Paycheck Protection Program

An SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.

Status - November 23, 2020
 

Forgiveness

On October 9, 2020 the SBA launched SBA Form 3508S, a simplified forgiveness application for PPP loans of $50,000 or less.

Our digital application has been updated to accommodate the new SBA Form 3508S and is available to all eligible borrowers. 

All borrowers with outstanding PPP loans have been sent an email with information on how to apply for forgiveness via SVB Online Banking. 

The PPP forgiveness application includes an SVB Online Banking digital application, an expense documentation guide, and on-demand training materials. Knowledgeable support teams are available to help you navigate the challenging SBA requirements.

As you prepare for forgiveness, we recommend reviewing the steps below and SVB’s FAQs for details on how to prepare for forgiveness.

Steps for Forgiveness

1. Determine which SBA form you will use.

Become familiar with the updated SBA PPP forgiveness application form (SBA Form 3508) and the “EZ” forgiveness application form (SBA Form 3508EZ) for eligible borrowers, and the SBA Form 3508S for borrowers with PPP loans of $50,000 or less.

SBA Form 3508EZ
In order to use the “EZ” forgiveness application (SBA Form 3508EZ), one of the following must apply to your business:

• Sole Proprietor – You are self-employed, an independent contractor, or sole proprietor who had no employees at the time of your PPP loan application.

• Employer – You have not reduced the number of employees at all since January 1, 2020 AND have not reduced salary/wages more than 25% during the Covered (or Alternative Payroll Covered) Period for employees earning less than $100K in 2019.

• COVID-Impact – You are not able to operate at the same level of business due to COVID-related requirements AND you have not reduced salary/wages more than 25% during the Covered (or Alternative Payroll Covered) Period for employees earning less than $100K in 2019. 

If none of the preceding statements apply to your business, and your PPP loan is over $50,000, you will need to complete SBA Form 3508. If you are unsure, we recommend completing SBA Form 3508.

Note: If you are using SBA Form 3508, complete the PPP Schedule A Worksheet before starting your online forgiveness application with SVB.

SBA Form 3508S
Borrowers with PPP loans of $50,000 or less may use SBA Form 3508S if the borrower and its affiliates, taken together have not received PPP loans totaling $2 million or more. Borrowers using the SBA Form 3508S do not have to provide detailed calculations of their requested forgiveness amounts and are exempt from reductions in forgiveness based on reductions in FTE employees or reductions in wages. Borrowers are required to submit documentation in connection with their loan forgiveness application and will not be eligible to receive loan forgiveness without this documentation.

The forgiveness amount is dependent on the use of funds and supporting documents must be submitted as part of the application. For more information please visit SBA.gov.

2. Gather the required documentation.

While completing the forgiveness application, you will be required to submit supporting documents.

Review SVB's Documentation Guide and gather the documents outlined. If you have additional questions, we recommend reviewing the SBA's resources at SBA.gov and Treasury.gov.

Document your expenses, both payroll costs and other eligible expenses, incurred during your chosen covered period by the borrower named on the PPP loan note . Many payroll services companies or professional employer organizations (PEO) can produce tailored reports that document payroll expenses during the covered period (either 8 weeks or 24 weeks after the date of your loan funding). If you use a payroll service/PEO, ask if they can tailor a report for your forgiveness application. This will streamline your documentation requirements.

3. Determine the best time to apply for forgiveness.

Evaluate your options to determine when it is best for your business to apply for forgiveness.

PPP borrowers do not need to apply immediately. Some reasons include:

• The SBA may release more guidance and ease rules in the coming weeks. We are eagerly watching to see if congress approves a simplified approval form for loans of $50,000 - $150,000. The AICPA also has additional guidance.

• Clients electing to use a 24-week Covered Period may apply before the end of their Covered Period.

• Per the SBA’s FAQ on PPP Loan Forgiveness dated August 4, 2020, “As long as a borrower submits their loan forgiveness application within ten months of the completion of the Covered Period, the borrower is not required to make any payments until the forgiveness amount is remitted to the lender by SBA”. (Source: General Loan Forgiveness FAQs, Question 3)

• SBA documentation requirements are complex. We suggest taking the time to assemble the right information and documentation to reduce friction in the process.

Other clients may want to apply as soon as possible due to a pending change in ownership, including an acquisition. Note that SVB has 60 days and the SBA has 90 days to process forgiveness requests, so finalizing the forgiveness process may take time regardless of your application date.

4. Access your PPP Loan Forgiveness Application

All borrowers with outstanding PPP loans have been sent an email with information on how to apply for forgiveness via SVB Online Banking.

For more information, please visit our FAQ page.

Important: It is your obligation, as the borrower, to make sure you understand the SBA's rules and that your application is true, complete and correct, and complies with the SBA’s requirements for forgiveness. Loan forgiveness is not automatic and must be requested through Silicon Valley Bank. Other eligibility requirements may apply.

SBA Rules on Changes in Ownership

Many PPP borrowers are considering transactions that involve changes in the borrower’s equity ownership (e.g. raising equity, mergers, etc.). On October 2, 2020, the SBA published an official procedural notice detailing the requirements for PPP borrowers who wish to make any changes to their equity ownership.

Under this new guidance, PPP borrowers who wish to make any equity ownership changes must notify SVB of all transactions. If you are considering any transaction which will change your equity ownership, please find instructions and a complete list of required information here.

Please note that while SVB will submit consent requests that require SBA approval in a timely manner, the SBA may take up to 60 days to respond.