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Prepare for PPP Loan Forgiveness

Northwest Community Credit Union is honored to provide resources for small businesses in our community through Paycheck Protection Program (PPP) Loans.

If You Have a PPP Loan Through NWCU

Here are a few things to remember if you've received a Payment Protection Program loan through us:

Loan payments will be deferred for up to 6 months. Interest will continue to accrue during this period at a 1.00% fixed rate.

You may owe money if the entire amount of your loan isn’t forgiven. This loan program allows for loan forgiveness by the Small Business Administration if you meet eligibility. If you don’t, you may have a loan payment as indicated on your note after the six-month deferral period. Only a percentage of your loan may be forgiven if the guidelines are not met.

Retaining and re-employing the headcount you disclosed in your application will be a consideration in your forgiveness. We fully anticipate needing your spending totals by category (as specified below) and the documentation to support it (as specified below) as part of your forgiveness request. SBA will issue more guidance on this as we get closer.

The eight-week covered period began on the date of first disbursement. This means you must incur all expenses eligible for forgiveness within the eight-week period beginning the day your PPP loan was funded.

PPP Loan Forgiveness Requirements

Use at least 75% of the loan to retain or rehire furloughed employees. Up to 25% of the loan proceeds can be used for eligible expenses outside of payroll. Loan proceeds are used to cover the following during the “covered period":

  • Payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee (for eight weeks, a maximum of $15,385 per individual), as well as covered benefits for employees (but not owners), including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums).
  • Owner compensation replacement, calculated based on 2019 net profit.
  • Payments of interest on mortgage obligationson real or personal property incurred before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business mortgage payments).
  • Rent payments on lease agreements in force before February 15, 2020, to the extent they are deductible on Form 1040 Schedule C (business rent payments).
  • Utility payments under service agreements dated before February 15, 2020 to the extent they are deductible on Form 1040 Schedule C (business utility payments).

Documents You’ll Need for Loan Forgiveness

In order to be eligible for loan forgiveness, we’ll need this documentation:

  • Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that best correspond to the covered period (with evidence of any retirement and health insurance contributions).
  • Evidence of business rent, business mortgage interest payments on real or personal property, or business utility payments during the covered period if you used loan proceeds for those purposes.
  • The 2019 Form 1040 Schedule C that was provided at the time of the PPP loan application must be used to determine the amount of net profit allocated to the owner for the eight-week covered period for sole proprietors, certain LLCs, and independent contractors.

Helpful Tips to Keep PPP Spending Organized

  • Open a separate bank account for your PPP expenses. We’d be happy to do that for you—give us a call at (800) 452-9515 to get set up!
  • Use Bill Pay to track expenses that aren’t related to payroll. By using Bill Pay you can give your payments specific labels.
  • Don’t forget that you may only use PPP for employees that earn up to $100,000 per year. If you have employees earning more than that, PPP funds are capped for them at $100,000 per year. Any potions exceeding that must be paid out of your pocket. This is addressed above in “payroll costs.”
  • Work with your payroll providers and tax advisors to determine how to best track these allocations.
  • Set up separate accounts in your books and recordkeeping to track loan proceeds and expenses.

Additional Resources for Loan Forgiveness