The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. We believe that SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.
Current law dictates that the Paycheck Protection Program (PPP) close by the end of August 8, 2020. As such, SBA (and by extension, Centennial Bank) is no longer accepting PPP applications.
At Centennial Bank, we understand how important forgiveness of your Paycheck Protection Program (PPP) loan is to your business.
Your loan may be forgiven in full if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 60% of the forgiven amount must have been used for payroll). Below are a few key points:
- PPP loans have an interest rate of 1%.
- Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years.
- Loan payments will be deferred for six months.
- No collateral or personal guarantees are required.
- Neither the government nor lenders will charge small businesses any fees.
Based on our understanding of the rules, full forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles.
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the 24-week period after receiving their PPP loan.
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.
To review the Paycheck Protection Program Interim Final Rules, please click on the link below:
This legislation makes certain material changes to the Paycheck Protection Program (PPP), including to the terms of loan forgiveness. We are continuing to build our PPP loan forgiveness application process. Please continue to check back to this page for the latest developments on our forgiveness application process.
Remember PPP loan forgiveness is not automatic. If you plan to seek forgiveness, you'll need to submit an application using the email sent to you from Centennial Bank. Until then, what can you do?
1. Prepare Now
- Understand covered expenses. Forgiveness requirements are outlined by the regulation. Please refer to the following link for more detail on forgiveness requirements. FederalRegister.gov
- Gather supporting documentation. Stay organized with your documentation on the use of the PPP funds, especially related to payroll, rent, utility payments and interest. Make sure you are able to prove payments when you submit your PPP forgiveness application.
- Review FAQ’s. The SBA has prepared a list of frequently asked questions regarding PPP loan forgiveness. To review, click the following link: SBA.gov FAQs
- Review the SBA Application(s). The SBA has recently updated the Forgiveness Application, Form 3508, to reflect the changes made under the PPP Flexibility Act. They have also released a second simplified version, the SBA Form 3508 EZ, which is available to borrowers who meet certain criteria. To see which form is right for your business, please review applications and instructions for both versions:
Please use the PDF applications and instructions to help you prepare for online entry. Centennial will not accept paper applications.
We recommend that you start reviewing the SBA forms of forgiveness application, as our PPP loan forgiveness application process will be based on those forms. Your PPP loan will require an automated application submission. Please do not complete the paper form to submit for forgiveness. An email sent to you by Centennial Bank will allow you to complete the application electronically.
2. Wait for Application Email
- If you received your PPP loan through Centennial Bank, you’ll need to submit your request through us as well. We’ll send you an email once our PPP loan forgiveness online application becomes available to you. It will contain a link that will allow you to access the forgiveness portal.
- You’ll want to wait to submit your PPP loan forgiveness application until you have collected and uploaded ALL of your required documents.
- Once you have submitted your information to us, we will review your completed PPP loan forgiveness application and supporting documents, and we will submit a proposed forgiveness decision to the SBA.
- The ultimate forgiveness decision is made by the SBA. Once the SBA responds to our submission, we will let you know the final results of their review.
- We expect that the process of our review and SBA’s ultimate approval could take from 30-90 days after your forgiveness submission is complete and accepted by us.
If you have questions regarding the forgiveness process, please call our Customer Care Center at (888) 372-9788 and ask for your Centennial Bank Loan Officer.