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Small Business Administration's
Paycheck Protection Program (PPP)



SBA PPP Loan Forgiveness Application Acceptance Guidance

MSU Federal Credit Union is committed to helping our business members and providing you information about the Small Business Administration's Paycheck Protection Program (SBA PPP). On October 8, 2020, the SBA announced a simpler SBA PPP Forgiveness application for loans $50,000 or less. On October 13, 2020, the SBA released updated Frequently Asked Questions on PPP Loan Forgiveness. As a result, we have updated our guidance on accepting SBA PPP Forgiveness applications. Our goal is to ensure the best experience for all borrowers.

• For SBA PPP loans $50,000 or less, we are incorporating the recent SBA changes into the SBA PPP Forgiveness application process and will notify borrowers on how to apply based on PPP loan funding date

• For SBA PPP loans over $50,000 and under $150,000, if you are ready to start the forgiveness process please contact us at [email protected] to begin. Otherwise, we will notify borrowers on how to apply based on the PPP loan funding date.

• For SBA PPP loans of $150,000 or more, please contact us at [email protected] if you have not started the forgiveness process and are ready to begin.

We are excited to continue our partnership with Lendio. Lendio helped with the initial SBA PPP application for funding and will also assist with the forgiveness application portion.

Notifications will be sent based on the funding date of your PPP loan. We will also provide updates on our website.

As a reminder, repayment of the SBA PPP loan is deferred until the amount of loan forgiveness is determined, or 10 months from the end of the forgiveness coverage period, if you do not apply for forgiveness.

SBA PPP Loan Forgiveness FAQs, Forms, and Instructions

We recommend you familiarize yourself with these documents, as they are an important part of the Forgiveness process.

Frequently Asked Questions on PPP Loan Forgiveness

The Paycheck Protection Program Loan Forgiveness Application (Form 3508 6/20)

The instructions for the Paycheck Protection Program Loan Forgiveness Application (Form 3508 6/20)

The Paycheck Protection Program EZ Loan Forgiveness Application (Form 3508 EZ 6/20)

The instructions for the Paycheck Protection Program EZ Loan Forgiveness Application (Form 3508 EZ 6/20)

The Paycheck Protection Program PPP Loan Forgiveness Application (Form 3508S 10/20) for loans $50,000 or less

The instructions for the Paycheck Protection Program PPP Loan Forgiveness Application (Form 3508S 10/20) for loans $50,000 or less

SBA PPP Loan Forgiveness

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.

Have Questions about the SBA PPP?

We are committed to helping all of our members through this process. If you have general SBA PPP questions, please contact us via email at [email protected].

We continue to monitor both the SBA and U.S. Treasury as they provide additional guidance about the Forgiveness portion of the SBA PPP loan.

Timeline: Please check back here for updates, as we will make updates to this page each day by 4:00 p.m. Eastern Time, or more often if circumstances warrant.

Updated: 10/12/20 10 a.m.

Small Business Administration's
Paycheck Protection Program
Small Business Administration's (SBA) Paycheck Protection Program (PPP) Loan Forgiveness Application

MSUFCU is monitoring SBA and U.S. Treasury guidance as they continue to provide details about the Forgiveness portion of the Paycheck Protection Program. SBA PPP Forgiveness Applications will be processed electronically, through an online portal. Our goal is to ensure the best experience for all borrowers.

We are excited to continue our partnership with Lendio. Lendio helped with the initial SBA PPP application for funding and will also assist with the forgiveness application portion.

Notifications will be sent based on the funding date of your PPP loan.

As a reminder, repayment of the SBA PPP loan is deferred until the amount of loan forgiveness is determined, or 10 months from the end of the forgiveness coverage period, if you do not apply for forgiveness.

How to prepare for Forgiveness:

• The SBA has released Frequently Asked Questions on PPP Loan Forgiveness, the Paycheck Protection Program Loan Forgiveness Application (Form 3508 6/20), the Paycheck Protection Program EZ Loan Forgiveness Application (Form 3508EZ 6/20), PPP Loan Forgiveness Application (Form 3508S 10/20) for loans $50,000 or less, and related instructions (Form 3508 instructions, Form 3508 EZ instructions, and Form 3508S instructions for loans $50,000 or less). We recommend you familiarize yourself with these documents, as they are an important part of the Forgiveness process.

• Forgiveness is not automatic; you must request it through MSUFCU.

•We'll provide you a timetable for Forgiveness requests as we receive guidance from the SBA.

•Borrower is responsible for any and all amount(s) not forgiven.

•You will need to certify and document that you used the loan funds for SBA-eligible purposes.

•We will review your request and send it to the SBA for authorization.

•Once the SBA makes a decision, we will email you.

Covered Period: The twenty-four week (previously eight-week) starts on the date of the PPP Loan Disbursement Date.

Alternative Payroll Covered Period: Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the twenty-four week (previously eight-week) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date.

Eligible Payroll Costs: Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the twenty-four week (previously eight-week) Covered Period (or Alternative Payroll Covered Period) ("payroll costs"). Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee's pay is earned. Payroll costs incurred but not paid during the Borrower's last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period). 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. Count payroll costs that were both paid and incurred only once.

Cash Compensation: The sum of gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family, medical or sick leave, not including leave covered by the Families First Coronavirus Response Act), and allowances for dismissal or separation paid or incurred during the Covered Period or the Alternative Payroll Covered Period. 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.

Eligible Nonpayroll Costs: Nonpayroll costs eligible for forgiveness consist of:(a) covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 ("business mortgage interest payments"); (b) covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 ("business rent or lease payments"); and (c) covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 ("business utility payments"). An eligible nonpayroll cost 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. Eligible nonpayroll costs cannot exceed 40 percent (previously 25 percent) of the total forgiveness amount. Count nonpayroll costs that were both paid and incurred only once.

Can I use the PPP Loan Forgiveness Application Form 3508S?

You (the Borrower) can apply for forgiveness of your Paycheck Protection Program (PPP) loan using this SBA Form 3508S only if the total PPP loan amount you received from your Lender was $50,000 or less. However, a borrower that, together with its affiliates (see 85 FR 20817 (April 15, 2020) regarding application of SBA's affiliation rules and the exemption of otherwise qualified faith-based organizations from SBA's affiliation rules), received PPP loans totaling $2 million or more cannot use this form. If you are not eligible to use this form, you must apply for forgiveness of your PPP loan using SBA Form 3508 or 3508EZ.

SBA Form 3508S requires fewer calculations and less documentation for eligible borrowers. Borrowers that use SBA Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages. SBA Form 3508S also does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, SBA may request information and documents to review those calculations as part of its loan review process.

Can I use the PPP Loan Forgiveness Application Form 3508EZ?

You (the Borrower) can apply for forgiveness of your Paycheck Protection Program (PPP) loan using this SBA Form 3508EZ if you can meet at least one of the three items below.

•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 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.

If you meet at least one of the three items above, complete this SBA Form 3508EZ in accordance with the instructions. If you are unable to check one of the boxes above, you cannot use SBA Form 3508EZ and instead you must apply for forgiveness of your PPP loan using SBA Form 3508.

DOCUMENTS THAT EACH BORROWER MUST SUBMIT WITH ITS PPP LOAN FORGIVENESS APPLICATION

Payroll: Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:

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

b. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period: Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.

c. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount.

FTE: Documentation showing (at the election of the Borrower):

a. the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019;

b. the average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020 and February 29, 2020; or

c. in the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive twelve week period between May 1, 2019 and September 15, 2019.

The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11. Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. Documents submitted may cover periods longer than the specific time period.

Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.

a. 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.

b. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled 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.

c. 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 statements and suggestions provided in this FAQ document are not legal opinions and cannot be relied upon as legal or financial advice. You should consult with your own legal counsel and/or financial advisor for guidance on use of loaned funds and requirements for forgiveness of the loan obligation. MSUFCU will only forgive as much of the loaned amount as the federal government pays to MSUFCU pursuant to the loan forgiveness application. Any unforgiven amount of the loaned funds will be your obligation to repay to MSUFCU according to the terms of the note and other loan documents.


ONCE I HAVE RECEIVED MY SBA PPP LOAN WHAT DO I NEED TO BE ELIGIBLE FOR SBA LOAN FORGIVENESS?

If you received funding through MSUFCU for your SBA PPP loan you may be eligible for SBA loan forgiveness but you have to follow the applicable SBA guidance. Click here to review the SBA guidance or your loan may not be forgiven.

The SBA has stated that loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the twenty-four week (previously eight-week) period following the date of the loan. However, not more than 40 percent (previously 25 percent) of the loan forgiveness amount may be attributable to non-payroll costs. The SBA has also stated that they will provide additional guidance. Until additional guidance is provided, please consider the following that may help you be eligible for SBA loan forgiveness:

• Eligible expenditures should be tracked over the twenty-four week (previously eight-week period (Covered Period)) following the date of the loan.

• You must document all SBA PPP loan eligible expenditures.

• Payroll costs may be supported by applicable IRS forms, other unemployment insurance tax reporting forms, or equivalent payroll processor records that correspond to the covered period.

• Non-payroll costs may be supported by cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered obligations that correspond to the covered period.

• You must maintain employee and compensation levels.

• You must comply with all certifications that you made on your SBA application.

• You should consult with your CPA or attorney for SBA loan forgiveness eligibility.

• You must request SBA loan forgiveness within SBA timelines through MSUFCU once eligible expenditures have been made and documented.

• MSUFCU will make available the SBA loan forgiveness application once SBA releases guidance and the application for forgiveness.

• SBA requires that MSUFCU make a decision on your SBA loan forgiveness application within 60 days of receipt of your application.

If your SBA PPP loan is not forgiven your loan payments will begin 10 months (previously 6 months) after the date of your loan disbursement.

*The statements and suggestions provided in this FAQ document are not legal opinions and cannot be relied upon as legal or financial advice. You should consult with your own legal counsel and/or financial advisor for guidance on use of loaned funds and requirements for forgiveness of the loan obligation. MSUFCU will only forgive as much of the loaned amount as the federal government pays to MSUFCU pursuant to the loan forgiveness application. Any unforgiven amount of the loaned funds will be your obligation to repay to MSUFCU according to the terms of the note and other loan documents.

HOW CAN PPP LOANS BE USED?

• Payroll costs (as defined in the Act and above)

• Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums

• Mortgage interest payments (but not mortgage prepayments or principal payments)

• Rent payments

• Utility payments

• Interest payments on any other debt obligations that were incurred before February 15, 2020; and/or

• Refinancing an SBA Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020 with certain conditions. If the EIDL loan was not used for payroll costs, it does not affect the eligibility for a PPP loan. If the EIDL loan was used for payroll costs, the PPP loan must be used to refinance the EIDL loan.


WHAT IS THE INTEREST RATE, FEE AND MATURITY ON A PPP LOAN?

• The interest rate will be 100 basis points or one percent.

• The maturity is five years (previously two years).

• No fees will be charged.


WHEN MUST REPAYMENT OF PRINCIPAL AND INTEREST BEGIN?

Payments do not need to be made for ten months (previously six months) following the date of disbursement of the loan. However, interest will continue to accrue on PPP loans during this ten month (previously six-month) deferment.


ADDITIONAL RESOURCES

• SBA may provide further guidance, if needed, through SBA notices and a program guide which will be posted on SBA's website.

• Questions on the Paycheck Protection Program 7(a) Loans may be directed to the Lender Relations Specialist in the local SBA Field Office.