The Covid-19 pandemic and resulting economic impacts will continue to change the business community. Many businesses were able to get much need support from the Federal Government’s PPP program, but there are still a lot of unknowns in the upcoming months. Let us help your business navigate the Paycheck Protection Program and help you maximize PPP forgiveness. Here are some important tips and reminders:

You Have Plenty of Time

Patience is a virtue – especially in the world of PPP. Ultimately, you have up to approximately 16 months after receiving funds depending on the length of your Covered Period (CP) (8- or 24-weeks CP + 10 months) to submit a complete forgiveness application before your payments will begin¹. Know that you will be able to apply with plenty of time remaining to request forgiveness while benefiting from any potential changes in store.

Don’t Include “Expense Projections”

If applying before your CP end date, expenses included in your forgiveness application should only reflect the span of time between the date you received funds and the date you apply for forgiveness. Do not include projected expenses through the end of your CP, as these are not considered paid or incurred. You may still use the Alternative Payroll Covered Period (APCP), as applicable, to start tracking payroll expenses on Day-1 of your first pay-cycle after receiving funds but stop all expense tracking by your application date if your Covered Period isn’t over.

Salary/Wage Reductions always have a Full Covered Period Impact

Be mindful of compensation levels relative to the beginning of the year, especially if applying for forgiveness before the end of your CP. If you are using the Full Application, salary/wage reductions over 25% can impact your forgiveness amount. If you choose to apply for forgiveness before your 8- or 24-week CP is up, these reductions are still applied to the full length of your CP. For example, a business using a 24 week CP reduced a full-time employee’s weekly salary by 50% from $1,000/week in the first quarter of the year in  2020 to $500/week during the CP. Salary reductions exceeding 25% impact forgiveness – in this case, the forgiveness impact amounts to $250/week. Even if the business applies for forgiveness before the end of the CP, their forgiveness application still needs to account for a 24-week salary reduction ($250 X 24 = $6,000 reduction for this employee).

Economic Injury Disaster Loans (EDIL) Advances are Reduced from Forgiveness Amount

Based on current guidance, if your business received an EIDL Advance, this will be deducted from your forgiveness amount when the SBA makes their final forgiveness decision. This will occur even if eligible expenses from the CP surpass your PPP loan amount plus your EIDL advance amount. There is no need to pay the EIDL Advance ahead of the SBA’s decision – the advance will convert to a 1% interest loan and your forgiveness application will include an option to extend the term for any unforgiven portion to 5 years if it is currently 2 years.

Max Forgiveness = PPP Loan Amount

This is helpful to bear in mind while tracking expenses during your CP. Ultimately, qualification for “full forgiveness” depends on documenting eligible expenses up to the amount of your PPP loan. If, for instance, your CP payroll expenses exceed your PPP loan amount, you are not required to demonstrate non-payroll expenses as well. Of course, it does not hurt to demonstrate eligible expense spending beyond the amount of your PPP loan, if you so choose.

Forgiveness Decision Timeline

It’s important to bear in mind that Santander has up to 60 days from receipt of a complete application to submit a lender decision to the SBA for their final decision on your forgiveness amount.  Upon receipt of your application, Santander will notify you if additional information is needed and of the decision on your application. Following the bank’s decision, we’ll send it to the SBA for final review. The SBA has an additional 90 days to provide final decision. Following the SBA’s decision, Santander will notify you if your loan was forgiven in whole, in part, or if the request was denied. If the loan was partially forgiven, and there is a balance remaining, we will notify you of the monthly payment amount and payment start date.

For More Information

If you have questions about your PPP loan or need help navigating the forgiveness program, please reach out to your relationship manager and the Business COVID-19 Recovery page to view our PPP Customer Forgiveness Guide and other resources to support your business through this unprecedented time.

¹Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness CP, loan payments are no longer deferred, and the borrower must begin making payments on the loan.

This article is intended for informational purposes only. Readers should consult their own financial advisers, attorneys or other tax advisors regarding any financial or tax strategies mentioned in this article.

  Equal Housing Lender. Santander Bank, N.A. is a Member FDIC and a wholly owned subsidiary of Banco Santander, S.A. ©2020 Santander Bank, N.A. All rights reserved. Santander, Santander Bank, and the Flame Logo are trademarks of Banco Santander, S.A. or its subsidiaries in the United States or other countries. All other trademarks are the property of their respective owners.


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