Loan Forgiveness FAQ

Loan Forgiveness FAQ

The Loan Forgiveness FAQs are posted based on what we know today and could change at anytime, without notice. Lenders are still waiting for more clarity and guidance from the US. Small Business Administration and Treasury Department.

What is the Paycheck Protection Program (PPP) Forgiveness and how do I qualify?

PPP loan borrowers can have their loans forgiven if they use the money for designated expenses, including payroll costs, and interest on mortgage, rent, and utility payments.

How much of my loan will be forgiven?

You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 24 weeks (or 8 weeks) after receiving your funds.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 40% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: You have until December 31, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
  • Safe Harbors for inability to rehire employees: If in good faith, you can document 1) written offers to rehire individuals who were employees on February 15, 2020; or 2) an inability to hire similarly qualified employees for unfilled positions by December 31, 2020, your loan will be forgiven.

Additionally, forgiveness will not be reduced for failure to maintain employment levels if the organization is able to document an inability to return to the same level of business activity as existed prior to February 15,2020, due to compliance with COVID-19-related guidance for sanitation, social distancing, or worker or customer safety requirements from the Health and Human Services (HHS), the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration (OSHA) between March 1 and December 31, 2020.

How can I request loan forgiveness?

You will submit your Loan Forgiveness Application to the lender that is servicing the loan. Each lender may have their own way of accepting and processing Loan Forgiveness Applications. Firstrust will be reaching out to all PPP customers through email with further guidance and instructions once we are ready to begin accepting applications and when PPP customers come to the end of their covered period.

What is my interest rate?

1.00% fixed rate.

 When do I need to start paying interest on my loan?

All payments are deferred for 10 months; however, interest will continue to accrue over this period.

Can I pay my loan earlier?

Yes. There are no prepayment penalties or fees.

Do I need to pledge any collateral for these loans?

No. No collateral is required.

Do I need to personally guarantee this loan?

No. There is no personal guarantee requirement. ***However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.***

What do I need to certify?

As part of your application, you need to certify in good faith that:

  • Current economic uncertainty makes the loan necessary to support your ongoing operations.
  • The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
  • You have not and will not receive another loan under this program.
  • You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the covered period after getting this loan.
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 40% of the forgiven amount may be for non-payroll costs.
  • All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
  • You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.