Loan Forgiveness Center

Our priority is to provide the highest efficiency and service to you and your business, so we’ll be inviting applicants in waves to ensure we are able provide you a personalized, quality Member experience. We will be inviting your business soon. Invites will be prioritized by applications that are due first. While you wait for your invitation, you can prepare for the forgiveness process. RCU’s PPP Loan Forgiveness Center web page provides detailed information, resources and steps you can take now in preparation for your application.

Please note, we’re not participating in the SBA’s direct forgiveness portal to ensure you get high quality service and support. Our dedicated team of PPP experts is ready and available to assist you. Our involvement will not add additional time to the application process.

No. The SBA requires you to apply for forgiveness to ensure PPP funds were used appropriately. If you received your SBA PPP loan through RCU, you’ll also need to submit your forgiveness request through us too. Please note, we’re not participating in the SBA’s direct forgiveness portal to ensure you get high quality service and support. Our dedicated team of PPP experts is ready and available to assist you. Our involvement will not add additional time to the application process.

The amount of your loan can only be forgiven up to the sum of the eligible covered expenses during your covered period. Loans will not automatically be forgiven. There is a loan forgiveness application process you must complete before your loan can be forgiven in whole or in part.

Yes. There is no prepayment penalty.

The full principal amount and any accrued interest can be forgiven for funds used to pay for covered costs during the covered period.

You must use at least 60% for payroll costs (salaries, healthcare benefits, insurance premiums), and you can use up to 40% for eligible nonpayroll expenses (business rent, utilities, mortgage interest). Once RCU begins accepting forgiveness applications, more details will be provided through our online portal of the required documentation and process.

Per the SBA, it is recommended to seek forgiveness through the lender that originally processed the loan. RCU will not accept any forgiveness applications for those who did not receive the PPP loan directly from us.

We are unable to accept applications downloaded from the SBA site or sent to us. Completion of your PPP forgiveness application must be completed through the online application invitation RCU sends you. Additionally, RCU will not be accepting any forms filled out by hand. We encourage borrowers to refer to the SBA forms throughout the application process for their personal use and to better prepare for their application.

You’ll use either the Standard Form 3508, or Form 3508EZ. The form you use will depend on your circumstances. You should use Form 3508EZ if you meet any one of these conditions, otherwise use Standard Form 3508. Once you receive RCU’s online invitation, our online forgiveness portal will guide you through the appropriate steps once you select the application type, including completion of the application.

For loans more than $150,000 this form requires less input and fewer calculations on your part compared to the long form (3508 standard form). Where possible, use the EZ form (3508EZ) versus the long form (3508) of the PPP Loan Forgiveness Application.

If you have a PPP loan that is over $150,000, you (the borrower) can apply for forgiveness using the SBA Form 3508EZ if at least one of the following three scenarios applies to your business:

 
• The borrower 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).

 

• 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 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 2 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

 

• 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.

Your loan forgiveness amount may also be further reduced if you (1) fail to maintain the same number of full-time equivalent (FTE) employees during the covered period compared to a defined look-back period (the FTE Reduction adjustment); and/or (2) decrease wages in your covered period for employees earning $100,000 or less (annualized) by more than 25% when compared to the employee’s average weekly wages during the 1st quarter 2020 (the Salary/Hourly Wage Reduction Adjustment). If you restore FTEs or wages by December 31, 2020 you may be eligible for the FTE and/or Salary/Hourly Wage Reduction Safe Harbors.

Your loan forgiveness amount may be further reduced if you do not use 60% of your loan amount on payroll costs. If a borrower uses less than 60% of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs. No more than 40% of the loan forgiveness amount can be attributable to nonpayroll costs.

You have a 10-month window from the end of the covered period of your PPP loan to submit your forgiveness application.

You can request forgiveness once you have spent all of the money. While you don’t have to wait until the end of your covered period, you may have to make certain certifications to the SBA regarding the entire covered period.

You need to use the funds within the covered period or alternative payroll covered period.

Based on the latest SBA guidance you may be eligible for partial forgiveness. However, since you can only request forgiveness once, it would be beneficial to use all your funds before requesting forgiveness.

Nonpayroll costs are eligible for loan forgiveness if they were 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.

Employees who made more than $100,000 (annualized) for any pay period in 2019 are removed from the loan forgiveness salary/hourly wage reduction calculation. Further, for each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period.

Hazard pay is included in the 60% payroll costs calculation and is subject to all the same wage rules.

Bonus pay is included in the 60% payroll costs calculation and is subject to all the same wage rules.

No. Payroll costs must be paid or incurred during your covered period. If incurred during the last period of your covered period, the payroll costs must be paid on or before the next regularly scheduled payroll date.

Based on guidance the wages that can be included in payroll cost must be paid or earned during your covered period.

To maximize forgiveness, you must use at least 60% of the loan amount for payroll costs and fully restore full-time employee (FTE) and salary/hourly wages by December 31, 2020 to the FTEs and salary/hourly wage rates in place on Feb. 15, 2020.

Yes. Your loan forgiveness amount may be impacted based on a comparison of the average number of FTEs during the covered period with one of two comparison periods. If you reduced FTEs, your loan forgiveness amount may be reduced. If you restore FTEs no later than December 31, 2020 you may qualify for the FTE Reduction Safe Harbor.

Yes. A borrower is eligible for an FTE Reduction Exceptions for:

• any positions for which the borrower made a good-faith, written offer to rehire an individual who was an employee on February 15, 2020 and the borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020;
• any positions for which the borrower made a good-faith, written offer to restore any reduction in hours, at the same salary or wages, during the borrower’s covered period and the employee rejected the offer, and
• any employees who during the borrower’s covered period who were:
  • fired for cause,
  • voluntarily resigned, or
  • voluntarily requested and received a reduction of their hours.

In each of these cases the borrower will list the FTE on the FTE Reduction Exception line on Tables 1 or 2 in the Loan Forgiveness Application, Schedule A Worksheet only if the position was not filled by a new employee. Any FTE reductions in these cases do not reduce the borrower’s loan forgiveness. It is important that borrowers maintain documentation supporting the exceptions.

Borrowers are required to inform the applicable state unemployment insurance office of any employee’s rejected rehire offer within 30 days of the employee’s rejection of the offer. The documents that borrowers should maintain to show compliance with this exemption include the written offer to rehire an individual, a written record of the offer’s rejection, and a written record of efforts to hire a similarly qualified individual.

Forgiveness is based on the employer maintaining or rehiring employees and maintaining wages paid. The sooner you return your employees to work and restore wages during your covered period the less your loan may be reduced based on FTE or wage reduction. Employees must be returned to work and wages restored not later December 31, 2020 to qualify for either the FTE or salary/hourly wage reduction safe harbors.

Payroll costs consist of compensation to your 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 compensation of employees; and for an independent contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or similar compensation.

According to the SBA’s Instructions for PPP Schedule A, the following payroll costs are eligible for forgiveness if incurred during the covered or alternative payroll covered periods:

• Employer contributions for employee health insurance, including employer contributions to a self-insured, employer-sponsored group health plans.
• Employer contributions to employee retirement plans, including pension plans.
• Employer state and local taxes assessed on employee compensation (e.g., state unemployment insurance tax).

The following are not eligible for forgiveness:

• Employer contributions—either pre-tax or after-tax—to health insurance and/or retirement plans.
• Employer contributions made on behalf of a self-employed individual, general partners, or owner-employees of an S-corporation, because such payments are already included in their compensation.
• Any taxes withheld from employee earnings

No. However, mortgage interest payments do qualify as a nonpayroll cost.

Yes—if the borrower does not own the property, they need to submit a rent or lease agreement.

Yes, so long as at least 60% of the funds requested for forgiveness are used for eligible payroll costs and no more than up to 40% of funds requested for forgiveness are used for eligible nonpayroll costs.

• 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 canceled 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.

The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11.

• The average number of FTE employees on payroll per week you employed between February 15, 2019 and June 30, 2019;
• The average number of FTE employees on payroll per week you employed between January 1, 2020 and February 29, 2020; or
• In the case of a seasonal employer, the average number of FTE employees on payroll per week you employed between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive 12-week period between May 1, 2019 and September 15, 2019.

• The business must primarily use the loan to pay payroll costs but can include some other expenses such as mortgage interest, rent, utilities, and to refinance disaster assistance loans obtained from the SBA between 01/31/2020-04/30/2020.
• For self-employed, independent contractors or sole proprietor—you must have claimed (or been able to claim) a deduction for these expenses on your 2019 Form 1040 Schedule C. Proof of having paid those expenses during your covered period, such as rent or lease payments, will be required.

The following are all considered forgivable utilities expenses for the PPP:

• electricity
• water bill
• gas
• sewage
• telephone (cell phone and landline)
• internet bill
• transportation costs

Traditionally, “utilities” normally means electricity, water, gas, and sewage only. But as you can see, the PPP adds the additional categories of telephone, internet, and transportation costs.

• All agreements must have been in place prior to February 15th, 2020. Any agreements that began after February 15 would not be eligible for forgiveness.
• For self-employed, independent contractors or sole proprietors: you must have claimed (or been able to claim) a deduction for these expenses on your 2019 Form 1040 Schedule C. Proof of having paid those expenses during your covered period, such as rent or lease payments, will be required.

To qualify for loan forgiveness, the funds must be used for eligible costs incurred or paid during a 24-week (168 day) covered period (ending December 31, 2020, at the latest); if you received your loan before June 5, 2020, then you can choose an 8-week (56 day) or 24-week (168 day) covered period.

• Covered period: The period that begins on the date you received the PPP loan proceeds; or
• Alternative payroll covered period: If you have a biweekly or more frequent payroll schedule, the period that begins on the first day of the first pay period after you received the PPP loan proceeds.

Payroll costs for the covered period must be paid or incurred during the period to be eligible.

Full-time equivalent employee means an employee who works 40 hours or more, on average, each week as defined by the U.S. Treasury.

You need to know the number of hours that were paid to each employee during the specified periods. An employee that on average was paid 40 hours or more a week counts as 1.0 FTE. One employee cannot exceed 1.0 FTE— overtime does not apply. For example, an employee who was paid 45 hours per week on average during the covered period would be considered to be an FTE employee of 1.0.

An employee that was paid for less than 40 hours per week can be calculated by dividing their average weekly hours worked by 40. For example, if an employee was for paid for 30 hours per week on average during the covered period, the employee could be considered to be an FTE employee of 0.75.

Add your full-time FTE and your part-time FTE to get your total FTE figure. For example, if you have 3 employees who each worked 20 hours a week, they would collectively count as 1.5 FTE.

For simplicity, when completing the forgiveness application, the SBA has alternatively allowed you to use 1.0 for any employee that works more than 40 hours a week, and 0.5 for all other part-time employees. You may use either method of calculation, but the method must be consistently used.

Borrowers must divide the average number of hours paid for each employee per week by 40, capping this quotient at 1.0. For employees who were paid for less than 40 hours per week, borrowers may choose to calculate the full-time equivalency in one of two ways.

First, the borrower may calculate the average number of hours a part-time employee was paid per week during the covered period. For example, if an employee was paid for 30 hours per week on average during the covered period, the employee is an FTE employee of 0.75. Similarly, if an employee was paid for ten hours per week on average during the covered period, the employee is an FTE employee of 0.25.

Second, for administrative convenience, borrowers may elect to use a full-time equivalency of 0.5 for each part-time employee who worked less than 40 hours per week.

Borrowers may select only one of these two methods and must apply that method consistently to all their part-time employees for the covered period or the alternative payroll covered period and the selected reference period.

• First, determine your average FTEs during your chosen covered period and the defined look-back period (referred to in the Loan Forgiveness Application as the Chosen Reference Period). Your look-back period, is, at your election, either (i) Feb. 15, 2019 to June 30, 2019; (ii) Jan. 1, 2020 to Feb. 29, 2020; or (iii) in the case of seasonal employers, either of the preceding periods or a consecutive 12-week period between May 1, 2019 and Sept. 15, 2019. A seasonal employer that elects to use a 12-week period between May 1, 2019 and Sept. 15, 2019 to calculate its maximum PPP loan amount must use the same 12-week period as the reference period for calculation of any reduction in the amount of loan forgiveness.
• Next, sum the aggregate total of FTE employees for both the Chosen Reference Period and your chosen covered period, by adding all employee-level FTE employee calculations.
• Finally, divide the average FTE employees during your look-back period by the average FTE employees during your Chosen Reference Period, the result is the FTE Reduction Quotient. You may be exempt from this reduction if you qualify for one of two FTE Safe Harbors.

Forgiveness is based on the employer maintaining or rehiring employees and maintaining wages paid. The sooner you return your employees to work and restore wages during your covered period, the less your loan may be reduced based on FTE or wage reduction. Employees must be returned to work and wages restored not later December 31, 2020 to qualify for either the FTE or salary/hourly wage reduction safe harbors.

From the guidance released so far, it appears you don’t have to rehire the same employees. The SBA’s forgiveness application does not make a distinction between new and existing employees.

Note that if you’re having a hard time getting your former employees back to work, you’re not required to bring on new employees just to meet your headcount numbers—the SBA has provided some leniency in that case.

Two separate safe harbors may exempt borrowers from any loan forgiveness reduction based on a reduction in FTE employee levels:

• FTE Reduction Safe Harbor 1: The borrower is exempt from the reduction in loan forgiveness based on a reduction in FTE employees described above if the borrower, in good faith, is able to document that it was unable to operate between Feb. 15, 2020, and the end of the covered period at the same level of business activity as before Feb. 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and Dec. 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 for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
• FTE Reduction Safe Harbor 2: The borrower is exempt from the reduction in loan forgiveness based on FTE employees described above if both of the following conditions are met: (1) the borrower reduced its FTE employee levels in the period beginning Feb. 15, 2020, and ending April 26, 2020; and (2) the Borrower then restored its FTE employee levels by not later than Dec. 31, 2020 to its FTE employee levels in the Borrower’s pay period that included Feb. 15, 2020.

FTE exceptions exempt you from the loan forgiveness reduction based on FTE employee levels if you document:

• Any positions for which you made a good-faith, written offer to rehire an individual who was an employee on February 15, 2020 and you were unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020;
• Any positions for which you made a good-faith, written offer to restore any reduction in hours, at the same salary or wages, during the covered period or the alternative covered period and the employee rejected the offer, and
• Any employees who during the covered period or the alternative payroll covered period
• were fired for cause
• voluntarily resigned,
• voluntarily requested and received a reduction of their hours.
• In all of these cases, include these FTEs on this line only if the position was not filled by a new employee.

These rules apply if you meet either Safe Harbor 1 or 2:

• FTE Reduction Safe Harbor 1: In good faith, you are able to document that you were 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 for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
• FTE Reduction Safe Harbor 2: You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; AND
• You then restored your FTE employee levels by not later than December 31, 2020 to your FTE employee levels in the pay period that included February 15, 2020.

If you use a payroll provider to assist with your company’s payroll, the payroll provider may have created a tool to assist with calculating the payroll costs and employee data needed for the forgiveness application. If so, please utilize the tool and submit that information as part of your forgiveness application to us.

Yes, borrowers can appeal the SBA’s determination with the SBA’s Office of Hearings and Appeals (OHA). Appeals can be made to the OHA after SBA completes a review of a PPP loan and makes an official written decision that the borrower:

• was ineligible for a PPP loan
• was ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses
• is ineligible for PPP loan forgiveness in the amount determined by the lender in its full or partial approval decision issued to SBA (except for the deduction of any Economic Injury Disaster Loan advance), and/or
• is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to SBA.

Review the Interim Final Rule on Appeals of SBA Loan Review Decisions Under the PPP for specific details regarding the appeals process, and consult with your financial or legal advisor.

Any amount of the loan that is not forgiven must be repaid at 1% interest rate over five years (for loans that were made after June 5, 2020) or two years (for loans made before June 4, 2020). Borrowers who received their loan prior to June 5, 2020, may contact their lender to discuss extending maturity date to five years. There are no prepayment penalties.

You have 10 months post covered period to apply for forgiveness. For example, if your covered period ended June 30, 2021, under the new guidelines the earliest your forgiveness application would be due is April 2022, and you have until then to request forgiveness.

Please use the following calculation to help you identify when your forgiveness will be due:

• PPP borrowers may select a covered period anywhere from 8 weeks to 24 weeks.
• RCU is automatically calculating your loan due date based on a 24-week covered period, if you intend on using a shorter covered period please inform us immediately as this will impact your due date.
• Your correct deadline will be reflected in your online banking account

If all or part of your PPP loan is not forgiven, your first loan payment will be due the first of the following month after the SBA has issued a decision.

If you decide not to apply for forgiveness altogether, loan payments will automatically begin the first of the following month after your forgiveness application deadline.

There is no penalty for early repayment. Interest will begin when you receive your loan amount however you can defer payments of your loan principal, interest and fees until the date on which the forgiveness amount is remitted to your lender. Any amount not forgiven must be paid back at 1% interest over a 5-year term (for loans made on or after the effective date of the PPP Flexibility Act) or two years if made before, and not renegotiated with your lender.