PPP step 4 - Leumi USA

Step 4: Complete your application package

PPP Loan Forgiveness Application – SBA Form 3508EZ and SBA Form 3508

You must read the instructions provided with each application form. The following are some important reminders as you complete the application, and include information on the Bank’s requirements with respect to forgiveness calculation. Nothing in this table should be construed as legal advice or an assurance that the SBA will agree with the Bank’s standards. If you have any questions regarding your application, please refer to the SBA resources provided on step 1 and speak with your legal advisor or accountant.

Business Legal Name

Your business name on the forgiveness application must match the name on your loan application exactly, including any corporate designations such as “LLC” and “Inc.” and any use of “&” instead of “and.”

DBA or Tradename

Complete this item with the same name you provided on your loan application, if applicable.

SBA PPP Loan Number, Lender PPP Loan Number, and PPP Loan Disbursement Date

You will receive this information from your Bank Leumi Banking Team.

Payroll Schedule

If you use multiple payroll periods, select the frequency that applies to the most number of your employees.

Covered Period and Alternative Covered Period

  • You may choose a Covered Period of 8 weeks or 24 weeks if you received your loan before June 5, 2020. However, you will be deemed a 24-week Covered Period borrower if you seek forgiveness based on eligible expenses that you paid over any period between 8 and 24 weeks after loan disbursement (or if applicable, after the first day of your first pay period following loan disbursement), regardless of when you apply for forgiveness.
  • If your payroll period is biweekly or more frequent, you may elect to use the Covered Period or the Alternative Payroll Covered Period to calculate your payroll costs. But whichever period you choose, you must use the same period to calculate both the cash and non-cash compensation you paid or incurred.
  • If you elect to use the Alternative Payroll Covered Period, your selection applies only to your payroll costs and determination of any FTE or compensation reduction. You must use the Covered Period for all other purposes, including, to the extent applicable, your determination of non-payroll costs and level of business activity.

Payroll Costs

  •  You must use at least 60% of loan proceeds for payroll costs to be eligible for maximum loan forgiveness.
  • You may only include the payroll costs for U.S. employees.
  • You may also include in your payroll costs the following amounts you paid or incurred during the Covered Period or Alternative Payroll Covered Period:
    ✓ any salary, wages, or commissions to furloughed employees up to an annual salary of $100,000, and
    ✓ any hazard pay or bonuses so long as the employee’s total compensation is $100,000 or less on an annualized basis.

Payroll Cost Limitations for Owner-Employees and Self-Employed Individuals

  •  The amount of loan forgiveness available for an owner-employee and a self-employed individual is capped, as follows:
    ✓ for 8-week Covered Period borrowers, 8/52 (or 15.38%) of 2019 compensation up to $15,385 per person; and
    ✓ for 24-week Covered Period borrowers, 2.5/12 (or 20.83%) of 2019 compensation up to $20,833 per person.
  • The 2019 compensation for owner-employees and self-employed individuals is determined, as follows:
    ✓ C-corporation owner-employees, add –
    2019 employee cash compensation,
    employer retirement contributions, and
    employer health insurance contributions.
    ✓ S-corporation owner-employees, add –
    2019 employee cash compensation, and
    employer retirement contributions.
    ✓ Form 1040, Schedule C or F filers, include only –
    owner compensation replacement, calculated based on 2019 net profit.
    ✓ General partners and managing members of LLCs filing taxes as a partnership, include only –
    2019 net earnings from self-employment (reduced by claimed section 179 expense deduction, unreimbursed partnership expenses, and depletion from oil and gas properties) multiplied by 0.9235.

    Incurred but Unpaid Payroll and Nonpayroll Costs

    If you include in your forgiveness amount any payroll or non-payroll costs that you incurred but did not pay during the Covered Period (or if applicable for payroll costs, the Alternative Payroll Covered Period), you must prorate the payments you made on the first regular payroll or billing date after the applicable period to include only those amounts you incurred during such period.

    For Form 3508 Applicants Only

    FTE Calculation

    You have two options for calculating full-time equivalency. Whichever option you choose, you must apply the same method consistently to all part-time employees during your Covered Period or Alternative Payroll Covered Period and the selected reference period.

    FTE Reduction, Exceptions, and Safe Harbors

    • Required Reduction of Forgiveness Due to FTE Reduction – You must reduce your loan forgiveness amount if the total average weekly FTE employees during your Covered Period or Alternative Payroll Covered Period was less than the total average weekly FTE employees during one of these periods to be selected by you (each, a “selected reference period”):
      ✓ between 2/15/2019 and 6/30/2019;
      ✓ between 1/1/2020 to 2/29/2020; or
      ✓ if you are a seasonal employer, you may also select any consecutive 12-week period between 5/1/2019 and 9/15/2019. The forgiveness reduction is made proportionately to the decline in FTE number.
    • Exceptions to FTE Reduction – In your computation of FTE for your Covered Period or Alternative Payroll Covered Period, you may include the FTE of the following positions if they were not filled by new employees:
      ✓ any position for which you made a written offer to rehire an individual who was your employee on 2/15/2020 and you were unable to hire a similarly qualified employee for the unfilled position by the earlier of the date of your forgiveness application and 12/31/2020;
      ✓ any position for which you made a written offer to restore a reduction in hours, at the same salary or wages, during the Covered Period or Alternative Payroll Covered Period and the employee refused; and
      ✓ any employee who during the Covered Period or Alternative Payroll Covered Period (i) was fired for cause, (ii) voluntarily resigned, or (iii) voluntarily requested and received a reduction of hours.
    • FTE Safe Harbors – You are exempt from the required reduction of your forgiveness due to any FTE reduction if either condition applies to you:
      1.  You can document that you were unable to operate between 2/15/2020 and the end of the Covered period at the same level of business activity as before 2/15/2020, due to direct or indirect compliance with COVID Requirements or Guidance.
      2. You reduced your FTE employee number during 2/15/2020 and 4/26/2020 but you restored your FTE employee number to the number you had in the pay period that included 2/15/2020, by the earlier of the date of your forgiveness application and 12/31/2020.

    Salary or Wage Reduction and Safe Harbor

    • Required Reduction of Forgiveness Due to Salary or Wage Reduction – You must subtract from your loan forgiveness the amount of salary or wage reduction but only to the extent that such reduction in salary or wage is not attributable to an FTE reduction. For example: If a full-time employee’s hours were reduced from 40 to 20 hours per week at the same pay rate, you must decrease your forgiveness amount proportionately to the FTE reduction but may disregard the resulting reduction in total compensation for that employee in your forgiveness calculation. The salary or wage reduction applies if you reduced the salary or wages of any employee who made an annualized equivalent of $100,000 or less for all 2019 pay periods, or was newly hired in 2020, by more than 25% during the Covered Period or Alternative Covered Period compared to the period between 1/1/2020 and 3/31/2020. The reduction calculation is done on a per employee basis, not in the aggregate.
    • Salary or Wage Reduction Safe Harbor – You are exempt from the required reduction of your forgiveness due to a salary or wage reduction of any employee if you (i) reduced the employee’s salary or wages during 2/15/2020 and 4/26/2020 but (ii) restored the employee’s salary or wages to the level the employee had in the pay period that included 2/15/2020, by the earlier of the date of your forgiveness application and 12/31/2020.

Required Supporting Documentation

Your application package must include Payroll Supporting Documents, FTE Supporting Documents, and if applicable, Non-payroll Supporting Documents. Your application will not be deemed complete until we receive all documents required to support your application.

Payroll Supporting Documents

  • You must submit each of the following proof of cash compensation:
    Bank account statements (or third-party payroll service provider reports) showing the amount of cash compensation paid to employees.
    Payroll tax filings (typically, Form 941) reported or that will be reported to the IRS (or equivalent third-party payroll service provider reports), which cover the Covered Period or the Alternative Payroll Covered Period.
  • If you are claiming non-cash benefit payments you paid, you must submit the following as applicable:
    State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported be reported, to the relevant state (or equivalent third-party payroll service provider reports), which cover the Covered Period or the Alternative Payroll Covered Period.
    Payment receipts, cancelled checks, or account statements showing the amount of any employer contributions to health insurance and retirement plans that you included in the forgiveness amount.

FTE Supporting Documents

  • For Form 3058EZ Applicants:
    • If you checked only the second box on the checklist on step 1 of this notice, you must provide the average number of FTE employees on your payroll on 1/1/2020 and at the end of your Covered Period.
  • For Form 3058 Applicants:

    You must provide documentation showing the average number of FTE employees on your payroll per week during your selected reference period. Examples:
    Payroll tax filings (typically, Form 941) reported or that will be reported to the IRS, which include the selected reference period.

    State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported or that will be reported to the relevant state, which include the selected reference period.

Non-payroll Supporting Documents

If you are claiming non-payroll costs, you must include the following proof of obligation or service prior to 2/15/2020 and actual payment during the Covered Period, as applicable:

  • For business mortgage interest payments
    Copy of lender amortization schedule and receipts or cancelled checks showing payments during the Covered Period; or

    Lender account statements from February 2020and the months of the Covered Period through one month after the end of the Covered Period showing interest amounts and payments made.

  • For business rent or lease payments
    Copy of current lease agreement and receipts or cancelled checks showing payments during the Covered Period; or

    Lessor account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered period end date showing payments made.

  • For business utility payments –
    Copy of invoices from February 2020 and the Covered Period; and

    Receipts, cancelled checks, or account statements showing payments during the Covered Period.

 

 

Note:

If you are missing any required supporting documentation, you must include a written explanation with your forgiveness application. We may ask you to obtain an opinion from your advisor if we are unable to resolve.

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None of the information should be construed as legal advice or an assurance that the SBA will agree with the Bank’s standards. If you have any questions regarding your application, please refer to the SBA resources provided on page 1 of this notice and speak with your legal advisor or accountant.