PPP Loan Forgiveness Resources

Last Updated: 1/15/2021

The information provided is intended for informational use only and is subject to change.

An update for our customers: new Congress stimulus bill

As you may have heard, on December 27, new federal stimulus legislation was approved, and it includes continuing the Paycheck Protection Program (PPP) and providing additional assistance to small businesses affected by the Covid-19 pandemic.

To help with your planning, below is a preliminary summary of highlights in the new legislation, keeping in mind this is a fluid situation and we’ll keep you informed if information changes.

#1: Paycheck Protection Program Simplified Loan Forgiveness
Simplifies the forgiveness application process for smaller loans up to $150,000 and expanded expenses that are eligible for forgiveness for new PPP loans taken out in 2021.

If you received a PPP loan from Eastern during the first round of PPP funding, there is no action to take until the SBA issues further guidance and we contact you. Since changes are expected, if you have not yet applied for loan forgiveness, you may want to wait. We’ll send you an e-mail with an invitation to apply once the necessary updates have been made to accommodate these changes.

If your loan forgiveness application of any amount is currently in process, we’ll contact you with next steps.

#2: Other Highlights

Paycheck Protection Program Loans for First-Time and Second-Time Borrowers
Establishes a new round of PPP loans for eligible businesses. Click here to learn more and apply.

Tax and Small Business Lending Highlights in the New Legislation Include:

Business expenses paid with PPP loans are tax deductible, consistent with the CARES Act.
Section 1112 of the CARES Act has been extended, which provides payment of principal, interest, and associated fees on qualifying SBA 7(a), 504 and microloans.
If you are an EIDL borrower, the Advance Deduction in Section 1110(e)(6) of the CARES Act has been repealed.

Loan Forgiveness Next Steps

We’re working to update our automated platform so that your application with us – for loan forgiveness – is convenient. We’ll send you another message soon with information on how we’ll be administering this newest PPP loan forgiveness legislation.

In the meantime, for the latest information on PPP forgiveness, visit SBA.gov and Treasury.gov. For EIDL loans, visit the SBA here.

Please also be alert – scammers attempt to take advantage of PPP programs to perpetuate fraudulent activity. If you are contacted by the SBA directly, notify your Eastern banker immediately for assistance and before providing any information. Learn more about COVID-19 scams here.

The information provided is intended for informational use only and is subject to change.

If you have secured Federal Paycheck Protection Program (PPP) loan funding with the Small Business Administration (SBA) through Eastern Bank, you may be wondering what's next and what to know about loan forgiveness.

Remember, based on the latest updates from the SBA, you now have more time to apply for loan forgiveness and can wait before submitting your application. This may be beneficial should new Federal guidelines be announced that may impact your application. There are also safe harbor provisions that you may want to familiarize yourself with that could impact forgiveness that run through the end of the year.

When you are ready to apply, keep in mind the following:

As of November 5, Eastern Bank is accepting applications for PPP loan forgiveness. Approximately at the end of the borrower’s 24-week Covered Period, customers will receive an invitation to apply by email. The email will contain a link with information on the process and access to the loan forgiveness application portal. All Eastern PPP loan customers will need to apply for loan forgiveness through our digital platform. We are not accepting paper applications.
The platform will follow the content of the forgiveness applications issued by the Small Business Administration (SBA). It will guide you to the right application to complete and prompt you step-by-step to add your information, but the application forms will not be uploaded into the platform. Please familiarize yourself with the information requested in the applications, and if you qualify to use the “S”, “EZ” or “Standard” applications.
Please allow up to 60 days for Eastern to validate your forgiveness application. Any approved forgiveness amount must also be approved by the SBA, which may take up to 90 days following the bank’s determination.
Based on its latest updates, the Small Business Administration (SBA) has stated you can apply for forgiveness any time during the term of your loan, and the payment is deferred up to 16 months. You can apply any time after your chosen covered period (either 8 weeks or 24 weeks) but ultimately, you should do what is most beneficial to you and your business and it may be beneficial to wait a few months to apply.

See below for more information on the following:

• Documentation and Getting Prepared
• When To Apply
• 6 Points To Remember About The SBA’s PPP Loan Forgiveness Application
• Best Practices On The Path To Forgiveness
• Resources and Helpful Links
• Be Aware of COVID-19 Scams

For your convenience, you may also e-mail Eastern at PPPinquiry@easternbank.com.

This dedicated e-mail address is staffed by bankers who can assist with questions during regular business hours.

Documentation and Getting Prepared

The information provided is intended for informational use only and is subject to change.

Documents you will need for forgiveness

If you have received an SBA Paycheck Protection Program loan, the next step is to prepare for forgiveness of your loan. SBA forgiveness is not automatic. You’ll need to apply, and there are a number of requirements.

Approximately at the end of the borrower’s 24-week Covered Period, customers will receive an invitation to apply by email. The email will contain a link with information on the process and access to the loan forgiveness application portal. All Eastern PPP loan customers will need to apply for loan forgiveness through our digital platform. It is an entirely online process. No paper applications are being accepted.
Our automated platform will prompt you to answer questions about your loan and then will guide you to the SBA forgiveness application to complete. The SBA has created the simpler Form 3508S for smaller loans of $50,000 or less, or otherwise use Form 3508EZ or 3508Standard.

BEFORE YOU APPLY FOR FORGIVENESS:

Familiarize yourself with the SBA Form to use
- Form 3508S (for smaller loans of $50,000 or less)
- Form 3508EZ
- Form 3508Standard
Review the instructions for your SBA Form, then organize your required documentation and be prepared to upload it in our automated platform when you apply
- Form 3508S Instructions (for smaller loans of $50,000 or less)
- Form 3508EZ Instructions
- Form 3508Standard Instructions
Read about your most frequently asked documentation questions below

How will I know the right SBA Form to use?

The latest guidance from the SBA requires borrowers using Form 3508S as well as Form 3508EZ and Form 3508Standard to submit documentation in connection with their loan forgiveness application. You will not be eligible to receive loan forgiveness without supporting documentation.

SBA Form 3508S includes a simplified application process for borrowers with PPP loans of $50,000 or less.

Form 3508EZ is for borrowers who meet at least one of these requirements: self-employed, did not reduce more than 25% of payroll, or did not reduce more than 25% of FTEs.

For detailed information on the applications, including Covered Periods, the types of costs that are eligible for forgiveness, and the documentation you will need to submit, please visit the SBA and Treasury websites.

All Eastern PPP loan customers will need to apply for loan forgiveness through our digital platform. Our automated platform will prompt you to answer questions about your loan and then will guide you to the right SBA forgiveness application to complete.

What expenses qualify for PPP loan forgiveness?

The PPP loan is intended to help small businesses keep employees on their payroll. Loans may be forgiven if an eligible small business uses it for full and part-time employee wages between the first eight and 24 weeks after the loan money is received.

• 60% of the loan amount must be used for payroll costs. These include:

- Employee salaries - Salary cap is $100,000 per employee.

- Group health care benefits, retirement benefits, and state/local taxes on employee salaries.

- Note: 1099 employees are ineligible for loan forgiveness calculations.

• No more than 40% of the loan amount can be used for non-payroll costs in place prior to February 15, 2020. These include: mortgage interest, rent, and utilities.

Will I be required to submit documentation?

Yes. A list of the documents each borrower must submit with its application is available here. You will have to provide proof of qualifying expenses, so you are encouraged to keep very good payroll and expense records. Some businesses may want to consider working with a tax professional or a CPA for help with recordkeeping. Keep documentation electronically. Any documentation needed with your application you will submit through our automated platform. Paper copies are not being accepted.

The following actions may increase your likelihood of forgiveness after the eight-week period:

• Keep disciplined records: Create account codes or sub-codes so there’s a paper trail for qualified expenses.

• Have supporting documents ready: Stay organized with your documentation of PPP fund usage - especially for payroll, interest, rent, and utilities payments.

- For Payroll the following documents must be provided:

• Bank account statements or third-party payroll service provider reports showing the amount of cash compensation paid to employees.

• Tax Forms showing payments that overlap with the chosen covered period to include:

o Payroll Tax filings, typically 941s

o State quarterly business and individual wage reporting

o Unemployment Insurance tax filing

• Payment receipts, cancelled check or account statements documenting payment to non-cash payroll benefits like retirement benefits and healthcare premium paid by the employer.

- For FTE, the following documents must be provided:

• Tax Forms showing the number of FTEs during the borrower’s chosen reference period. Acceptable documents are:

o Payroll Tax filings, typically 941s

o State quarterly business and individual wage reporting

o Unemployment Insurance tax filing

- For mortgage interest payments, acceptable documents are:

o Lender Amortization Schedule

o Receipts or Cancelled checks showing payments during the covered period

o Lender Accounts statements showing payments during the covered period

- For rent or lease payments, acceptable documents are:

o Copy or Rent/Lease Agreement

o Receipts or Cancelled checks showing payments during the covered period

o Lender Accounts statements showing payments during the covered period

- For Business Utility Payments, acceptable documents are:

o Copy of invoices/statements verifying the payment amount

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

TIP: Keep your documentation electronically. When it becomes time to submit your application on our online platform, your access to electronic records will be most efficient.

Keep in mind, these are a few preparations your small business may want to consider, but they are by no means all the factors you may need to take into account to qualify for PPP loan forgiveness. Finally, as a PPP lender, Eastern Bank can’t offer an opinion on whether the loan of any particular borrower qualifies for forgiveness.

When To Apply

Based on its latest updates, the Small Business Administration (SBA) has stated you can apply for forgiveness any time during the term of your loan, and the payment is deferred up to 16 months. Remember, based on these latest updates, you now have more time to apply and can wait before submitting your application. This may be beneficial should new Federal guidelines be announced that may impact your application. There are also safe harbor provisions that you may want to familiarize yourself with that could impact forgiveness that run through the end of the year.

You can apply any time after your chosen covered period (either 8 weeks or 24 weeks) but ultimately, you should do what is most beneficial to you and your business and it may be beneficial to wait a few months to apply.

5 Points To Remember About When To Apply

SBA guideline - Based on its latest updates, the Small Business Administration (SBA) has stated you can apply for forgiveness any time during the term of your loan, and the payment is deferred up to 16 months.
Payment deferral - We are automatically deferring the payments on all PPP loans with Eastern Bank for 16 months, or up to 10 months from the end of your24 week forgiveness period.
Pending Congressional legislation - The possibility remains of new Congressional legislation that may change loan forgiveness requirements. Please visit SBA.gov or Treasury.gov for any updates.
Tax and other implications - You may want to consider working with a tax, legal or other trusted professional before you apply for loan forgiveness. Please be aware that there are safe harbor provisions that you may want to familiarize yourself with that could impact forgiveness that run through the end of the year.
Processing time - Please allow up to 60 days for Eastern to validate your forgiveness application. Any approved forgiveness amount must also be approved by the SBA, which may take up to 90 days following the bank’s determination.

The information provided is intended for informational use only and is subject to change.

6 Points To Remember About The SBA's PPP Loan Forgiveness Application

Here are 6 points to know now about PPP loan forgiveness, as per the SBA’s application and related worksheets:

1. Payroll Period Flexibility

The SBA has offered some flexibility for payroll during the eight-week (56-day) loan spending period (Covered Period).

• You now can choose to calculate payroll costs using an eight-week period starting the day your loan was funded (Covered Period) or using an “Alternative Payroll Covered Period” that aligns with your regular payroll cycle.

- For example, if you pay employees bi-weekly, you can start your “Alternative Payroll Covered Period” on the first day of your business’s first pay cycle following disbursement of your loan, making it easier to calculate your total payroll costs in the loan forgiveness application.

Enhancements through the PPP Flexibility Act announced on June 5, 2020:

• The period to spend your proceeds has been increased from 8 to 24 weeks.

• The amount of the loan that must be used for payroll is lower, at 60% rather than 75%.

2. Expenses Paid and Incurred

Costs eligible for inclusion in your forgiveness application include expenses paid and expenses incurred.

• Payroll costs incurred but not paid during the last pay period of the Covered Period or the Alternative Payroll Covered Period are eligible for forgiveness if paid on or before the next regular payroll date.

• Eligible nonpayroll costs must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period.

• Have supporting documents that reflect these expenses prepared.

3. FTE Reductions

The SBA issued guidance on full-time equivalent (FTE) reductions that – if not filled by new hires – can be exempted from forgiveness calculations. You can exclude the following situations from forgiveness calculations:

• Any positions for which you made a good-faith offer in writing to rehire an employee during the Covered Period, which was rejected by the employee;

• Any employees who during the Covered Period were terminated for cause, voluntarily resigned, or voluntarily requested and received a reduction of their hours.

• Have supporting documents that reflect these expenses prepared.

4. Salary and Hourly Wage Reductions

Your loan forgiveness amount may be reduced due to a statutory requirement concerning reductions in employee salary and wages. The amount of loan forgiveness will depend on whether salary or hourly wages during the Covered Period or the Alternative Covered Period were less than from January 1, 2020 – March 31, 2020.

• If salary and hourly wage levels were restored, you may be eligible for elimination of the salary and hourly wage reduction amount.

• You will need to complete a worksheet – only for employees whose salaries or hourly wages were reduced by more than 25% – to determine whether to reduce the amount of loan forgiveness for which you are eligible.

5. Restoring FTE levels by 6/30/2020

The SBA now allows you to qualify for a safe harbor exemption from loan forgiveness reduction if you restore FTE levels by June 30. This safe harbor applies if the following two conditions are met:

• You reduced your business’ FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and

• You then restored FTE employee levels by June 30, 2020 to the FTE employee levels in the pay period that included February 15, 2020.

Enhancements through the PPP Flexibility Act announced on June 5, 2020:

• You now have more time to restore FTE levels, by December 31, 2020 rather than June 30, 2020.

6. Restoring Salary and Hourly Wage Reductions

The SBA issued guidance on calculating reductions in employee salary and wages, and it involves:

• Determine if pay was reduced by more than 25%.

• Determine if the salary and hourly wage reduction safe harbor is met.

• Determine the salary and hourly wage reduction.

You may qualify for a salary and hourly wage safe harbor if certain criteria are met.

Keep in mind, these are just a few points to consider, but are by no means all the steps you may need to take to qualify for PPP loan forgiveness. Finally, as a PPP lender, Eastern Bank can’t offer an opinion on whether the loan of any particular borrower qualifies for forgiveness.

The information provided is intended for informational use only and is subject to change.

Best Practices on the Path To Forgiveness

Best Practice #1

Forgiveness is not guaranteed

Specific criteria will need to be met if you want to turn your PPP loan into a grant. We will keep you informed as more information becomes available from the SBA, and for now, we are providing some ideas for ways to prepare to help stay on track.

Best Practice #2

Timing

Per the guidelines in the Paycheck Protection Program (PPP) Flexibility Act announced on June 5, 2020, you will need to spend your loan amount during the eight-to-24-week Covered Period, which begins on the date your loan was disbursed. The portion not spent on qualifying expenses during the Covered Period becomes a regular loan with a 1% interest rate, payable over your maturity period from your original funding date, with an initial payment deferral of 16 months. If in the event your loan is not forgiven, other deferment or repayment options may be available.

Best Practice #3

Other funding

A basic reminder for businesses that received grants under the SBA’s Economic Injury Disaster Loan (EIDL) program. If your business received an EIDL loan with a corresponding emergency, then any PPP forgiveness would be reduced by that EIDL $10,000 grant portion of the EIDL loan amount.

Best Practice #4

Covered Period and Alternative Payroll Covered Period

Although they sound similar, they’re quite different. Familiarize yourself with what they mean. “Covered Period” is the eight-to-24-week period of your PPP loan. The first day is the same as your PPP loan disbursement date. “Alternative Payroll Covered Period” is for administrative convenience. Borrowers with a biweekly or more frequent payroll schedule can choose to calculate eligible payroll costs using the eight-to-24-week period beginning on the first day of their first pay period following their PPP loan disbursement date, the Alternative Payroll Covered Period.

Best Practice #5

Safe harbor exemptions

A safe harbor may exempt some borrowers from the loan forgiveness reduction based on two criteria: 1. FTE employee levels, and/or 2. salary and hourly wage reduction.

The information provided is intended for informational use only and is subject to change.

Resources And Helpful Links

There is a lot to understand about the SBA’s PPP loan forgiveness, especially as information changes.

PPP Loan Forgiveness Resources

PPP Loan Forgiveness Resources Information Page
Monit, A Free Financial Assistant To Help Track PPP-Related Expenses
Email Eastern at PPPinquiry@easternbank.com (this dedicated e-mail address is staffed by bankers who can assist with questions during regular business hours)

Government Resources

Please visit SBA.gov or Treasury.gov for any updates.

Be Aware of COVID-19 Scams

Please be alert – scammers attempt to take advantage of events like this to perpetrate fraudulent activity. Therefore now more than ever, we encourage you to remain vigilant at this time to protect yourself.
Always obtain your information from credible sources and if you are unsure of the source, do not take any action.

If you are a PPP loan customer:
•   Any Small Business Administration (SBA) loan is publicly available information. This means your name, address and loan guarantor are easily searchable by fraudsters.
•   The SBA may be contacting PPP loan recipients directly as part of its own guidelines. If you are contacted by the SBA directly, notify your Eastern banker immediately for assistance and before providing any information.
•   There are reports of phishing activities around PPP loans and fraudsters appearing as the SBA.

Helpful links:
•   Federal Trade Commission (FTC)
•   U.S. Department of the Treasury
•   Federal Bureau of Investigation (FBI)
•   SBA Programs – Scams and Fraud Alerts

The information provided is intended for informational use only and is subject to change.

Assistance for Eastern Bank Customers

Update for Business Customers - Paycheck Protection Program

Investor Relations

PPP Loan Forgiveness Resources

An update for our customers: new Congress stimulus bill

See below for more information on the following:

• Documentation and Getting Prepared
• When To Apply
• 6 Points To Remember About The SBA’s PPP Loan Forgiveness Application
• Best Practices On The Path To Forgiveness
• Resources and Helpful Links
• Be Aware of COVID-19 Scams