part of your application, you need to certify in good faith that: 

• Current economic uncertainty makes the loan necessary to support your ongoing operations. 
• The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments. 
• You have not and will not receive another loan under this program.
• You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
• Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount maybe for non-payroll costs.
• All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
• You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.