Wondering about PPP loan forgiveness?

As a B Corp, Sunrise Banks believes it is their social responsibility to help their community, according to Senior Vice President Chris Albrecht. This year, that has involved handling 1,800 Paycheck Protection Program (PPP) loans worth $215 million.

Over 80% were under $150,000 and 50% were under $50,000, she said.”We really were hitting our mission of taking care of our community and small businesses,” said Albrecht during a Midway Chamber of Commerce Zoom meeting focused on PPP loans held on Wednesday, Sept. 3, 2020.

In all, $11.3 billion was distributed in Minnesota before the PPP loan program closed on Aug. 8, money that helped keep Minnesota employed, observed SBA’s Minnesota District Office Director Brian McDonald.

After the initial $349 billion was claimed within two weeks, another $310 billion was released. Of that, $130 billion remains, according to McDonald. There is speculation that it may be released for additional loans, which could be granted to those who received loans in the first round, or it could be distributed to specific groups of businesses hit hard by the COVID-19 pandemic such as restaurants or musical venues.

“It was really a remarkable effort by the lending community,” said McDonald. “We’ve heard a lot of comments about how helpful it was.”

National SBA representatives visited the Midway area in August to hear from local businesses, including Elsa’s House of Sleep, Deneen’s Pottery and Urban Growler.

Initially, the PPP loan program provided money to cover expenses over an 8-week time frame with a 2-year repayment period at 1% interest. Also, at least 75% had to be spent directly on payroll. Other forgivable expenses included mortgage interest, rent, and utilities.

The rules were adjusted on June 5. The biggest shift was providing funds for a 24-week period, and stipulating that at least 60% (versus 75%) needed to be spent on payroll in order to get full loan forgiveness.

The repayment period was also expanded to five years. Those who received a loan prior to June 5 can request that their borrower change the repayment period from two to five years, pointed out McDonald, but need to get that in writing.

The Small Business Administration is overseeing the PPP loan program. “The SBA used to be one of the best kept secrets of the federal government,” said McDonald. “We’re a small agency with a big mission.”

The SBA was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns. It offers training and financial assistance. It is also helping businesses damaged by civil unrest with disaster loans, particularly for those that were uninsured or underinsured or suffered economic injury.

How to get loan forgiveness

Since the PPP loan program closed, the focus has shifted to loan forgiveness, said McDonald.

The 25 people who attended the virtual session on Sept. 3 were ahead of the curve, according to McDonald.

“It is important to work with your lender,” he advised. The loan forgiveness paperwork will be submitted through the lender. Some will do this online and some with paper applications.

“Stay in touch and keep the lines of communication open with your lender and trusted partners,” McDonald stated.

Local CPA Kevin Sullivan pointed out that businesses can manage this process themselves, use their in-house bookkeeping or hire an outside consultant to pull together the necessary documentation needed for loan forgiveness. SCORE is local resource with volunteers that assist small businesses (www.score.org) with loan applications, as well as marketing and other strategies.

Once a loan forgiveness application is submitted, a lender has 60 days to submit it to the SBA, which then has 90 days to approve it. Businesses have 10 months to submit paperwork for the loan forgiveness.

While there has been speculation that the government may offer wholesale forgiveness, right now everyone who received a PPP loan needs to fill out an application for forgiveness, clarified McDonald.

Sullivan shared information from the American Institute of CPAs. Qualifying payroll costs include:

• Salary, wages, commissioners or similar

• Cash tips or the equivalent

• Payment for leave

• Allowance for separation or dismissal

• Housing allowance or stipend

• Payments for group healthcare benefits including group health care coverage

• Payment of any retirement benefits

• Payment of state and local taxes assessed on the compensation of employees

Those with salaries over $100,000 are excluded, as are those who are not U.S. residents and those who work as independent contractors.

UP NEXT

The Midway Chamber of Commerce is offering the following free online workshops:

• Parents: Surviving and Thriving in the School Year, Thursday, Sept. 17, 3-4 p.m.

• Economic Development: Recovery, Tuesday, Sept. 22,

8-9 a.m.

Upcoming in-person events:

• Midway Walking Tour, Tuesday, Sept. 22, 3-4 p.m.

• Business After Hours, Lake Monster Brewing patio, Tuesday, Sept. 22, 4-5:30 p.m.