Application: What to Expect & Best Practices October 15, 2020 - - PowerPoint PPT Presentation

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SBA PPP Forgiveness Application:

What to Expect & Best Practices

October 15, 2020

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Disclaimer

PPP Forgiveness is an evolving process, subject to change as further guidance comes

• ut from the SBA and US Treasury.

This presentation is for general information purposes only and should not be relied upon as a substitute for obtaining independent advice or undertaking independent research before starting the process to apply for PPP forgiveness. This presentation does not take into account any particular borrower’s situation or needs. All PPP Borrowers should obtain professional advice based on their unique situation before proceeding with the forgiving process. In addition, any implied projections or views of the hosts are their own personal opinions and are not the official position of Commerce Bank or their respective directors or successors or assigns, and may not prove to be accurate. While the information contained herein is believed to be accurate as of the date of production, the information is subject to change and revision.

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Your Presenters

Adam Kirkbride

SBA Advisor

Libby Bane

Commercial Strategies & Lending Programs Manager

Tami Nugent

Director of Commercial & Small Business Marketing

Michael Bruening

Portfolio Management Team Leader

Heather Cummings

Portfolio Management Team Leader

Kevin Barth

Head of Commercial Line

• f Business

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Agenda

Customer Resources What to Expect Q & A Best Practices & Timing Communication Forgiveness Application Portal Documentation Forgiveness Overview What to Expect

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What to Expect

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What to Expect

Receive Invitation Email Submit Application through Portal

Commerce Review (Up to 60 Days)

Receive & Complete E-Signature Request

Commerce Submits Proposed Forgiveness Amount to SBA SBA Processing & Review (Up to 90 Days)

Commerce Receives & Applies Forgiveness Payment

If applicable, Loan Modification & Repayment Begins

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Communication

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Communication

Your initial email will contain links to helpful resources as you prepare for your PPP Loan Forgiveness You will also receive a physical letter as a back up in case you haven’t received our emails Next you will receive an email invitation containing:

• your unique link to apply for Loan Forgiveness via our portal
• a link to our reference guide with step-by-step instructions and screen shots

to guide you through the application

All emails will arrive from: commercial.business@commercebank.com

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Forgiveness Application Portal

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Preparing to Apply

1. Recommended to utilize Chrome Browser 2. Determine whether you will be applying based on 3508 Forgiveness Application, 3508EZ Forgiveness Application or the 3508S Forgiveness Application 3. Locate your promissory note as you will need your account number and loan number when accessing the portal 4. Have your documents in individual files in electronic form (acceptable file types PDF, PNG, JPEG, DOCX, DOC or XLS) 5. E-Signer must be authorized representative of business 6. Wait for email invitation from us with link to begin application

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Create a Password

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Forgiveness Overview

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Forgiveness Expenses

60% 40%

At least 60% of loan proceeds must be used for payroll costs No more than 40% of loan proceeds may be used for interest on mortgage payments, rent and utilities Loan proceeds used for the following purposes are not eligible for forgiveness

Compensation in excess of an annualized salary of $100,000

• f individual employees, or

self-employment income in excess of $100,000 of sole- proprietors and partners

• Compensation of

employees with a principal residence outside of the US

• Employer portion of FICA

(Social Security and Medicare) and FUTA taxes Qualified sick leave or family leave wages for which a credit is allowed under the Families First Coronavirus Response Act

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Covered Period

1. Eight weeks (56 days) or 24 weeks (168 days) at election of borrower 2. Begins date PPP loan funds were disbursed 3. Borrowers with bi-weekly or more frequent payroll may elect alternative covered period 4. Eligible expenses must be paid or incurred during covered period or alternative covered period and paid prior to forgiveness application 5. Covered period cannot extend beyond 12/31/2020

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Forgiveness Applications

3508 08

• Can be used by any borrower
• Should be used if the

borrower is claiming any FTE Safe Harbor or had FTE employee or salary/wage reductions unless borrower qualifies to use the SBA 3508S

• Can be used if borrower can

claim 1 of the 3 certifications listed on the application instructions

• Certifications related to

employee wage/salary reductions or the inability to

• perate due to health and

safety guidelines

• May be used by borrowers

with a loan amount of $50,000 or less

• Exempt from completing

reduction calculations due to reductions in FTE employees

• r salary/wages
• Borrower still required to

submit documentation supporting forgiveness amount calculation

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

3508 08EZ EZ 3508 08S S – NEW! W!

Three SBA Forgiveness Applications

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Forgiveness Timeline

Loan Disbursed 8 or 24 week covered period (borrower specific) Covered period cannot extend beyond 12/31/2020 Up to 10 months to apply for forgiveness after end of borrower’s covered period(borrower specific) Final application deadline cannot extend beyond 10/31/2021 Borrower applies for forgiveness Commerce has up to 60 days to review application SBA has up to 90 days to review application and remit forgiveness Borrower has 30 days to appeal decision with SBA Repayment begins

• n any unforgiven

amount

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Documentation

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Documentation

Payroll – Cash Compensation

Documents required 1. Internal payroll reports with supporting bank account statements OR Third-party payroll service provider reports ❑ Must document the amount of cash compensation paid to employees ❑ Must be incurred or paid during chosen covered period ❑ Must comply with program cash compensation limits

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Documentation

Payroll - Cash Compensation

Documents required

2. Tax Forms (Both Required) 1. Quarterly IRS Forms 941 or equivalent 2. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state ❑ Must document the amount of cash compensation paid to employees ❑ Must overlap chosen covered period – Start with quarter that includes start of covered period – End with quarter that includes end of covered period

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Documentation

Payroll - Non-Cash Benefits

Documents required 1. Payment Receipts OR 2. Cancelled Checks w/ Bank Account Statements AND 3. Service Provider Account Statements ❑ Must document the amount of employer contributions to employee health insurance and/or retirement plans that were included in forgiveness amount ❑ Must be during chosen covered period

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Documentation

FTE: Full Time Equivalent Employees

Documentation detailing (time period at election of borrower): 1. the average number of FTE employees on payroll per week employed by the Borrower between 2/15/2019 and 6/30/2019; or 2. the average number of FTE employees on payroll per week employed by the Borrower between 1/1/2020 and 2/29/2020; or 3. in the case of a seasonal employer, the average number of FTE employees on payroll per week employed by the Borrower between 2/15/2019 and 6/30/2019; between 1/1/2020 and 2/29/2020; or any consecutive 12-week period between 5/1/2019 and 9/15/2019

Note: FTE supporting documentation must be submitted with full 3508 (not 3508EZ or 3508S). However in all cases, borrower must retain these records.

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Documentation

Non-Payroll Costs – Business Mortgage Interest Payments

Documents required May pick either: 1. Lender Amortization Schedule and receipts/cancelled checks from eligible period 2. Lender Account Statements from Feb 2020 and the months of the covered period through 1 month after the end of the covered period verifying interest amounts and eligible payments. ❑ Must reflect the mortgage was in place before 2/15/2020 and in the name of borrower ❑ Payments were made from borrower’s business account ❑ Amount of payments is equal/greater than the claimed amount

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Documentation

Non-Payroll Costs – Business Rent or Lease Payments

Documents required May pick either: 1. Copy of current lease agreement and receipts/cancelled checks 2. Lessor account statements from Feb 2020, the covered period and

• ne month past the covered period

❑ Must reflect the lease was in place before 2/15/2020 and in name of borrower ❑ Payments were made from borrower’s business account ❑ Payments were made during the covered period ❑ Amount of payments is equal/greater than the claimed amount

Note: IFR dated 8/24/2020 states that rent payments to a related party are forgivable for the amount of mortgage interest owed on the property during the covered period that is attributable to the space being rented by the business.

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Documentation

Non-Payroll Costs – Business Utility Payments

Documents required May pick either: 1. Copy of invoices from Feb 2020 and during the covered period 2. Copy of receipts, cancelled checks

• r account statements showing

eligible payments ❑ Must reflect the utility account was in place before 2/15/2020 and in name

• f borrower

❑ Payments were made from borrower’s business account ❑ Expenses incurred or paid during chosen covered period ❑ Amount of payments is equal/greater than the claimed amount

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Best Practices & Timing

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Best Practices & Timing

Streamline your application

• If eligible, use the 3508EZ

Form or 3508S Form

• 8-week covered period will

require reliance on ancillary expenses, whereas 24-week period generally seeks full forgiveness relying only on payroll with ample coverage.

• 24-week period typically

reduces documents needed and lessens the time it takes to complete your submission and our review

• When available, use payroll

providers custom PPP reports Wait to apply until all documents are available

• For a covered period

extending into Q4, tax documents aren’t available until January. Prior submission creates an incomplete application. Take note of Compensation Limits

• Owner compensation is

limited based on covered period to $15,385 (8-week)

• r $20,833 (24-week)
• This limit differs from

employee compensation limits of $100,000 annually prorated based on payroll period info provided Upload documents to the correct system placeholder and ensure legibility

• Reduces potential back and

forth with the bank

• Increases speed with which

your application can be reviewed

• Only submit requested

documentation Retain supporting documentation

• Two categories of

documentation

• 1) Documents borrowers

must submit with application

• 2) Documents borrowers

must maintain, but not submit with application, for six (6) years after the date the loan is forgiven or repaid in full As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Customer Resources

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Resources – commercebank.com/ppp

FAQ’s answered by the SBA and U.S. Department of Treasury PPP Loan Forgiveness Documentation Checklist PPP Loan Forgiveness Application & EZ Application PPP Loan Forgiveness Application Instructions & EZ Application Instructions

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Resources – Quick Reference Guide

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

www.commercebank.com/pppqrg

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Resources – Customer Support

Technical questions regarding the portal can be directed to:

833-304-0350

Questions specific to your individual loan forgiveness should be directed to your attorney or your accountant

• r your Commerce Bank

representative.

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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What to Expect

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What to Expect

Receive Invitation Email Submit Application through Portal

Commerce Review (Up to 60 Days)

Receive & Complete E-Signature Request

Commerce Submits Proposed Forgiveness Amount to SBA SBA Processing & Review (Up to 90 Days)

Commerce Receives & Applies Forgiveness Payment

If applicable, Loan Modification & Repayment Begins

As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

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Q & A

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Thank You