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WHAT TO KNOW ABOUT PPP FORGIVENESS

A guide to the forgiveness application process.

GUIDANCE ON PPP LOAN FORGIVENESS

Application Information and Options for Our Clients

You must complete your application with First Midwest via our online portal only.

  • A computer icon

    How do I apply?

    All PPP loan borrowers must complete your application with First Midwest via our online portal by logging into Spark with your current login and password. Important: You must use a valid email address.

    • 2020 PPP borrowers are now eligible.
    • 2021 PPP loan borrowers will receive an email from Windsor Advantage 8 weeks after the funding of your PPP loan. A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used.

    For certain borrowers, if all loan proceeds have been used prior to 8 weeks following disbursement, please email sbappphelpdesk@firstmidwest.com to request the application be sent.

    Learn more at the SBA’s PPP loan forgiveness site.

  • A application icon

    UNDER $150K LOAN APPLICATION

    If you received a PPP Loan of $150,000 or less, the application process has been simplified and you can apply online via the 3508S application located on the Spark portal.

    Click here to watch a brief instructional video on how to complete the Forgiveness application in Spark.

    Learn more about the under $150K application on SBA’s website here.

    *If a Forgiveness Application is being submitted for a Second Draw PPP Loan, the Borrower must submit with the 3508S documentation that supports the gross receipts reduction the Borrower certified to on their PPP loan application if the Borrower has not already submitted the documentation to the Lender at the time of their PPP Loan Application. See the FAQ below for more information.

  • EZ application icon

    Over $150K Loan EZ Application

    Available to borrowers on the Spark portal 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%.

    Learn more about the EZ application on SBA’s website here.

  • Phone Icon for Support Hotline

    Over $150K Loan FULL APPLICATION

    If you do not meet the criteria for the EZ Application, you must apply via the full forgiveness application located on the Spark portal.

    Click here to watch a brief instructional video on how to complete the Forgiveness application in Spark (this also applies to the Over $150K EZ Application).

    Learn more about the full application on SBA’s website here.

IMPORTANT INFORMATION ABOUT PPP APPLICATIONS

This summary information is not a substitute for the detailed review and analysis required to complete the forgiveness application process. The SBA continues to issue guidance and clarifications regarding the PPP and loan forgiveness process and we will continue to update you with new developments as they become known.

First Midwest Bank does not provide tax, legal, or accounting advice to our bank clients or borrowers for the SBA PPP. Please consult with your tax, legal and accounting advisors. As the borrower under the program, it's your obligation to understand the SBA’s rules on eligibility and the documentation requirements associated with your loan.

SBA PPP FAQs

 

Stages of Forgiveness: A Step-by-Step Process

  • Receive a PPP Loan Forgiveness email prior to your initial eligibility date for application (56 days post funding of your loan). Important: You must use a valid email address.
  • Decide if intend to use the funds past 8 weeks, up to 24 weeks
  • Once ready to apply for forgiveness, click the application link embedded in the email and begin the application
  • Calculate forgiveness
    • We advise working with a financial advisor or accountant when performing calculations
  • Upload supporting documents if required
  • Confirmation / What to Expect Email sent
  • Forgiveness application submitted
  • Applicant may be contacted to provide more information
  • Email notification will be sent to applicant to inform application decision
  • Electronically execute SBA Form 3508, 3508EZ or 3508S and First Midwest's additional documentation
  • When application submitted, applicant can save file and continue working later, then submit when completed
  • Once Lender review completed, Application Status in Spark to “SBA Review”
  • Signed Package sent to First Midwest and forgiveness report to SBA
  • If all related entities total more than $2MM in PPP Loans, applicant will receive a "Loan Necessity Questionnaire" required by SBA. Applicant has 10 Days to complete.
  • The SBA may take more than 90 days to review. Once the application is submitted to the SBA, First Midwest has no insight into the application status until the final notice from the SBA is received.
  • Once SBA finishes their review and renders a decision, the Applications Status in Spark will display as “Complete”
  • If SBA approves full forgiveness, applicant will receive an email confirmation from First Midwest within 10 business days from date of decision.
    • You will receive a final “Paid in Full” notice email from Windsor Advantage within 30 days of initial confirmation. Please retain for your records.
  • If SBA approved partial forgiveness, applicant will receive email from First Midwest with remaining balance within 10 business days from date of decision.
    • Loan documentation will be sent via email from Windsor Advantage in the following weeks.
  • Log into Spark to review official correspondence from the SBA regarding your PPP Loan.

PPP Forgiveness Questions You May Have

You will need to provide proof of proper use of funds, within each of the three documentation categories:

  1. Payroll expenses:
    • IRS payroll tax filings (typically form 941)
    • State income and payroll filings
    • State unemployment insurance filings
  2. Non-payroll expenses:
    • Receipts for mortgage interest
    • Receipts for rent payments
    • Receipts for utility payments
  3. You will be required to:
    • Certify that the information and documentation provided is true and accurate
    • That the PPP funds were used within the program’s guidelines

Full details on required documentation are available on page 10 of the SBA PPP Loan Forgiveness Application.

PPP Loan Forgiveness is not automatic and must be applied for along with all required supporting documentation. If supporting documentation is not provided, the loan will not be eligible for forgiveness. Borrowers may have some or all the loan forgiven.  If not fully forgiven, borrowers will be responsible for repaying any loan amounts not forgiven by the SBA.

The covered period to use the proceeds of your PPP loan for eligible expenses has been expanded to up to 24 weeks., Eligible  expenses for forgiveness fall into two categories:

Payroll*

  • Salary, wages, commission and tips
  • Payroll taxes
  • Employee benefits:
    • Vacation pay
    • Healthcare benefits
    • Insurance benefits
    • Retirement benefits

*At least 60% of the PPP loan proceeds must be used towards payroll to be eligible for forgiveness

Non-Payroll**

  • Rent
  • Mortgage interest
  • Utilities:
    • Electricity and gas
    • Water
    • Transportation
    • Telephone and internet

**Non-payroll covered costs must have been in force prior to 2/15/2020. Up to 40% of the PPP proceeds can be used towards non-payroll.

 

Each Borrower must maintain the documentation they used in verifying their eligibility under the Program. This can include: Payroll Documentation, Non-Payroll Documentation as well as Other Records relating to the Borrower’s certifications including the Borrower’s gross receipt reduction for a Second Draw PPP Loan.

While these documents may not be required to submit the PPP Loan Forgiveness Application, the Borrower must retain all employment records/payroll documentation in its files for four (4) years and all other documents and records for three (3) years after the date of the loan forgiveness application is submitted to the Lender.

The following list includes the primary sets of documentation a Borrower can provide to support their certification they have “sustained at least the 25% reduction in gross revenue” as result of the impacts of the COVID-19 Pandemic.
(Only one set of documents is required, however a Borrower may opt to provide more if they feel it is required).
Quarterly Financial Statements
Y/N Are the Financial Statement/s Audited? If “NO”, Borrower must sign and date first page of financial statement and initial all other pages.
Y/N Do the Financial Statement/s specify which line items are included in their gross receipts calculation? If “NO”, the Borrower must explain which line item(s) represent gross revenue receipts.
Quarterly or Monthly Bank Statements
Y/N Borrower should mark or provide cover page noting which deposits listed on the bank statement are included in their gross receipts calculation (e.g. payments for purchases of goods and services)? If “NO”, Borrower must explain how the supporting documents were used to support their calculation of revenue reduction.
Y/N Borrower should mark or provide cover explanation noting which deposits listed on the bank statement have been excluded from their gross receipts calculation (e.g., capital infusions)? If “NO”, Borrower must explain how the supporting documents were used in their calculation of revenue reduction.
Annual IRS Income Tax Filings (required if Borrower used an Annual Reference Period)
Y/N Has the Borrower filed their 2020 Tax Return yet? If ”NO”, the Borrower must fill out a copy of the TAX Return Forms, compute the relevant gross receipts value, and sign and date the return, attesting that the values that enter into the gross receipts computation are the same values that will be filed on the entity’s tax return.
Y/N

Are the IRS transcripts of the 2020 Tax Return provided?

If “NO”, the SBA has extended through June 30, 2021 the guidance that provides alternate processing procedures when there are IRS delays impacting the tax verification process.*
Y/N

Did the Borrower utilize the alternate processing procedures to provide Tax Verification?

If “NO”, Borrower must provide a certification that the tax information provided is identical to what was submitted to the IRS.

If the SBA determines you did not use all your funds as authorized by the PPP, you may not be granted forgiveness or only given partial forgiveness.

No Forgiveness

  • Your loan is due as per terms outlined below.

Partial Forgiveness

  • A portion of your loan will be forgiven, with the remainder due as per terms outlined below.

Loans carry a 1% interest rate. Loans originated prior to the enactment of PPP Flexibility Act of 2020 on June 5 are due for full repayment at minimum in 2 years, while loans originated after this act are due at minimum in 5 years. If you have a 2-year loan, you may convert to a 5-year loan if you and your lender mutually agree to this update. There is no prepayment penalty on PPP loans.

The following must be met for you to qualify for full forgiveness:

  • At least 60% of funds must be spent on payroll expenses
  • No more than 40% of funds can be spent on eligible non-payroll expenses
  • Funds were used within the 24-week covered period
  • You maintain full-employment and salaries at your business***
  • Provide supporting documentation for payroll and non-payroll expenses

***Several safe harbor provisions exist for this requirement. Please talk with your financial consultant or lawyer for more details.

The SBA is now requesting an additional form from PPP borrowers who, including their affiliates, received PPP loans with an original principal amount of $2 million or greater, in order to maximize program integrity. When the SBA reviews your application after applying for Forgiveness, you will receive a Loan Necessity Questionnaire from First Midwest Bank. Once you receive this form, you have 10 business days to complete it and provide all required supporting documentation. We recommend preparing your answers and saving documentation now, so that you can successfully complete this form within the 10-day window. There are two forms, one for non-profit borrowers and one for for-profit borrowers. (Updated 12/8/2020)

  • View the entire For-Profit Necessity Questionnaire (Form 3509)
  • View the entire Non-Profit Necessity Questionnaire (Form 3510)

A loan forgiveness application must be submitted within 10 months of the completion of the Covered Period. An applicant may select a Covered Period up to 24 weeks after the funded date in order to maximize their potential forgiveness.

  • All non-payroll costs must be incurred or paid during the Covered Period.
  • Payroll and non-payroll expenses are eligible for forgiveness if:
    • Incurred prior to the Covered Period but paid during the selected Covered Period (up to 24 weeks from funded date); or
    • Incurred during the Covered Period and paid on or before the next payroll or billing cycle

If you are an owner of a C Corp, an S Corp, or a partnership, please note that there are additional rules and exceptions. You can find more information on the SBA’s August 11th update on page #4. Click here to access this page from the SBA website.

If a seasonal employer elected to use a 12-week period between May 1, 2019 and September 15, 2019 to calculate the loan amount, the same 12-week period must be used for the forgiveness calculation.

Total cash compensation, which includes compensation, tips, commissions, bonuses and hazard pay, is limited to $100,000 per employee on an annualized basis. However, the gross payroll amount continues to be what is used for the forgiveness calculation, rather than cash compensation.

The Paycheck Protection Flexibility Act of 2020 was signed into law on June 5, dramatically improving several critical forgiveness terms of the PPP. The key improvements:

  • Extends the 8-week forgiveness period to 24 weeks, permitting any borrower to use the extended time-frame or the original 8-week period.
  • Changes the 75%-25% breakdown of payroll to non-payroll expenses to 60%-40%. A minimum of 60% of the loan proceeds must be used for payroll to be eligible for full forgiveness.
  • Extends the loan maturity to 5 years for all loans funded June 5th and beyond. Any pre-existing loans may amend the note to reflect new maturity terms if lender and borrower mutually agree.
  • The deferral period of the loan is pegged to date the forgiveness application is submitted to the lender or 10 months after the end of the 24-week covered period.
  • Expands safe harbor rules for rehiring employees by allowing for a reduction in employees if borrower is able to document:
    • Inability to rehire employees
    • Inability to hire similarly qualified employees
    • Lack of return to same level of business activity as existed at or before February 15, 2020

On February 5, 2021 the SBA published an additional interim final rule which implemented further updates to the PPP as enacted under the Economic Aid Act of December 27, 2020. The interim final rule on Second Draw PPP Loans, and the consolidated interim final rule on PPP loan forgiveness requirements and loan review procedures.

  • Allows individuals who file an IRS Form 1040, Schedule C to calculate their maximum loan amount using gross income.
  • Removed the eligibility restrictions that prevented business owners with non-financial fraud felony convictions in the last year from obtaining PPP loans.
  • Removed the eligibility restriction that prevented business owners who are delinquent or in default on their Federal student loans from obtaining PPP loans.
  • These changes apply to both First and Second Draw Loans.

On March 11, 2021 the American Rescue Plan Act of 2021 was enacted.

  • Expanded eligibility to additional businesses and organizations and revised the size standards and added affiliation waivers for certain businesses and organizations.
  • Provides for the revision of the consolidated interim final rule on loan forgiveness to clarify certain forgiveness payroll cost exclusions under the Economic Aid Act and to incorporate forgiveness payroll cost exclusions required by the American Rescue Act.
  • Removed the restriction for qualifying for a Shuttered Venue Operator (SVO) Grant if that entity also received a PPP loan subject to certain timing/sequencing considerations.

FOR OUR COMMERCIAL AND SMALL BUSINESS CLIENTS

Learn more about programs, accommodations and safe financial practices for your business during COVID-19.

Learn More

FREQUENTLY ASKED QUESTIONS

You want to find an answer easily. We get that. Get a list of answers to your most frequently asked questions.

COVID-19 FAQs

REVIEW THE SBA PPP FORGIVENESS APPLICATION

Begin your preparation by reviewing and gathering necessary documentation.

SBA Forgiveness Information