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PPP Loan Forgiveness.

FORGIVENESS APPLICATIONS are scheduled to be received after August 10th

Additional instructions to follow, we will update this page and make email communication with borrowers as we learn more information.​

We’re committed to helping our members get through the Payroll Protection Program Loan Forgiveness process as smoothly as possible. Below, we’ve created a series of resources that will help you prepare for the forgiveness application process. The information below is based upon guidance the SBA has issued to date. Please note that the SBA is continuously refining its guidance and this information is subject to change. Day Air Credit Union will update and change this document as promptly as possible as the SBA continues to provide guidance. This information is intended for the use by Day Air members and is not intended to be relied upon for legal or tax advice.

The Benefits of Waiting: How Choosing to Use the 24- Week Covered Period Can Help Maximize Forgiveness*

With the potential of a loan payment looming overhead, it can be tempting to rush into the PPP loan forgiveness process BUT choosing the best covered period could actually help you get more if not all of your loan forgiven.  Here are some of the advantages of utilizing the 24-week covered period:

  1. As a proprietor with no employees or an independent contractor filing a 1040 Schedule C, the maximum loan amount that can be forgiven using an 8-week covered period is $15,385 which may be less than your PPP loan. Choosing a 24-week covered period will allow for a maximum forgivable amount of $20,833.
  2. If you had reductions in employee pay or wages, you will be penalized in the forgivable amount of your loan if the wages and/or the number of employees was not restored by the time you apply for forgiveness. By using a 24-week covered period you are provided more time to restore these employees before applying for forgiveness.
  3. The process is always changing!! As you may remember from your application process, the PPP program has been a moving target since the beginning with rules and guidance changing, what seems like weekly. Waiting to apply could potentially save you time and effort as new rules come into place for how the loans are forgiven.
  4. You actually have 10-months to apply for forgiveness after the last date of your chosen covered period! No need to rush.
  5. By choosing the 24-week covered period, you have more time to speak with advisors (CPA, payroll company, etc.) who can help you gather the appropriate documentation for forgiveness or even prepare you a professional payroll report which will help expedite your process when you are ready to apply for your loan forgiveness.​

*This information provided by LUCRO Commercial Solutions, learn more at lucro.org

Information for Self Employed, Sole Proprietors and Independent Contractors

Loan forgiveness documentation for Sole Proprietors, Independent Contractors and Self-Employed Individuals.

 

June 16, 2020 – Please see the revised FULL PPP Loan Forgiveness Application Instructions here.

Loan forgiveness documentation for Sole Proprietors, Independent Contractors and Self-Employed Individuals. 3

  • The 2019 Form 1040 Schedule C to verify net income (line 31) for owner income replacement calculation.
  • If you have employees, provide payroll documentation as outlined above, including documentation of healthcare and retirement benefits costs. Exclude owner from healthcare and retirement costs.
  • Canceled checks, receipts, account statements or other documentation of payment for other eligible costs incurred and paid during the covered period such as mortgage interest, lease payments, utility payments. Note: these types of expenses must have been deducted on the 2019 Form 1040 Schedule C to be eligible for forgiveness.

3 Reminder: This information is currently not fully complete and requires additional SBA guidance.

PPP EZ Loan Forgiveness Application and Instructions

The PPP EZ Loan Forgiveness Application version requires fewer calculations and less documentation for eligible borrowers. Borrowers have the option to use the original 8-week covered period (if loan was made before June 5, 2020) or an extended 24-week covered period.

PLEASE NOTE: Borrower must answer 1 of 3 questions in EZ Loan Forgiveness Application to be able to use the EZ form.

  • PPP EZ Loan Forgiveness Application – click here.
  • PPP EZ Loan Forgiveness Application Instructions – click here.
PPP Loan Forgiveness Application

To view the PPP Loan Forgiveness Application click here. (includes details on loan calculations)

Please contact bizhelp@dayair.org when you are ready to apply for PPP Loan Forgiveness.

Eligibility and "Good Faith"

All borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere1, borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

Borrowers must have made this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification in good faith.

Furthermore, the SBA will review all loans in excess of $2 million, in addition to other loans as appropriate, following Day Air’s submission of your loan forgiveness application.

1 As defined in Section 3(h) of the Small Business Act.

Important to consider when attempting to utilize proceeds that may be forgiven:
  • If by 6/30/20, you re-hire your workforce and additionally restore your full-time employment and salary levels for any changes to your workforce made between 2/15/20 and 4/26/20, the re-hire and restoration would be exempted from forgiveness reductions. No governmental guidance requires that employees be physically working, but rather that they be employed.
    • Example, if you had 10 employees prior to 2/15/2020 and reduced your staff to 5 employees during the crisis, you could avoid a reduction in forgiveness by rehiring 5 employees back to 10 total. If salary levels were $100,000 per month before 2/15/2020, then were reduced to $50,000 per month during the crisis, forgiveness reductions could be avoided by returning to the $100,000 salary and 10 employee levels as before.
  • Utilize proceeds for payroll costs first.
  • Utilize qualifying proceeds within the first 8 weeks from disbursement of the proceeds.
How much of my SBA PPP loan MAY be forgiven?
  • The amount of loan proceeds used for qualifying purposes during the 8 weeks following the date of the disbursement of the proceeds.
  • The maximum forgiveness is the full principal amount plus any accrued interest; however, stipulations apply, and the forgiveness can be less than this.
  • At a minimum, 60% of the loan proceeds must be attributable to Payroll Costs.
  • At a maximum, 40% of the forgiveness amount may be attributable to non-Payroll Costs2, which are limited to:
    • payments of mortgage interest on mortgage obligations incurred before February 15, 2020
    • rent payments on leases dated before February 15, 2020
    • utility payments under service agreements dated before February 15, 2020

Important: It is the borrower’s responsibility to track and calculate Payroll and non-Payroll Costs.

2 For individuals with self-employment income who file a Form 1040 Schedule C, these are eligible for forgiveness to the extent they are deductible on Form 1040 Schedule C.

The amount forgiven may be reduced if:
  • Your full-time employee headcount decreases.
    • The amount of loan forgiveness will be reduced (but not increased) by comparing the number of full time employees (FTE) used for the loan amount calculation to the number of employees during the period when proceeds were used. Reduction would not be applied if the total number of FTE is restored before 6/30/20.
    • If you attempt to rehire a laid off employee for the same salary/wages and same number of hours, but the employee declines the offer, the forgiveness amount will not be reduced by that employee. You must have given a good faith, written offer, and the employee’s rejection of that offer must be documented.
    • Employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.
  • Salaries and wages decrease by more than 25% for any employee making less than $100,000 annually. Reduction would not apply if the salary or wage is restored before 6/30/20.
  • You refinanced an Economic Injury Disaster Loan (EIDL) into your PPP, any proceeds from any EIDL advance up to $10,000 will be deducted from the loan forgiveness amount.

Information for Employers

Loan forgiveness documentation for employers.

June 16, 2020 – Please see the revised FULL PPP Loan Forgiveness Application Instructions here.

Loan forgiveness documentation for employers. 3

  • Payroll tax reports: 2020 IRS Forms 941, state income and unemployment tax returns that include the 8-week covered period. (See recommendation below regarding 8-week covered period.) If your organization contracts with a payroll provider or Professional Employer Organization (PEO) you can supply other documents, such as reports reflecting employment tax returns filed.
  • Compensation and FTEs: In general, payroll reports which will include the following:
    • Gross wages for each employee for the following:
      • During the 8-week covered period
      • During the most recent full quarter before the 8-week covered period
    • Identifying employees who during any period in 2019, received an annualized pay of more than $100k and also employees whose principal place of residence is outside the U.S.
    • State and local employer taxes assessed on an employee’s compensation (i.e. SUTA) during the 8-week covered period
    • The average number of full-time equivalents (FTEs) per month for the following:
      • During the 8-week covered period
      • 15 through June 30, 2019
      • 1 through Feb. 29, 2020
        Note: borrower elects which period, ii or iii, to compare to i.
    • For seasonal businesses, use average number of FTEs per month during the period February 15, 2019 through June 30, 2019.
  • Group health care benefits: Documentation showing total costs paid for all health care benefits, including insurance premiums paid by the organization under a group health plan.
    • Include all employees and company owners.
    • Do not include employee withholdings for their portion of contributions to the plan.
  • Retirement plan benefits: Documentation showing the sum of all retirement plan funding costs paid by the organization.
    • Include funding for all employees and the company owners.
    • Do not include employee withholdings for their portion of contributions to the plan.
  • Other documentation: Canceled checks, receipts, account statements or other documentation of payment for other eligible costs incurred and paid during the covered period such as mortgage interest, lease payments, utility payments.

3 Reminder: This information is currently not fully complete and requires additional SBA guidance.

PPP EZ Loan Forgiveness Application and Instructions

The PPP EZ Loan Forgiveness Application version requires fewer calculations and less documentation for eligible borrowers. Borrowers have the option to use the original 8-week covered period (if loan was made before June 5, 2020) or an extended 24-week covered period.

PLEASE NOTE: Borrower must answer 1 of 3 questions in EZ Loan Forgiveness Application to be able to use the EZ form.

  • PPP EZ Loan Forgiveness Application – click here.
  • PPP EZ Loan Forgiveness Application Instructions – click here.
PPP Loan Forgiveness Application

To view the PPP Loan Forgiveness Application click here. (includes details on loan calculations)

Please contact bizhelp@dayair.org when you are ready to apply for PPP Loan Forgiveness.

Eligibility and "Good Faith"

All borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere1, borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

Borrowers must have made this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification in good faith.

Furthermore, the SBA will review all loans in excess of $2 million, in addition to other loans as appropriate, following Day Air’s submission of your loan forgiveness application.

1 As defined in Section 3(h) of the Small Business Act.

Important to consider when attempting to utilize proceeds that may be forgiven:
  • If by 6/30/20, you re-hire your workforce and additionally restore your full-time employment and salary levels for any changes to your workforce made between 2/15/20 and 4/26/20, the re-hire and restoration would be exempted from forgiveness reductions. No governmental guidance requires that employees be physically working, but rather that they be employed.
    • Example, if you had 10 employees prior to 2/15/2020 and reduced your staff to 5 employees during the crisis, you could avoid a reduction in forgiveness by rehiring 5 employees back to 10 total. If salary levels were $100,000 per month before 2/15/2020, then were reduced to $50,000 per month during the crisis, forgiveness reductions could be avoided by returning to the $100,000 salary and 10 employee levels as before.
  • Utilize proceeds for payroll costs first.
  • Utilize qualifying proceeds within the first 8 weeks from disbursement of the proceeds.
How much of my SBA PPP loan MAY be forgiven?
  • The amount of loan proceeds used for qualifying purposes during the 8 weeks following the date of the disbursement of the proceeds.
  • The maximum forgiveness is the full principal amount plus any accrued interest; however, stipulations apply, and the forgiveness can be less than this.
  • At a minimum, 60% of the loan proceeds must be attributable to Payroll Costs.
  • At a maximum, 40% of the forgiveness amount may be attributable to non-Payroll Costs2, which are limited to:
    • payments of mortgage interest on mortgage obligations incurred before February 15, 2020
    • rent payments on leases dated before February 15, 2020
    • utility payments under service agreements dated before February 15, 2020

Important: It is the borrower’s responsibility to track and calculate Payroll and non-Payroll Costs.

2 For individuals with self-employment income who file a Form 1040 Schedule C, these are eligible for forgiveness to the extent they are deductible on Form 1040 Schedule C.

The amount forgiven may be reduced if:
  • Your full-time employee headcount decreases.
    • The amount of loan forgiveness will be reduced (but not increased) by comparing the number of full time employees (FTE) used for the loan amount calculation to the number of employees during the period when proceeds were used. Reduction would not be applied if the total number of FTE is restored before 6/30/20.
    • If you attempt to rehire a laid off employee for the same salary/wages and same number of hours, but the employee declines the offer, the forgiveness amount will not be reduced by that employee. You must have given a good faith, written offer, and the employee’s rejection of that offer must be documented.
    • Employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.
  • Salaries and wages decrease by more than 25% for any employee making less than $100,000 annually. Reduction would not apply if the salary or wage is restored before 6/30/20.
  • You refinanced an Economic Injury Disaster Loan (EIDL) into your PPP, any proceeds from any EIDL advance up to $10,000 will be deducted from the loan forgiveness amount.

Additional Information

What is the PPP Loan?

Designed to advance Congress’s goal of keeping workers paid and employed across the United States by providing cashflow assistance to employers who maintain their payroll during this emergency, the core purpose of the SBA Paycheck Protection Program (SBA PPP or PPP) is to devote finite program resources primarily to payroll protection. The PPP provides low cost funds to borrowers to meet eligible payroll costs and other eligible expenses during this temporary time of economic dislocation caused by the Coronavirus. As certified in the application, the funds from the SBA PPP Loan will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments.

How do I calculate Payroll Costs for forgiveness purposes?

Payroll Costs Include:

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee with a principal place of residence in the United States);
  • Employee benefits (for employees not owners) including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation paid by the employer (such as unemployment insurance premiums);
  • Housing stipends or allowance provided to an employee as part of compensation; and
  • Owner compensation replacement, calculated based on 2019 net profit4, with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit, but excluding any qualified sick or family leave equivalent amount for which credit is claimed under FFCRA5.

Payroll Costs Excludes:

  • Compensation from employees whose principal place of residence is outside of the US;
  • Compensation of an individual employee in excess of an annual salary of $100,000, prorated as necessary;
  • Since payroll costs are calculated on a gross basis, they are calculated without regard to federal employment taxes imposed or withheld between 2/15/20 and 6/30/20, including the employee’s and employer’s share of FICA and RRA taxes. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer, and payroll costs do not include the employer’s share of payroll tax;
  • Other income taxes required to be withheld from employees; and
  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

4 Net profit is calculated using 2019 IRS Form 1040 Schedule C line 31 net profit amount (if you have not yet filed a 2019 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000.

5 Section 7002 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116-127) and Section 7004 of FFCRA, respectively

Looking to apply for PPP funds? Contact us at bizhelp@dayair.org to get more information on how to get started.

Please note:
1. If funds are used for unauthorized purposes, you will have to repay those amounts. If you knowingly misuse them, you will be charged with fraud.

2. Day Air Credit Union will not pay Agents for assistance they may provide an applicant in obtaining a PPP loan.

The information on this page is based upon guidance from the Small Business Administration (SBA) and American Institute of CPAs (AICPA). Please note that the SBA is continuously refining its guidance and this information is subject to change. This information is intended for use by Day Air members and is not intended to be relied upon for legal or tax advice.

More COVID-19 Resources

Impacted services and locations.

Borrower Assistance Programs for members.

Paycheck protection program for small businesses.

Economic impact payment (stimulus check) details for members.

CARES Act summary for Day Air members.

How to access your account digitally.

Associate and Community support throughout the COVID-19 situation.

Safety and soundness of Day Air Credit Union.

Protect your money from Coronavirus scams.

Local, state and national resources for our members.