SBA Paycheck Protection Program FAQ

Frequently Asked Questions

These questions and answers are being provided as a convenience. The answers are based on our interpretation of the SBA Final Rule. This information does not, and is not intended to, constitute legal advice; instead, all information, content, and materials are for general informational purposes only. The information below may not constitute the most up-to-date legal or other information and Enterprise Bank & Trust may update this information without notice. You should contact your attorney to obtain advice with respect to any particular legal matter below. Enterprise Bank & Trust gives no warranty and accepts no responsibility or liability for the accuracy or the completeness of the information and materials contained below. All liability with respect to any action taken or not taken based on the content below is hereby expressly disclaimed.


What is the Paycheck Protection Program (PPP)?

The PPP is a federal loan program that is designed to help small- and medium-sized businesses impacted by the coronavirus (COVID-19) to retain their workforce. One of this program’s significant features is you can apply for loan forgiveness after receiving the funds as long as the funds are used to fund payroll and other specific uses during the covered period. Forgiveness can be up to 100% of the loan and accrued interest. 

When will Enterprise begin accepting forgiveness applications?

If your loan amount was $50,000 or more, Enterprise will begin accepting your Form 3508 or 3508EZ PPP loan forgiveness application on October 27, 2020.
 
If your loan amount was $50,000 or less, you are eligible to use Form 3508S, a simpler forgiveness application for PPP loans that was recently released by the SBA. Our vendor is updating the forgiveness platform for this new form. As soon as we are ready to accept the Form 3508S, we will notify all impacted borrowers. Please do not submit the Loan Forgiveness Application at this time.

All Enterprise PPP clients will receive an email from us with a link to their Loan Forgiveness Application when we are ready to begin accepting applications. We are using a system that allows Enterprise PPP borrowers to electronically submit their forgiveness application and supporting documents. We strongly encourage our PPP borrowers to use our electronic forgiveness platform which will pre-fill portions of your application, making the process more efficient for you. However, if you cannot complete an electronic application, please notify us by sending an email to sbapaycheck[email protected].

Please visit our SBA PPP Loan Forgiveness page for more information.

When will I know how much of my loan will be forgiven?

Upon receipt of a complete application, Enterprise has 60 days to review your application and supporting documentation and make a loan forgiveness recommendation to the SBA. We’ll contact you if we need additional information. We will notify you when we submit your loan forgiveness application to the SBA. The SBA will process your application within 90 days of our recommendation and notify Enterprise of its decision. Enterprise will notify you of the final SBA decision.

When can I apply for loan forgiveness? 

Subject to the lender accepting applications, borrowers may submit a loan forgiveness application any time on or before the maturity date of the loan—including before the end of the covered period—if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness. Payments may be due if the borrower delays submitting a forgiveness application beyond 10 months after the end of the covered period. For more details, please see the FAQ link below. If the borrower applies for forgiveness before the end of the covered period and has reduced any employee’s salaries or wages in excess of 25 percent, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period, as described in Part III.5 of the SBA Interim Final Rule.  

When do I have to start making principal and interest payments on my PPP loan?

If the borrower does not apply for loan forgiveness within 10 months after the last day of the covered period, or if SBA determines that the loan is not eligible for forgiveness (in whole or in part), the PPP loan is no longer deferred and the borrower must begin paying principal and interest. If this occurs, the lender must notify the borrower of the amount and date the first payment is due.

Which forgiveness application, Form 3508 or Form 3508EZ, should I submit?

There are three forgiveness applications: Form 3508, Form 3508EZ and Form 3508S. Our forgiveness platform will allow you to check your S or EZ Form eligibility.

Form 3508S requires fewer calculations and less documentation for eligible borrowers. 

  • Borrowers that use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, SBA may request information and documents to review those calculations as part of its loan review process.

For review purposes only, the Form 3508S is here and the form instructions are here.

Form 3508EZ requires fewer calculations and less documentation for eligible borrowers. Borrowers who use Form 3508 (long form) are also required to submit a Schedule A. The Form 3508EZ applies to borrowers who meet any one of the following criteria:

  • The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form. 
  • Did not reduce salary or wages for any employee by more than 25% during the covered period AND did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
  • Did not reduce salary or wages for any employee by more than 25% during the covered period AND experienced reductions in business activity as a result of health directives related to COVID-19.

If you meet at least one of the criteria above, you will be allowed to use the SBA Form 3508EZ to apply for forgiveness. For review purposes only, the Form 3508EZ is here and the form instructions are here.

Form 3508 is a longer form and requires a Schedule A to be submitted. If you do not meet the criteria for Form 3508EZ or 3508S, you must apply for forgiveness of your PPP loan using SBA Form 3508 (6/20). For review purposes only, the Form 3508 is here and the form instructions are here.

What supporting documents do I need to provide with the forgiveness application?

Each borrower must submit documentation with its PPP Loan Forgiveness Application Form 3508 or 3508EZ to the lender. You should gather the following documents verifying eligible expenses, including the number of full-time equivalent employees on your payroll and their pay rates for the time frame used to verify you met the staffing and pay requirements:
 
Payroll Expenses - Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:

  • Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
    • Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
      • Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
      • State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
  • Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount.

Nonpayroll Expenses - Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period. (Remember: This only applies if you included nonpayroll expenses in the amount for which you are trying to seek forgiveness.)

  • Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments. 
  • Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments. 
  • Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments
Where can I get help on the forgiveness application?

Please visit our SBA PPP Loan Forgiveness page for more information.

What size loans will the SBA review?

The SBA may review any PPP loan of any size at any time at its discretion. If SBA undertakes such a review, SBA will notify the Lender and the Lender must notify the borrower in writing within five business days of receipt of notification. The SBA may also request additional information directly from the borrower. 

What are the records retention requirements for the PPP program?

Borrowers are required to retain PPP loan supporting documents for a period of six years after the date that the loan is forgiven or repaid in full. Such information includes payroll documentation, documentation supporting the borrower’s certifications, documentation delivered in connection with, and in support of, the borrower’s loan forgiveness application, and any other records demonstrating material compliance with PPP requirements. Questions about PPP records retention should be directed to your legal counsel, financial advisor or accountant for assistance.

Is the borrower demographic information on the PPP forgiveness application required?

No, the disclosure of this information is optional and voluntary and will have no bearing on the loan forgiveness decision.

How does an EIDL loan impact forgiveness? 

Adjustments to your forgiveness may be necessary if you received an Economic Injury Disaster Loan (EIDL) loan in addition to your PPP loan. Questions about EIDL loan adjustments should be directed to your legal counsel, financial advisor or accountant for assistance.

Where can I get more information on the PPP forgiveness process and rules?

A link to the SBA FAQ’s on loan forgiveness is here.

What can I use my funds for?

The permitted use of proceeds are:

  1. Payroll costs
  2. Rent
  3. Utilities
  4. Interest on mortgages, and
  5. Interest on other debt obligations on debt incurred before February 15, 2020.

To receive full loan forgiveness, a borrower must use at least 60 percent of the PPP loan for payroll costs, and not more than 40 percent of the loan forgiveness amount may be attributable to non-payroll costs. Forgiveness will be reduced proportionally if payroll does not meet the 60% threshold.

How long do I have to spend the loan proceeds?

The SBA extended the “loan forgiveness covered period” to a 24-week period beginning on the date your PPP loan was disbursed or December 31, 2020, whichever is earlier. If your PPP loan was made before June 5, 2020, you may elect to have your loan forgiveness covered period be the eight-week period beginning on the date your PPP loan was disbursed. If you elect to use an eight-week covered period, you may seek forgiveness for payroll costs for the eight weeks beginning on either:

  1. The date of disbursement of your PPP loan proceeds; or
  2. The first day of the first payroll cycle after disbursement of your PPP loan proceeds (the “alternative payroll covered period”).
What is the maximum amount an owner-employee or single employee can pay themselves during the covered period?

The SBA recently provided guidance for the maximum amounts that can be used for payroll costs for a single employee and income replacement for an owner-employee in obtaining forgiveness.

  • The eight-week period is calculation is 8 ÷ 52 × 2019 net profit, up to a maximum of $15,385.
  • For the 24-week period, the forgiveness calculation is limited to 2.5 months’ worth (2.5 ÷ 12) of 2019 net profit, up to $20,833.
Are there any other products available as part of the relief package that could positively impact (forgiveness, cover payments, etc.) my business loan with Enterprise?

Yes. For example, if you have an existing SBA loan with the bank, there is payment relief available for that specific SBA loan during the remainder of 2020. You can find additional information on our COVID-19 Customer Information page or discuss options with your Relationship or Portfolio Manager.

I received my PPP funds and want to change the amount. What should I do?

No changes are permitted after your PPP loan has been funded.

What changes did the  Paycheck Protection Program Flexibility Act of 2020 make to the Program?

This Act provided flexibility for the following:

  • Created a new exemption for borrowers to avoid a reduction in loan forgiveness amount when they have a reduction in full-time equivalent employees.
  • The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest.
  • To receive full loan forgiveness, a borrower must use at least 60 percent of the PPP loan for payroll costs, and not more than 40 percent of the loan forgiveness amount may be attributable to nonpayroll costs. Forgiveness will be reduced proportionally if payroll does not meet the 60% threshold.
Can I repay my PPP loan?  

Yes, Borrowers may repay their PPP loan at any time without a prepayment penalty. You will be charged accrued interest on the PPP loan for any time it was outstanding. For repayments after May 18, 2020, the certifications you made on your application remain subject to SBA review.

Does Enterprise pay agents or agent fees?

Enterprise may pay agent fees if the agency is disclosed at the time the loan application is submitted and the parties reach a contractual agreement for fees that are consistent with SBA requirements.

Who can help answer my question if it’s not on the website?

Due to the overwhelming number of questions, we are asking borrowers to discuss questions with their legal counsel, financial advisor or accountant for assistance. Ultimately, the accuracy of the calculation is the responsibility of the applicant. For more information on the program, you can review the SBA website at SBA.gov.