For more than 120 years, Mascoma Bank has helped our customers and our communities through good times and challenges of all sorts. Today is no different, and we stand ready to help you and your business or nonprofit. With the new federal relief package (the CARES Act) now signed into law, we are assisting many of our business and nonprofit customers with the Paycheck Protection Program.
We have received the “SBA PPP Interim Final Rule” (the “Rule”) which contained some significant changes to the program, especially in regard to the banks’ responsibilities. In particular, instead of having to “verify” various applicant representations, including the applicant’s payroll calculation using tax filings and other documents, the banks are now required to “confirm” three items:
“Each lender shall:
- Confirm receipt of borrower certifications contained in Paycheck Protection Program Application form issued by the Administration;
- Confirm receipt of information demonstrating that a borrower had employees for whom the borrower paid salaries and payroll taxes on or around February 15, 2020;
- Confirm the dollar amount of average monthly payroll costs for the preceding calendar year by reviewing the payroll documentation submitted with the borrower’s application…”
Thus, in order for us to process your application as quickly as possible, please be sure to comply with points 1 and 2 above and, in regards to 3, please clearly demonstrate how you calculated your average monthly payroll costs, citing and providing a copy of your source for each number used in your calculation. Please use the sources required by the Rule and include spreadsheets, explanatory notes or other documents we would need to confirm your calculation. Again, this will expedite our processing of your application and our submitting it to the SBA for approval and loan funding.
Below are highlights of the Paycheck Protection Program. It does not include all the details of the ruling but is a summary. Please see the details of the ruling document for more information.
Borrowers must submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099-Misc, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records sufficient to demonstrate the qualifying payroll amount.
How Do I Calculate My Loan Amount
See pages 8-11 of the ruling document.
Who is Eligible
Small businesses that were in operation on February 15, 2020 with 500 or fewer employees – including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors are eligible. See pages 5-7 of the ruling document.
Loan and Loan Forgiveness
Funds are provided in the form of loans that may be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high volume of applications, at least 75% of the forgiven amount must have been used for payroll). Payroll costs are capped at $100,000 on an annualized basis for each employee. Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
The loan amounts will be forgiven as long as:
- The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
- Employee and compensation levels are maintained
Forgiveness of your PPP loan will be based on your actual expenses incurred during the eight week period starting with the initial disbursement of your loan. For your loan to be considered for forgiveness at the end of 8-weeks you must supply the Bank with proof of the expenses you incurred with the loan proceeds and they must be eligible expenses. Please carefully read and thoroughly understand the loan forgiveness provisions of the PPP Loan Program as contained in the Small Business Administration Ruling Document, including which expenses are eligible for reimbursement, the minimum required proportion of payroll expenses, the time period during which these expenses may be incurred, the records you must submit for your loan to be eligible for forgiveness, and the required certifications/
Please also see the Frequently Asked Questions link below on the Treasury Department’s website. Question #20 addresses the length and starting point for the time period for which eligible expenses can be incurred.
To help assist you in tracking information for loan forgiveness we have developed this Expense Accounting and Loan Forgiveness Tool. If you have questions regarding this tool, please click on the “Application in Process or Submit a Question” button below
IMPORTANT TIMELY INFORMATION ONCE YOU RECEIVE A PPP LOAN TO HELP ENSURE FORGIVENESS
It is each borrower’s responsibility to fully understand the loan forgiveness guidelines/requirements to ensure they are eligible for the maximum amount of forgiveness. It is extremely important that each borrower educate themselves before, or immediately after, closing a PPP loan and receiving the proceeds, since the amount of forgiveness is based, among other factors, on the business’s expenses incurred and the number of employees employed during the eight week period commencing with the receipt of loan proceeds. Forgiveness will also be contingent on the borrower’s providing sufficient documentation of the expenses incurred during the eight week period and the eligibility of the expenses. The Rule and subsequent guidance stipulate how payroll costs are to be calculated and how the number of employees is to be calculated and the importance of each in receiving forgiveness of the loan, plus a definition of the eight week time period and a description of eligible expenses. Therefore, we strongly urge each customer to read the Rule, FAQs and other Treasury/SBA documents, plus consult with their accountants and/or lawyers as needed. Also, please monitor the Treasury Department’s website for updates and clarifications.
Frequently Asked Questions
To assist you as you fill out your application, here is a list of frequently asked questions provided by the Small Business Administration and the Department of the Treasury. Some of the information in this document may not pertain to you.