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This global crisis caused by the COVID-19 pandemic has severely impacted just about everything. Here we are seven months later and we continue to struggle with the many negative impacts on our community, our country and our families.  Our bank has worked tirelessly to provide information and comfort during these difficult times. Since the signing of the CARES ACT on March 27, 2020, our team at First National Bank of South Miami has taken great care to ensure that our clients have the most current and accurate information on the Paycheck Protection Program (PPP).



Download And Fill Out The Forgiveness Applications


Applying for forgiveness through FNBSM is an automated process through a Secure web portal. The link to this portal is found below. This will ensure that the bank reviews and processes the forgiveness process in an efficient and accurate manner. Many clients have found it more convenient to review what they will need, gather their documentation (as required) and fill in the application to have a smoother Online experience. For this reason, we are providing you with the 3 applications (depending on your circumstances) for applying for forgiveness. Please do not submit the “printed” application to us nor your banker.


3508EZ Application:
  • PPP Loans of more than $150,000 AND
  • You did NOT reduce the annual salary or hourly wage by more than 25% of any employee that earned less than $100,000 annualized compensation during the COVERED PERIOD AND
  • You did NOT reduce the number of employees or average hours of employees between Jan 1 2020 and end of COVERED PERIOD.

3508S (Simplified) Application:
  • PPP Loans of $150,000 or less
  • NOTE: Borrower + Affiliate that received PPP loans totaling more than $2,000,000 may NOT use this form.

3508 Application:
  • All other PPP Forgiveness applications 
 
NOTE: Please carefully read eligibility for forgiveness applications as there may be conditions that allow you or prevent you from using a simplified form (3508 EZ and 3508S)




PPP Application 3508EZ

PPP Loan Forgiveness Application

PPP Application 3508S (Simplified)


When you're ready to apply, click below 

 
 





Updated PPP and New Second Draw Applications

 
Below you will find samples of the SBA applications for the Paycheck Protection Program. You may download and complete them, but DO NOT submit to the bank. If you have reserved your place for the PPP through FNBSM you will receive an email invitation to link to the electronic site where you must complete the information Online. These applications are ONLY intended to assist you in gathering the requisite information for when you are ready to apply.



Updated PPP Borrower Application


PPP Second Draw Borrower Application

Download if you have never previously applied for PPP or you received PPP and returned the funds and now wish to apply because your needs have changed.


For applicants that received PPP and have used all the PPP funds made available to them and have sustained a 25% decline in at least one quarter in 2020 compared to 2019

 

 



PPP Second Draw Webinars now available


Topic: PPP Second Draw - Morning Session
Date Recorded: Jan 11, 2021 
Meeting Recording: Click here to view Webinar
 
Topic: PPP Second Draw - Afternoon Session
Date Recorded: Jan 11, 2021 
Meeting Recording: Click here to view Webinar
 





What borrowers should know about forgiveness 


Paycheck Protection Program (PPP) borrowers may be eligible for loan forgiveness if the funds were used for eligible payroll costs, payments on business mortgage interest payments, rent, or utilities during either the 8 or 24-week period after disbursement. A borrower can apply for forgiveness once it has used all loan proceeds for which the borrower is requesting forgiveness. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred and borrowers will begin making loan payments.

Learn more about the latest updates on forgiveness and how to apply digitally online by downloading our updated Loan Forgiveness Walkthrough Brochure

 



PPP Borrowers Are Asked to Justify Need for Loans Over $2 Million


The Small Business Administration has begun asking some Paycheck Protection Program borrowers to document why they needed the loans, drawing concern from advocacy and trade groups that say such disclosures weren’t required when the businesses applied for aid.
The Loan Necessity questionnaire is aimed at borrowers that took loans of $2 million or more under PPP, the federal government’s main coronavirus-aid initiative for small businesses. It directs them to answer questions about business activity and liquidity.

The form says the questions will help the SBA evaluate a certification borrowers made when they applied for aid. The certification stated that economic uncertainty made the loan request necessary to support business operations. But the loan application didn’t specify what the SBA meant by “economic uncertainty” or how borrowers would demonstrate their need, according to Mike Kennedy, general counsel at the Associated General Contractors of America, a trade group.
Mr. Kennedy said the questionnaire “essentially moves the goal post.” For example, it asks borrowers whether they have been subject to a government-mandated, coronavirus-related shutdown and how much cash they had on hand before taking the loans, questions that weren’t part of the original application.


“The loan necessity review only applies to a limited number of loans, and it is necessary given that American taxpayers are providing billions of dollars in forgivable loans to these borrowers,” said SBA Administrator Jovita Carranza. “Using this questionnaire helps ensure that the SBA is maintaining program integrity and ensuring the program works as intended.”
AGC of America, along with more than six dozen other trade and advocacy groups, sent a letter this week to congressional leaders, Ms. Carranza and Treasury Secretary Steven Mnuchin.
The questionnaires “introduce a confusing and burdensome process for both borrowers and lenders, and we fear that it could lead the agencies to inappropriately question thousands of qualified PPP loans made to struggling small businesses,” the letters said.


The SBA and the Treasury Department, which jointly oversee PPP, have faced criticism over constantly evolving guidelines since the initiative was launched in April. The agencies since spring have said that all loans over $2 million would be subject to audit, with smaller loans potentially also subject to review.


“People are just nervous you’re set up for failure,” said Glen Birnbaum, a partner at Sikich LLP, a management consulting and accounting firm that has been working with PPP borrowers.


PPP loans are forgivable if borrowers meet certain criteria, and the questionnaire makes clear borrowers might be ineligible for forgiveness if they don’t complete it. Borrowers are receiving the questionnaire via the lender that issued them the loan, at the direction of the SBA.


A borrower who is found not to have had an economic need for the loan after a multipronged review process that includes the questionnaire and other steps would be ineligible for forgiveness and would have to repay the loan.
An SBA official said no single response on the questionnaire would cause a determination that the certification of a business wasn’t made in good faith.

“It was important to provide a questionnaire that asked about a variety of outcomes to help us understand the totality of their circumstances,” the official said, adding that the agency would also consider other sources, such as publicly available information.


The Wall Street Journal has reviewed a copy of the questionnaire, which isn’t publicly available and has separate versions for nonprofits and for-profit companies. The SBA official said the agency and Treasury didn’t make them public to “protect the integrity of the review process” and to prevent borrowers from modifying their business practices to “game the system.”
The SBA plans to consider feedback on the questionnaire but doesn’t expect to make significant changes, the official said.
Tony Wilkinson, chief executive at the National Association of Government Guaranteed Lenders, said questions about liquidity were particularly troubling, given that Congress created PPP primarily to help small firms keep their workers employed during the pandemic-induced economic downturn.


“What we fear is that businesses that didn’t furlough,” Mr. Wilkinson said, “may get punished now by some revisionist history that says, ‘In our opinion, you had enough cash to do this, you didn’t need to borrow.’”

 

Separately, PPP recipients face a conundrum over tax deductions for business expenses.


Mr. Mnuchin said earlier this year that such deductions would give businesses an impermissible double benefit when combined with tax-exempt loan forgiveness. Mr. Mnuchin and the Internal Revenue Service went one step further this week and determined that companies can’t take those deductions in 2020 if they have a reasonable expectation that their loans will be forgiven, even if that forgiveness doesn’t happen until 2021.


The inability to take these deductions for tax year 2020 could add to the cash crunch facing some businesses.

  

Latest PPP Update

 

It has been a few weeks since we have provided an update on the Paycheck Protection Program and the forgiveness process. The reason, quite simply, is because not much has moved in Washington. We are still waiting for action to authorize a potential blanket forgiveness, and we still await the possibility of PPP2. Regardless, I thought it beneficial to remind you of a few programmatic points and offer some thoughts for consideration.

 

When MUST I apply for forgiveness?

 

The good news is that you have up to 10 months from the END of your Covered Period to apply for forgiveness. For those who received a PPP loan prior to June 5th, you have the option to use an 8 week (56 day) or 24 week (168 day) Covered Period. If you received your PPP loan after June 5th then you must use the 24-week Covered Period. But, under NO circumstances can the Covered Period extend beyond December 31, 2020, even if you don’t get a full 24-week Covered Period.

 

Below are a few examples…

 

 

         

When SHOULD I apply for forgiveness? That depends and here is why:

 

If your PPP loan is less than $150,000. We continue to believe that there is a bi-partisan desire on the part of Congress and the President to authorize blanket forgiveness for these loans. Of course you will have to certify that the monies were appropriately used for allowable and forgivable expenses and you may be subject to a future audit; however, this would avoid the need for you to go through completing  the forgiveness application and submitting the documentation. Presumably, this would be a much simpler process.

The latest unofficial update is that they do not want to consider blanket forgiveness until after December 31,2020. This would be to ensure that businesses are using the monies appropriately.

Blanket forgiveness would save you quite a bit of time and since there is no real urgency to process the forgiveness application, you might consider simply waiting until January 2021 to see what happens in Congress.

 

If you have exhausted the PPP monies or plan on using the 8-week Covered Period. We are advising our clients to aggregate as much allowable and forgivable

PPP expenses as possible, even if it exceeds the PPP loan amount.

 

There are several reasons for this. First, as you know, the PPP process has been a dynamic one and the SBA has been continually altering the rules along the way. At this time, they have not indicated that there is a process by which a borrower can resubmit a PPP forgiveness application once one is submitted. While reasonableness dictates that a process should exist, the resubmittal process does not exist today and therefore we cannot assume one will. For this reason, submitting $150,000 in allowable and forgivable expenses for a $100,000 PPP loan can provide a meaningful cushion in the event the bank or the SBA identifies an itemized expense that may be deemed inappropriate, either because it was not incurred or paid within the Covered Period or simply because it was not properly supported with documentation. Therefore, for almost everyone, opting for the 24-week Covered Period vs. the 8-week Covered Period can generate greater allowable forgivable expenses.

 

If you have furloughed staff or reduced wages by more than 25%. Do not forget about the Safe Harbor provision which allows you until December 31, 2020 to rehire or bring back the wages of the affected employees without a penalty. What is important to note here is that bringing back these employees or bringing their salaries back must be done within a payroll cycle prior to December 31, 2020 and they are to be maintained.

 

If you have commercial credit with financial covenants that may be impacted by the PPP debt. Remember that the Paycheck Protection Program is indeed a loan. That means that on your financial statements you will show this debt and if your lender has placed financial covenants on your lines or term loans having this additional indebtedness may adversely affect your financial ratios and place you in technical non-compliance. Our recommendation is that you discuss this with your lender as soon as possible. They may encourage you to apply for forgiveness earlier or simply allow you a waiver of the financial covenant due to the extenuating circumstances.

 

My PPP Note says that payments begin 6 months from the Note Date and that is coming up soon. Don’t I have to start making payments?

 

No. We are in the process of sending our PPP borrowers an official notice that may require you to sign and return to modify the existing terms. Since the SBA has changed some of the rules from when the program was first rolled out, we now find that the earliest that we will require any payments will be either:

 

  1. Beginning 10 months following the end of your Covered Period -or-
  2. If 100% forgiveness is NOT approved, payments will begin once you have been notified. This would follow your submittal of the application, the bank’s decision on forgiveness and the SBA’s review.

 

I am ready NOW!

  

Terrific! So are we!  We recommend that you download the appropriate application below and complete it offline and gather all documentation you will need to support the application. Once you feel comfortable that you have completed the application properly you will then apply directly on-line.

The official PPP Forgiveness application is an electronic application, this is because the SBA process for forgiveness is a digital process. This ensures that all your information is accurately submitted, and the process is streamlined.

 

 


 

Download one of our helpful PPP Guides


 

Forgiveness, Now or Later?

PPP Presentation Guide

Tracking Expenses

Loan Forgiveness
These are the presentation slides that were used in our webinar explanation on when to take forgiveness. 

Tracking your expenses and applying for forgiveness is the next steps in the PPP program, this guide will help.

Here's  helpful guide on how to track your expenses and maximize your forgiveness for the business.

Learn the answers to this question, what has happened since you received your PPP monies?

 
 

Pre-Recorded Webinars


Topic: PPP Forgiveness, now or later?
Date Recorded: Aug 25, 2020 
Meeting Recording: Click here to view Webinar
 
Topic: PPP Forgiveness, now or later?
Date Recorded: Aug 20, 2020 
Meeting Recording: Click here to view Webinar
 
Topic: PPP Loan Forgiveness Guidelines
Date Recorded: Jun 3, 2020 
Meeting Recording: Click here to view Webinar


Program in participation with the SBA.

1 While we continue to read and disseminate the latest guidance in order to keep our clients informed, we do not present ourselves as experts.  Clients are urged to discuss their specific situation with their professional advisors, such as accountants and attorneys.