Regardless of where you are in the Paycheck Protection Program (PPP) application process, we have answers to some of the frequently asked questions that we’ve been hearing from business owners.
STAGE 1 - APPLICATION
Village Bank is no longer accepting applications as of June 24th
STAGE 2– SUBMITTED APPLICATION
If you’ve submitted an application with Village Bank, here are answers to questions about what happens next:
Q: What can I use the PPP loan for?
A: You should use the proceeds from this loan on your:
1. Payroll costs, including:
a. Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
b. Employee benefits including costs for vacation, parental, family, medical, or sick leave; an allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
c. State and local taxes assessed on compensation; and
d. For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee
2. Interest on mortgage obligations, incurred before February 15, 2020;
3. Rent, under lease agreements in force before February 15, 2020; and
4. Utilities, for which service began before February 15, 2020.
Q: How long should I wait to hear from my banker after submitting all necessary documentation?
A: We understand you are anxious to find out when you will receive your funds as we understand how important this loan is to your business. We are doing our best to respond promptly after receiving documents, but it takes time to review your application and process it.
Q: How do I know when my loan has been successfully processed?
A: You will be notified by the banker that you are working with via email when your loan has been successfully processed and approved into the SBA system. You will also receive via email your loan information (SBA-generated loan number) and documentation to sign via DocuSign from Village Bank. Once you receive this confirmation from your banker, your funding is secured.
Q: After processing is complete, what do I need to do?
A: All funds will be disbursed into a Village Bank deposit account, so a Village Bank cash management expert will reach out to you to open this account if you do not have an existing deposit account with Village Bank. When you receive your loan information and documentation to sign, please ensure all information is accurate. We are doing our best to ensure there are no mistakes, but with the high volume of loans we are processing, mistakes may happen. Be diligent about ensuring the correctness.
Q: When will I receive the funds in my deposit account?
A: On average it can take 10 days to fund your loan. We are working as quickly as possible to fund loans but have a tremendous number of loans to process. Please be patient and diligent about checking your account periodically. If 2 weeks have gone by and your loan has not been funded, reach out to your banker to check-in.
Q: Will my PPP loan be sold?
A: It is not Village Bank’s intention to sell our PPP loans at this time.
STAGE 3 – PREPARING TO SUBMIT FOR LOAN FORGIVENESS
If you’ve been approved for PPP loan funding, here are answers to questions about funding and loan forgiveness:
Q: Can my PPP loan be forgiven?
A: You should review carefully the required certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” You must make this certification in good faith, taking into account your current business activity and ability to access other sources of liquidity sufficient to support your ongoing operations in a manner that is not significantly detrimental to the business. Companies should be prepared to demonstrate to the SBA, upon request, the basis for its certification.
The loan will be eligible to apply for forgiveness if the funds are used during the period after loan disbursement for payroll costs, interest (not principal) on mortgages, rent, and utilities that were in existence prior to February 15, 2020. At least 60% of the forgiven amount must have been used for payroll.
Q: How do I apply for loan forgiveness?
A: See Stage 4 for more details and links to the application.
The application for forgiveness must include documentation of the loan proceeds being used for the purposes included in the calculation of the amount eligible for forgiveness, including state and federal payroll tax reports, unemployment insurance filings, lease agreements, mortgage statements, utility statements, receipts, bank transcripts, canceled checks or other evidence showing how funds were used. Lenders must make a determination on the application within 60 days of your application.
Q: How could the forgiveness amount be reduced?
A: The full forgiveness will be granted to businesses that retain their employees and the compensation paid to those employees. Loan forgiveness amounts will be reduced if the employer has on average fewer employees during the period after receiving the loan than during the time periods of either February 15, 2019, to June 30, 2019, or January 1, 2020, to February 29, 2020, (as chosen by the employer), or if the employer reduces the pay of any employee by more than 25% compared to the last calendar quarter. To encourage employers to rehire workers laid off due to the COVID-19 crisis, the PPP provides that if a business rehires previously laid-off workers or eliminates any reductions in salaries prior to June 30, 2020, it will not be penalized for having a reduced payroll at the time of the loan.
Q: What happens to loan amounts that are not forgiven?
A: Any portion of the loan that is not forgiven will have a 2-year term with deferred P&I for the first 6 months, amortizing over the remaining 18 months at 1%.
Any loans made after June 5, 2020 will have a term of 5-years, versus 2-years per the legislation update passed by the President on June 5th.
STAGE 4 – APPLYING FOR LOAN FORGIVENESS
Your loan period has ended and you're applying for PPP loan forgiveness. Here are helpful answers to questions you have as you're completing the forgiveness application:
Q: Where can I find the PPP Loan Forgiveness Application?
A: On June 17, 2020, the SBA released a revised full loan forgiveness application. In addition to revising the full application, SBA also published a new EZ version of the loan forgiveness application that applies to borrowers that:
• Are self-employed and have no employees; OR
• Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
• Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
The following links are instructions on how to complete the full application and EZ application.
We encourage you to reach out to your CPA, payroll processor, or financial advisor to determine which application to use and ensure accurate completion of the application and documentation.
Q: When can I apply for loan forgiveness?
A: You can apply for loan forgiveness beginning 8 weeks after your loan funding date, or once your funds have been fully utilized. Loan proceeds must be used before the end of the 24 week period.
Village Bank is awaiting guidance from the SBA on how to process and submit completed applications to the SBA for their review. Once guidance is received and Village Bank is able to begin accepting applications, we will notify borrowers accordingly.
Q: What changed with the Paycheck Protection Program Flexibility Act of 2020?
A: The Paycheck Protection Program Flexibility Act of 2020 includes, but is not limited to the following provisions that apply to new and existing loans except for the maturity minimum:
- Extending the loan maturity minimum to 5 years for new loans going forward;
- Changing the breakdown of payroll to non-payroll expenses from 75%-25% to 60%-40%. 60% minimum to be used on payroll costs and 40% can be used on non-payroll items including mortgage interest, rent, and utilities;
- Extend the origination period of PPP loans from June 30, 2020, to December 31, 2020;
- Extend the 8-week covered period to 24 weeks. Borrowers can choose to use the original 8-week covered period for forgiveness or the new 24-week covered period;
- Extend the deferral period for payments to 10 months after the end of the 24-week covered period;
- Allow borrowers with forgiven loans to defer payroll taxes;
- Expand the safe harbor for rehiring employees by allowing that the forgiveness will not be affected by a reduction in employees if the borrower is able to document an inability to rehire individuals, to hire similarly qualified employees, or to return to the same level of business activity as it was operating at before February 15, 2020
Q: Where do I find my SBA PPP Loan Number/Lender PPP Loan Number?
A: For clarification, your SBA PPP Loan Number and Lender PPP Loan Number are the same number and can be found on your Promissory Note under "Loan No" as shown here:
Q: Where do I find my PPP Loan Amount?
A: Your PPP Loan Amount is the disbursed principal amount of the PPP loan (the total loan amount you received from Village Bank) and can be found on your Promissory Note under "Principal" as shown here:
Q: Where do I find my PPP Loan Disbursement/Funding Date?
A: Your PPP Loan Disbursement/Funding Date is the date that you received the PPP loan proceeds in your account from the Village Bank. If loan proceeds were received on more than one date, enter the first date on which you received PPP loan proceeds. To find your Loan Disbursement Date, check your Business Online Banking account or e-statements (mailed statement if applicable) for the date that funds were deposited into your account. An example from an e-statement is shown here:
Q: Where do I send the completed application and supporting documentation?
A: Once you are notified that Village Bank is accepting applications, your completed application and supporting documents can be sent to SBA@villagebankonline.com.
To ensure accurate completion of the PPP Forgiveness Application, work with your CPA, payroll processor, or financial advisor on the specifics of PPP.
Please note: this guidance may change or be updated due to additional analysis or further guidance from the SBA. For complete guidance on the SBA PPP Loan Program visit sba.gov or treasury.gov. Please check back on this page for updated information.
Contact our SBA Team
For more information about SBA resources, please visit Village Bank’s SBA Financing page.