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 AFNB may update this information without notice. You should contact your attorney to obtain advice with respect to any particular legal matter below. AFNB 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.

SBA FAQ's on Loan Forgiveness

SBA PPP FAQ's

US Treasury PPP Information

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 can I apply for loan forgiveness?

August 17th we will begin accepting applications. You 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 you have used all of the loan proceeds for which you are requesting forgiveness. Payments may be due if you delay submitting a forgiveness application beyond 10 months after the end of the covered period. For more details, please see the FAQ link below. If you apply for forgiveness before the end of the covered period and have reduced any employee’s salaries or wages in excess of 25 percent, you 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 you do 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 you must begin paying principal and interest. If this occurs, we will notify you of the amount and date the first payment is due.

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 us and we will notify you in writing within five business days of receipt of notification. The SBA may also request additional information directly from you.

What are the records retention requirements for the PPP program?

You 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 your 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. If you complete the borrower demographic information on the PPP forgiveness application we will include it with our submission of your application to the to SBA.

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.

What can I use my funds for?

The permitted use of proceeds are:

Payroll costs

Compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation;
Cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips);
Payment for vacation, parental, family, medical, or sick leave; Allowance for separation or dismissal;
Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement;
Payment of state and local taxes assessed on employee compensation; and
For an independent contractor or sole proprietor who separately applied for a PPP loan, wages, commissions, income, or net earnings from self-employment or similar compensation.

Non-Payroll Costs

Mortgage loan interest on any business mortgage obligation — whether for real estate or personal property — is includible so long as the mortgage itself was in place on February 15, 2020. Only interest is includible, not the principal payment portion of a mortgage payment or any prepayment of principal or interest.
Rent is includible so long as the rental agreement was in place on February 15, 2020. This includes rent on real property and rent paid for the rental of equipment. To be eligible for inclusion in forgivable expenditures, the lease agreement giving rise to the rent payment must be an obligation of the applicant.
Payments for the following utilities are included in forgivable PPP loan expenses if the utility service was in place on February 15, 2020:
- Electricity;
- Gas;
- Water;
- Transportation;
- Telephone (this should include cellphone contracts on which you are the contracting party); and
- Internet service.

Interest on mortgages, and 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: The date of disbursement of your PPP loan proceeds; or The first day of the first payroll cycle after disbursement of your PPP loan proceeds (the “alternative payroll covered period”).

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.

AFNB cannot provide financial, legal or tax advice, including interpretation of the SBA’s rules or guidance for loan forgiveness, or how they may apply to the circumstances of your business. Please seek financial, legal or tax advice from your financial, legal and/or tax professional(s). Please note that the information above is taken directly from the SBA and/or the SBA Paycheck Protection Program Loan Forgiveness Application, and is posted here solely for your convenience. It is not intended to be, and should not be considered, comprehensive or definitive. Please be sure to consult the SBA and/or U.S. Treasury PPP websites for information related to loan forgiveness and the PPP program. Guidance and rules directly from the SBA and/or the U.S. Treasury will supersede and control over any information or in any FAQ posted here, to the extent of any conflict.

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