SBA Loans

PPP Loan Forgiveness FAQs

Frequently Asked Questions

Application Process

How early can I submit for forgiveness of my PPP loan?

Borrowers can submit their forgiveness package to Radius Bank eight (8) weeks from the date their PPP loan was funded into their bank account.   

I have spent my SBA loans funds in the less than 8 weeks, can I apply for forgiveness now or do I need to wait?

You can not submit until 8 weeks after the funding.

What is the application process?

  • Borrower applies directly with the lender they applied for the PPP loan. Borrowers will be directed towards Radius Bank’s online application portal, which will direct them to complete either the SBA Form 3508EZ or SBA Form 3508 with other supporting documentation.
  • Upon submission of a completed application, lender has 60 days to verify and recommend a forgiveness amount to the SBA.
  • Upon lender submission of recommendation to SBA, the SBA has 90 days to approve or decline the lenders forgivable recommendation.

When should I hear back after submitting my forgiveness application on a decision?

After submitting a forgiveness application, the Lender has up to 60 days to make a recommendation to the SBA on the forgiveness amount. After the Lender submits its recommendation to the SBA, then the SBA has up to 90 days to render final approval.   

The 60 day window for the lender review starts when we receive the signed application, if we don’t have all the documentation we will reach out to request any additional documentation needed. If we don’t receive the required documentation or if the applicant is non-responsive, we will make a recommendation based on the information we have.

The 60/90 day timeframes listed above are calendar days.

I need help need help on calculating certain fields on the SBA Form 3508, can someone at Radius help me?

No. If you need help calculating certain fields within the SBA Form 3508 please contact your financial advisor or CPA.

Can I submit my forgiveness application or supporting documents by fax or email?

No. You must submit your forgiveness application and all of the supporting documents, including the applicable SBA Forgiveness application, through our online portal.

Who can submit form 3508 EZ?

Who can submit form 3508 EZ:

  • A borrower who is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form (SBA Form 2483).

OR

  • A borrower who did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);

AND

  • The Borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. Also ignore reductions in an employee’s hours that the Borrower offered to restore and the employee refused. See 85 FR 33004, 33007 (June 1, 2020) for more details.

OR

  • The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);

AND

  • The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

To complete the EZ Form, the borrower must satisfy at least 1 of the 3 points above.

What documentation do I need to submit with Form 3508 EZ?

Payroll: Documentation verifying the eligible cash compensation and non-cash benefit payments from the covered period or the alternative payroll covered period consisting of each of the following:

  • Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
  • Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the covered period or the alternative payroll covered period:
    • Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
  • Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount. If you checked only the second box on the checklist on page 1 of these instructions, the average number of full-time equivalent employees on payroll employed by the Borrower on January 1, 2020 and at the end of the covered period.

Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the covered period.

  • Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the covered period; or lender account statements from February 2020 and the months of the covered period through one month after the end of the covered period verifying interest amounts and eligible payments.
  • Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
  • Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments

Documents that each Borrower must maintain but is not required to submit:

  • Documentation supporting the certification that annual salaries or hourly wages were not reduced by more than 25 percent during the covered period or the alternative payroll covered period relative to the period between January 1, 2020 and March 31, 2020. This documentation must include payroll records that separately list each employee and show the amounts paid to each employee during the period between January 1, 2020 and March 31, 2020, and the amounts paid to each employee during the covered period or alternative payroll covered period.
  • Documentation regarding any employee job offers and refusals, refusals to accept restoration of reductions in hours, firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and any inability to hire similarly qualified employees for unfilled positions .
  • Documentation supporting the certification, if applicable, that the Borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the covered period (other than any reductions that arose from an inability to rehire individuals who were employees on February 15, 2020, if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020). This documentation must include payroll records that separately list each employee and show the amounts paid to each employee between January 1, 2020 and the end of the Covered Documentation supporting the certification, if applicable, that the Borrower was unable to operate between February 15, 2020 and the end of the Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19. This documentation must include copies of the applicable requirements for each borrower location and relevant borrower financial records.
  • All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements. The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.

I want to convert my loan from the 8 week period to the 24 week period for forgiveness. How do I switch from 8 to 24 weeks?

All loans qualify for the 24 week forgiveness period.  Forgiveness funds can be utilized up to 24 weeks after funding, but can be applied for anytime from 8 week after funding forward.

Where do I find my loan number?

The Radius Loan Number always starts with 5399 and is on the cover page of the loan documents you received.  The SBA Loan Number is labeled as such on the top of your Paycheck Protection Program note.

Why haven’t I received an email about Forgiveness?

If you haven’t received an email from us, please check your spam folder. Also, if you have unsubscribed from any of our emails, you have unsubscribed from all marketing emails, which would include emails regarding Forgiveness. To re-subscribe, please contact customer service.

Does the 8-week time period begin on the day the funds were disbursed or the day I received them?

It begins on the day your funds were disbursed. You can find the disbursement date in the email from Radius about the loan forgiveness process. We send this email every three weeks until you have completed the forgiveness application.

What is the final deadline to apply for forgiveness?

As of now, it is September 30, 2021, but we encourage borrowers to apply as soon as they have spent their PPP funds on eligible expenses.

Who qualifies for form 3508S?

Any borrower whose total PPP loan amount is $50,000 or less.

Who doesn’t qualify for form 3508S?

If a borrower and it’s affiliates received PPP loans totaling $2 million or more, the borrower cannot use form 3508S.

What is different about SBA Form 3508S?

Borrowers that qualify for Form 3508S are exempt from reduction in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries and wages.

             
SBA Form 3508S does not require borrowers to show the calculations used to determine their loan forgiveness amounts. However, SBA may request information and documents to review those calculations as part of its loan review process.

What is the “Covered Period” for SBA Form 3508S?

The Covered Period is either 24 weeks (168 days) or 8 weeks (56 days), with nothing in between. The Covered Period begins on the date of the loan disbursement. Also, in no event may the Covered Period extend beyond December 31, 2020. Please note, the covered period is the same for all forms 3508, 3508EZ, and 3508S.

What documents must be submitted along with SBA Form 3508S?

Payroll:
a. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
b. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period: i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and ii. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
c. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount.

Nonpayroll:
a. Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
b. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.
c. Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments

Important: The following documents should be maintained, but are not required to be submitted with your application.

All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to its eligibility for a PPP loan, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements. The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.

Documentation

What are the required documents needed for forgiveness?

Either the SBA Form 3508EZ or SBA Form 3508

Documents verifying the number of full-time equivalent employees on payroll and their pay rates, for the periods used to verify you met the staffing and pay requirements:

  • Payroll reports from your payroll provider
  • Payroll tax filings (Form 941)
  • Income, payroll, and unemployment insurance filings from your state
  • Documents verifying any retirement and health insurance contributions
  • Documents verifying that your eligible interest, rent, and utility payments were active in February 2020
  • Documentation showing the number of FTEs for the “Lookback Period”. Borrowers can choose between the following “Lookback Periods” :
    • February 15 to June 30, 2019, or 
    • January 01 to February 29, 2020, or  
    • In the case of a seasonal employer a consecutive 12-week period between May 01 and September 15, 2019.  
    • Borrowers will not be penalized for any FTE reductions if, (1) the borrower made a good-faith, written offer to rehire the employee during the “Covered Period”, and that employee rejected the offer or (2) the employee was fired for cause, voluntarily resigned, or voluntarily requested a reduction in hours. Also, the borrower will not be penalized if FTEs were reduced between February 15 to April 26, 2020, only if the FTEs levels are restored, by June 30, 2020, back to levels that existed on February 15, 2020. 

Documents verifying your eligible interest, rent, and utility payments (canceled checks, payment receipts, account statements)

What documents are needed to verify full-time employees?

  • Payroll reports from your payroll provider
  • Payroll tax filings (Form 941)
  • Income, payroll, and unemployment insurance filings from your state
  • Documents verifying any retirement and health insurance contributions
  • Documents verifying that your eligible interest, rent, and utility payments were active in February 2020

What documents are needed to verify eligible interest, rent or utilities?

We will accept: canceled checks, payment receipts, account statements

I am a sole proprietor, is the required documentation different?

If you’re a sole proprietor, you can have eight weeks of the loan forgiven as a replacement for lost profit. But you’ll need to provide documentation for the remaining two weeks’ worth of cash flow, proving you spent it on mortgage interest, rent, lease, and utility payments

My bills are due outside of the 24-week covered period. Can I claim these expenses?

As long as you pay it on the next regular billing date, any of those eligible non-payroll expenses (utilities, rent, mortgage interest) can be claimed for forgiveness, prorated to the end of the covered period.

In example if the electricity bill for your storefront at the end of each month and you received your PPP loan in the second week of May (May 15, to be specific), your 24-week period ends at the end of October (Oct 30). At the end of May, June, and July, August, and September and you paid your electricity bill as usual. In October, you apply for loan forgiveness. You can seek loan forgiveness on your May through October electricity bills, because they were paid during your forgiveness period.

Also, you can claim forgiveness for the portion of your October electricity bill that was under your covered period (October 1 to October 30), because you paid it on your next regular billing date.

What counts as mortgage interest?

Any interest paid on mortgage on property used for business purposes is an eligible expense that the PPP can be used for and qualifies for forgiveness.

Acceptable examples include:

  • Mortgage interest on a warehouse you own to store business equipment
  • Auto loan interest on a car you own to make business deliveries

If an employee does not wish to return to work, do I need to have a refusal from them in writing?

The borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower.

Loan Forgiveness

How does my loan get forgiven?

The SBA has stipulated that at least 60% of your loan must go towards payroll.  The additional 40% can be applied towards utility bills, rent, as well as mortgage interest.  Backup proof of the utilization of funds with the above parameters within eight weeks of funding, as well as a completed SBA PPP Forgiveness Application (SBA Form 3508) are needed for your loan to get forgiven by the SBA.

Once my forgiveness application is submitted to Radius, how long will it take for me to find out if my loan has been forgiven?

Radius Bank has 60 days from submission of a full application package to review and submit the submission of forgiveness to the SBA.  The SBA then can take up to 90 days to review and approve the forgiveness once Radius submits, for a total of up to five months.  Any part of the loan that is forgiven will have that portion’s accrued interest forgiven by the SBA as well.

How is the forgiveness amount determined?

The Bank will evaluate the applicable SBA Forgiveness Application Form provided by borrower, with all supporting documentation to determine the eligible forgiveness amount per SBA guidelines.

What expenses are eligible for forgiveness?

Payroll Expenses, defined as:

  • Compensation (not exceeding $15,385 per employee) in the form of: gross salary, gross wages, gross commissions, and gross tips, vacation, parental, family, medical, or sick leave (other than leave for which the employer was reimbursed under the Families First Coronavirus Response Act), and allowance for separation or dismissal;
  • Employer contribution for employee group health care coverage;
  • Employer contribution for employee retirement plans; and
  • Payment of state and local taxes assessed on compensation of employees.

Note: For an independent contractor or sole proprietor, payroll costs only include wages, commissions, income, or net earnings from self-employment, or similar compensation.

Non-Payroll Expenses, defined as:

  • Mortgage interest payments for the business on real or personal property (debt incurred before February 15, 2020);
  • Rent/Lease payments for the business on real or personal property (lease in force before February 15, 2020); and
  • Utility payments for the business for electricity, gas, water, transportation, telephone, or internet access (service began before February 15, 2020).

Note: For an independent contractor or sole proprietor, you must have claimed or be entitled to claim a deduction for these expenses on your 2019 Form 1040 Schedule C in order to claim them as expenses eligible for PPP loan forgiveness in 2020.

How do I determine my 24 Week Covered Period?

The 24-week period during which expenses must be incurred or paid:

  • The 24 weeks (168 days) beginning on the day the PPP loan was disbursed or
  • For borrowers with a biweekly (or more frequent) payroll schedule, the 24 weeks (168 days) beginning on the first day of the first pay period following the PPP loan disbursement.

Tip: If you are using an online date calculator, remember to count the date of the disbursement of the loan as part of the 168 days. For example, if the loan was disbursed on May 15, the last day of the 168 days would be October 30).

Will applying for loan forgiveness negatively affect my ability to get a future loan or impact my credit score?

If the loan is forgiven thus you do not have any amount to pay back, there will be no impact on future borrowing or your credit score.

What happens if I am not approved for forgiveness?

What happens to loan amounts that are not forgiven?

For loans funded before June 5th 2020 any loan amounts not forgiven, the SBA allows a loan payback term of two years at 1% interest rate with payments deferred for the first six months. For loans funded on or after June 5th 2020 any loan amounts not forgiven, the SBA allows a loan payback term of five years at 1% interest rate with payments deferred for the first six months.

When does the deferment period begin for the amount not forgiven?

As it stands now, payments on the amount that is not forgiven begin 6 months after the borrower received funding.

What happens if a decision on forgiveness is not made before the loan payments are scheduled to begin?

As it stands now, the borrower would be responsible to make the required payments, again this could change.

When will the monthly payment amount be provided to the customer? Are monthly statements provided showing balance and interest break down? Is the interest tax deductible?

15 days before the payment is due the borrower will get a billing statement in the mail. Statements breakdown principal and interest. If a borrower received funding in May, then in mid-October they would receive a billing statement. Regarding the tax deduction, generally speaking mortgage interest is an operating expense that is deductible, but that would also depend on how the company is formed.

Are there any penalties or fees if I pay back my loan early?

There are no prepayment penalties or fees.

Through the Paycheck Protection Program, Radius has helped put 60,000 employees back to work

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