Paycheck Protection Program (PPP)
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Chelsea Groton Bank worked with the Small Business Administration (SBA) to provide relief funding through the Paycheck Protection Program (PPP) to over 500 area businesses. The PPP program was designed to provide a direct incentive for small businesses to keep their workers on the payroll – the program ended June 30, 2020.
How and when do I apply for Forgiveness?
Chelsea Groton Bank established procedures and instructions for accepting SBA PPP forgiveness applications online. We will email you a formal instruction package which will include an electronic means of providing us your completed application when you are ready to apply. We will be encouraging all borrowers to submit their application and supporting documentation through a secure link. Please contact your PPP lender to begin the application process.
There is a lot of confusion about the PPP Forgiveness application deadline for borrowers to apply for forgiveness partly due to the PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) displaying an expiration date of 10/31/2020 in the upper-right hand corner. We looked to the SBA PPP Forgiveness guidance and this is the response from the SBA about the PPP Forgiveness application deadline: “Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period (8 or 24 weeks), loan payments are no longer deferred and the borrower must begin making payments on the loan. For example, a borrower whose covered period ends on October 30, 2020 has until August 30, 2021 to apply for forgiveness before loan repayment begins. The expiration date in the upper-right corner of the posted PPP loan forgiveness application forms is displayed for purposes of SBA’s compliance with the Paperwork Reduction Act, and reflects the temporary expiration date for approved use of the forms. This date will be extended, and when approved, the same forms with the new expiration date will be posted."
The latest SBA PPP Forgiveness guidance can be found here. For additional questions please contact us at 860-448-4200.
Here are action steps we recommend and a list of documents you should start collecting:
- Become familiar with the two PPP Forgiveness Applications and Instructions now - a new “EZ’ form was introduced for select borrowers.
- Document how all loan proceeds were spent:
- List and provide supporting evidence of all employees on payroll for the 8 or 24 weeks following the loan disbursement with the dollar amount of payroll costs (defined below).
- Evidence of mortgage interest payments, rent payments and utilities paid during the 8 or 24 weeks following the loan; include copies of canceled checks and/or bank statements with ACH info and copies of utility and mortgage statements/lease agreement
- Evidence of payroll costs, utilities, rent/lease payments, and mortgage interest paid before February 15, 2020, to compare to what is paid or incurred during the 8 or 24 weeks following the loan closing to ensure it aligns. If self-employed, these expenses are allowed to the extent they are deductible on Form 1040 Schedule C.
- Copy of EIDL loan if refinanced with PPP loan (be sure to identify how much was an advance that does not have to be repaid)
- If you used PPP to refinance an EIDL loan, only the funds used for payroll costs will be forgiven, so be prepared to provide the documentation listed above for the EIDL loan, too.
As a reminder:
The Connecticut Small Business Development Center (CTSBDC) offers no-cost advisory assistance for small businesses that may not have a formal payroll system, a team of accountants, or even advisors familiar with the PPP loan forgiveness process. CTSBDC advisors will provide guidance to date from the Small Business Administration on forgiveness, tips to maximize forgiveness, and other available resources.
CTSBDC COVID-19 Request for advising