Application: What to Expect & Best Practices October 15, 2020 - PowerPoint PPT Presentation

SBA PPP Forgiveness Application: What to Expect & Best Practices October 15, 2020 1

Disclaimer PPP Forgiveness is an evolving process, subject to change as further guidance comes out from the SBA and US Treasury. This presentation is for general information purposes only and should not be relied upon as a substitute for obtaining independent advice or undertaking independent research before starting the process to apply for PPP forgiveness. This presentation does not take into account any particular borrower’s situation or needs. All PPP Borrowers should obtain professional advice based on their unique situation before proceeding with the forgiving process. In addition, any implied projections or views of the hosts are their own personal opinions and are not the official position of Commerce Bank or their respective directors or successors or assigns, and may not prove to be accurate. While the information contained herein is believed to be accurate as of the date of production, the information is subject to change and revision. 2

Your Presenters Libby Bane Adam Kirkbride Kevin Barth Commercial Strategies SBA Advisor Head of Commercial Line & Lending Programs of Business Manager Heather Cummings Tami Nugent Michael Bruening Portfolio Management Portfolio Management Director of Commercial Team Leader Team Leader & Small Business Marketing 3 3

Agenda Forgiveness Forgiveness Communication Application What to Expect Documentation Overview Portal Customer Best Practices & What to Expect Q & A Resources Timing 4

What to Expect 5

What to Expect Commerce Receive Invitation Submit Application Receive & Complete Review (Up to 60 Email through Portal E-Signature Request Days) If applicable, Commerce Commerce SBA Processing & Loan Modification Submits Proposed Receives & Applies Review (Up to 90 & Repayment Forgiveness Forgiveness Days) Payment Begins Amount to SBA 6 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Communication 7

Communication Your initial email will contain links to helpful resources as you prepare for your PPP Loan Forgiveness You will also receive a physical letter as a back up in case you haven’t received our emails Next you will receive an email invitation containing: • your unique link to apply for Loan Forgiveness via our portal • a link to our reference guide with step-by-step instructions and screen shots to guide you through the application All emails will arrive from: commercial.business@commercebank.com 8

Forgiveness Application Portal 9

Preparing to Apply 1. Recommended to utilize Chrome Browser 2. Determine whether you will be applying based on 3508 Forgiveness Application, 3508EZ Forgiveness Application or the 3508S Forgiveness Application 3. Locate your promissory note as you will need your account number and loan number when accessing the portal 4. Have your documents in individual files in electronic form (acceptable file types PDF, PNG, JPEG, DOCX, DOC or XLS) 5. E-Signer must be authorized representative of business 6. Wait for email invitation from us with link to begin application 10 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Create a Password 11 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Forgiveness Overview 12

Forgiveness Expenses At least 60% of loan 40% No more than 40% of loan proceeds must be used for proceeds may be used for payroll costs 60% interest on mortgage payments, rent and utilities Loan proceeds used for the following purposes are not eligible for forgiveness Compensation in excess of an Compensation of • Qualified sick leave or family annualized salary of $100,000 employees with a principal leave wages for which a credit of individual employees, or residence outside of the US is allowed under the Families self-employment income in Employer portion of FICA • First Coronavirus Response Act excess of $100,000 of sole- (Social Security and proprietors and partners Medicare) and FUTA taxes 13 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Covered Period 1. Eight weeks (56 days) or 24 weeks (168 days) at election of borrower 2. Begins date PPP loan funds were disbursed 3. Borrowers with bi-weekly or more frequent payroll may elect alternative covered period 4. Eligible expenses must be paid or incurred during covered period or alternative covered period and paid prior to forgiveness application 5. Covered period cannot extend beyond 12/31/2020 14 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Forgiveness Applications Three SBA Forgiveness Applications 3508 08S S – NEW! W! 3508 08 3508 08EZ EZ Can be used if borrower can May be used by borrowers • Can be used by any borrower • • claim 1 of the 3 certifications with a loan amount of listed on the application $50,000 or less Should be used if the • instructions borrower is claiming any FTE Exempt from completing Safe Harbor or had FTE • Certifications related to reduction calculations due to • employee or salary/wage employee wage/salary reductions in FTE employees reductions unless borrower reductions or the inability to or salary/wages qualifies to use the SBA operate due to health and 3508S safety guidelines Borrower still required to • submit documentation supporting forgiveness amount calculation 15 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Forgiveness Timeline Loan Covered period cannot Final application deadline cannot Disbursed extend beyond 12/31/2020 extend beyond 10/31/2021 8 or 24 week covered period Up to 10 months to apply for forgiveness after end of (borrower specific) borrower’s covered period(borrower specific) SBA has up to 90 days to review application and remit forgiveness Borrower Repayment begins applies for on any unforgiven forgiveness amount Borrower has 30 days to Commerce has up to 60 appeal decision with SBA days to review application 16 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Documentation 17

Documentation Payroll – Cash Compensation Documents required ❑ Must document the amount of cash compensation paid to employees 1. Internal payroll reports with supporting bank account ❑ Must be incurred or paid during statements chosen covered period OR Third-party payroll service provider reports ❑ Must comply with program cash compensation limits 18 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Documentation Payroll - Cash Compensation ❑ Must document the amount of Documents required cash compensation paid to 2. Tax Forms (Both Required) employees 1. Quarterly IRS Forms 941 or equivalent ❑ Must overlap chosen covered 2. State quarterly business and period individual employee wage reporting and Start with quarter that includes – unemployment insurance start of covered period tax filings reported, or that End with quarter that includes – will be reported, to the end of covered period relevant state 19 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Documentation Payroll - Non-Cash Benefits Documents required ❑ Must document the amount of employer contributions to employee 1. Payment Receipts OR health insurance and/or retirement plans that were included in 2. Cancelled Checks w/ Bank Account forgiveness amount Statements AND 3. Service Provider Account ❑ Must be during chosen covered Statements period 20 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.

Documentation FTE: Full Time Equivalent Employees Documentation detailing (time period at election of borrower): 1. the average number of FTE employees on payroll per week employed by the Borrower between 2/15/2019 and 6/30/2019; or 2. the average number of FTE employees on payroll per week employed by the Borrower between 1/1/2020 and 2/29/2020; or 3. in the case of a seasonal employer, the average number of FTE employees on payroll per week employed by the Borrower between 2/15/2019 and 6/30/2019; between 1/1/2020 and 2/29/2020; or any consecutive 12-week period between 5/1/2019 and 9/15/2019 Note: FTE supporting documentation must be submitted with full 3508 (not 3508EZ or 3508S). However in all cases, borrower must retain these records. 21 As of 10/14/2020, subject to change based on further congressional action, regulatory action or further guidance from the SBA or Department of Treasury.