covid-19 

ALL COVID-19 FAQS

Your questions and answers on the Coronavirus Aid, Relief, and Economic Security (CARES) Act and government EIP checks.

PPP Overview and Validation

  • A01) What is the Paycheck Protection Program (PPP)?

  • A04) Are PPP loans guaranteed?

  • A05) Who can get a loan?

  • A06) Can my local church or other nonprofit organization get a PPP loan?

  • A07) Is a small business required to have 500 or fewer employees to be eligible to participate in the PPP?

  • A81) Is a hospital owned by a governmental entity eligible for a PPP loan?

  • A82) Is a hedge fund or private equity firm eligible for a PPP loan?

  • A83) Do the SBA affiliation rules prohibit a portfolio company of a private equity fund from being eligible for a PPP loan?

  • A84) Does participation in an employee stock ownership plan (ESOP) trigger application of the affiliation rules?

  • A85) Is the applicant eligible to receive a PPP loan if the business is in bankruptcy?

  • A87) What should a borrower do if they feel that a previous certification in the PPP application can no longer be relied upon?

  • A08) Does the business need to prove that it has a hardship to qualify for the loan?

  • A09) Who is prohibited from receiving a PPP loan?

  • A10) Can an applicant receive a PPP loan if they pleaded guilty to a felony crime a long time ago?

  • A11) Is a bank director, officer, key employee or significant shareholder (20% or more) eligible to apply for a PPP loan through the affiliated bank?

  • A12) Are there situations where ownership interests, control interests, common agreements, and other affiliations could restrict the ability of a small business or a non-profit organization to receive a PPP loan?

  • A13) Is the bank required to make their own independent determination regarding applicability of affiliation rules under 13 C.F.R. 121.301(f) to borrowers?

  • A14) How do SBA’s affiliation rules at 13 C.F.R. 121.301(f) apply with regard to counting the employees of foreign and U.S. affiliates?

  • A16) Is the bank required to validate the applicant’s payroll documentation when it is being confirmed?

  • A86) Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs?

  • A88) Is there existing guidance to help PPP applicants and lenders determine whether an individual employee’s principal place of residence is in the United States?

  • A17) How does the bank validate the terms and conditions applicable to borrowers for loan eligibility?

  • A18) Are PPP loans for existing customers considered new accounts for FinCEN Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial ownership information in accordance with the rule requirements for existing customers?

  • A19) What requirements do banks have under the PPP program regarding the Bank Secrecy Act?

  • A20) What is the lender’s underwriting obligation when an applicant submits an application for a PPP loan?

  • A22) What certifications must the applicant make to receive a PPP loan?

  • A28) When does the required eight-week period begin that the borrower uses to determine their payroll costs?

  • A30) What risk does the lender incur if the borrower does not follow the PPP program’s criteria?

  • A31) Who can make PPP loans?

  • A32) How does a bank that is currently not an SBA lender sign up to issue PPP loans?

  • A33) What is the interest rate and term of the PPP loan?

  • A37) What is the maximum loan amount?

  • A38) How do the $10 million cap and affiliation rules work for franchises?

  • A39) How do the $10 million cap and affiliation rules work for hotels and restaurants (and any business assigned a North American Industry Classification System (NAICS) code beginning with 72)?

  • A40) When the applicant calculates the amount of compensation to be deducted from employees making more than $100,000 per year, does the applicant need to deduct all employee benefits?

  • A41) When calculating payroll costs, does the applicant include paid sick leave?

  • A42) How do applicants show payroll costs when they utilize a third-party payer for payroll costs such as a payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes?

  • A43) What time frame does the applicant use to determine the average of monthly payroll costs?

  • A44) When an applicant needs to determine the number of employees for the employee-based size standard, what method should they use?

  • A45) What is considered “payroll cost”?

  • A46) What is expressly excluded from the definition of payroll cost?

  • A47) What can PPP loans be used for?

  • A48) How does the applicant consider federal payroll taxes when determining payroll costs to compute the maximum loan amount, allowable uses of the loan, and loan forgiveness?

  • A50) Who determines borrower eligibility and creditworthiness?

  • A51) Can a community bank receive a PPP loan?

  • A53) Can a small business apply for more than one PPP loan?

  • A54) Can a small business receive more than one loan under the COVID-19 lending programs?

  • A55) Can borrowers who receive PPP loans participate in tax relief programs under the CARES Act?

  • A58) Is there a payment deferral period for the payment of principal and interest on the PPP loan?

  • A59) Under this program do lenders have to apply the “credit elsewhere” test, require collateral, or require a personal guarantee?

  • A61) How are borrower agent fees paid?

  • A62) Who can be considered an agent under the PPP program?

  • A63) What is the bank’s obligation to pay CPA firms and others who demand an agent fee from the bank for providing information on the borrower’s behalf?

  • A79) Are businesses that receive revenue from legal gaming eligible for a PPP loan?

  • A80) Is a Lender permitted to submit a PPP loan application to SBA through ETran before the Lender has fulfilled its responsibility to review the required borrower documentation and calculation of payroll costs?

  • K02) Are agricultural producers, farmers, and ranchers eligible for PPP loans?

  • K03) Are agricultural and other forms of cooperatives eligible to receive PPP loans?

  • A15) If a minority shareholder in a business irrevocably waives or relinquishes an existing right under 13 CFR 121.301(f)(1) is that minority shareholder still considered to be an affiliate of the business?

  • A21) Does the info lenders are required to collect from PPP applicants regarding every owner who has a 20% or greater ownership stake in the applicant business satisfy a lender’s obligation to collect beneficial ownership info under the BSA?

  • H03) Will the FHLBs start accepting Payment Protection Program loans (PPP loans) as collateral when making advances to their members?

  • A89) To determine borrower eligibility under the 500-employee or other applicable threshold established by the CARES Act, must a borrower count all employees or only full-time equivalent employees?

  • A90) If a seasonal business was dormant or not fully operating as of February 15, 2020, is it still eligible for the PPP?

  • A91) Can a borrower take multiple draws from a PPP loan and thereby delay the start of the twenty-four-week covered period?

  • A92) Is the lender responsible for delays caused by the borrower that would prevent the lender from meeting the ten calendar-day period for disbursement?

  • A93) How do lenders handle loan proceeds related to the refinance of an EIDL?

  • A94) By when must a lender electronically submit an SBA Form 1502 indicating that PPP loan funds have been disbursed so that the processing fee can be collected?

  • A95) Is a business that was in operation on February 15, 2020 but had a change in ownership after February 15, 2020 eligible for a PPP loan?

  • A96) Can a single corporate group receive unlimited PPP loans?

  • A98) Do nonprofit hospitals exempt from taxation under section 115 of the Internal Revenue Code qualify as “nonprofit organizations” under section 1102 of the CARES Act?

  • A99) Will a borrower’s PPP loan forgiveness amount be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

  • A100) Can a seasonal employer that elects to use a 12-week period between May 1, 2019 and September 15, 2019 to calculate its maximum PPP loan amount make all the required certifications on the Borrower Application Form?

  • A101) Do student workers count when determining the number of employees for PPP loan eligibility?

  • A102) Are recipients entitled to exemptions based on nondiscrimination laws for sex-specific admissions practices or domestic violence shelters, coreligionist housing, or Indian tribal preferences in connection with adoption or foster care practices?

  • A104) How should a borrower proceed if, after receiving a PPP loan, it concludes that its own borrower application form certification that current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant?

  • A105) How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

  • A106) If a seasonal employer received a PPP loan before the alternative criterion for determining the maximum loan amount for seasonal employers became available, can the loan amount be increased?

  • A107) If a partnership received a PPP loan that did not include any compensation for its partners, can the loan amount be increased to include partner compensation?

  • A108) What is the accounting for fees payable to the lender under the PPP?

  • G09) Regulation B requires a “notification of action taken” within 30 days of receiving a “completed application.” When does a PPP loan application count as a “completed application?”

  • G11) If a bank received sufficient information from an applicant to make a credit decision but has't received a loan number from the SBA or a response about the availability of funds, can the bank deny the application based on incompleteness?

  • A109) Are electric cooperatives that are exempt from federal income taxation under section 501(c)(12) of the Internal Revenue Code eligible for a PPP loan?

  • A110) Are employees of foreign affiliates included for purposes of determining whether a PPP borrower has more than 500 employees?

  • A111) How can lenders request payment of PPP processing fees?

  • A119) When won’t a lender receive a processing fee?

  • A112) How will SBA disburse the processing fee to lenders?

  • A113) Will SBA review the payment of lender processing fees?

  • A114) Are lender processing fees subject to clawback if SBA determines that a borrower is ineligible?

  • A115) Are lender processing fees subject to clawback if a Lender has not fulfilled its obligations under PPP regulations?

  • A116) What are the ongoing reporting requirements for PPP loans?

  • A117) When a loan is sold, which lender is responsible for 1502 reporting to SBA?

  • A118) Is the loan forgivable?

  • A121) When does the required twenty-four-week period begin that the borrower uses to determine their payroll costs?

  • A123) Under what conditions would the loan not be forgiven by SBA?

  • A124) Will SBA review individual PPP loan files?

  • A140) What should a lender review in the PPP loan forgiveness application?

  • A144) Will the lender have the opportunity to respond to SBA’s questions in a review?

  • A147) Are telephone cooperatives that are exempt from federal income taxation under section 501(c)(12) of the Internal Revenue Code eligible for a PPP loan?

  • A148) Which borrowers are eligible to complete the loan forgiveness application using the SBA Form 3508EZ short form?

  • A149) Is there a safe harbor or exemption for the loan forgiveness penalties associated with FTE reductions and employee headcount reductions for borrowers who are not able to restore employee levels during the period from Feb. 15 to Dec. 31, 2020?

  • A146) For borrowers that elect not to apply for loan forgiveness, when should the lender begin the process of collecting principal and interest payments for the loan?

  • A150) When should a borrower’s EIDL loan be refinanced as part of its PPP loan?

  • A182) In calculating FTE reduction exceptions in Table 1 of the PPP Schedule A Worksheet on the Loan Forgiveness Application (SBA Form 3508 or lender equivalent), do borrowers include employees who made more than $100k in 2019 (those listed in Table 2)?

  • A193) What should a lender do if a borrower received an EIDL advance in excess of the amount of its PPP loan?

PPP Processing and Funding

PPP Loan Forgiveness & Loan Review

  • A27) Is the loan forgivable?

  • A29) Under what conditions would the loan not be forgiven by SBA?

  • A30) What risk does the lender incur if the borrower does not follow the PPP program’s criteria?

  • A48) How does the applicant consider federal payroll taxes when determining payroll costs to compute the maximum loan amount, allowable uses of the loan, and loan forgiveness?

  • A49) How does PPP loan forgiveness operate?

  • A72) What documentation will a self-employed individual be required to submit to the lender when requesting loan forgiveness?

  • A73) For self-employed individuals, what amounts are eligible for forgiveness?

  • A99) Will a borrower’s PPP loan forgiveness amount be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

  • A118) Is the loan forgivable?

  • A121) When does the required twenty-four-week period begin that the borrower uses to determine their payroll costs?

  • A123) Under what conditions would the loan not be forgiven by SBA?

  • A124) Will SBA review individual PPP loan files?

  • A125) What is the general process to obtain loan forgiveness?

  • A126) When must payroll costs be incurred and/or paid to be eligible for forgiveness?

  • A127) For self-employed individuals, what amounts are eligible for forgiveness?

  • A128) Are salary, wages, or commission payments to furloughed employees; bonuses; or hazard pay during the covered period eligible for loan forgiveness?

  • A129) Are there caps on the amount of loan forgiveness available for owner-employees and self-employed individuals’ own payroll compensation?

  • A130) When must nonpayroll costs be incurred and/or paid to be eligible for forgiveness?

  • A131) Are advance payments of interest on mortgage obligations eligible for loan forgiveness?

  • A132) Will the loan forgiveness amount be reduced if the borrower laid-off or reduced hours of an employee, then offered to rehire that employee for the same salary and number of hours, or restore the reduction in hours, but the employee declines?

  • A133) What effect does a reduction in a borrower’s number of full-time equivalent (FTE) employees have on the loan forgiveness amount?

  • A134) What does “full-time equivalent employee” (FTE) mean and how should a borrower calculate its number of full-time equivalent (FTE) employees?

  • A135) What effect does a borrower’s reduction in employees’ salary or wages have on the loan forgiveness amount?

  • A136) How should borrowers seeking loan forgiveness account for the reduction based on a reduction in the number of employees (Section 1106(d)(2)) relative to the reduction relating to salary and wages (Section 1106(d)(3))?

  • A137) If a borrower restores reductions made to employee salaries and wages or FTE employees by not later than December 31, 2020, can the borrower avoid a reduction in its loan forgiveness amount?

  • A138) Will a borrower’s loan forgiveness amount be reduced if an employee is fired for cause, voluntarily resigns, or voluntarily requests a schedule reduction?

  • A139) What must borrowers submit for forgiveness of their PPP loans?

  • A140) What should a lender review in the PPP loan forgiveness application?

  • A141) What is the timeline for the lender’s decision on a loan forgiveness application?

  • A142) What borrower representations and statements will SBA review?

  • A143) When will SBA undertake a loan review?

  • A145) What should a lender do if it receives notice that SBA is reviewing a loan?

  • A150) When should a borrower’s EIDL loan be refinanced as part of its PPP loan?

  • A151) May fishing boat owners include payroll costs in their PPP loan applications that are attributable to crewmembers described in Section 3121(b)(20) of the Internal Revenue Code?

  • A152) May a fishing boat owner include as payroll costs in its application for loan forgiveness any compensation paid to a crewmember who received his or her own PPP loan and is seeking forgiveness?

  • Are payroll costs that were incurred during the covered period or the alternative payroll covered period but paid after the covered period or the alternative payroll covered period eligible for loan forgiveness?

  • A163) Are payroll costs that were incurred before the covered period but paid during the covered period eligible for loan forgiveness?

  • A164) Are borrowers required to calculate payroll costs for partial pay periods?

  • A165) For purposes of calculating cash compensation, should borrowers use the gross amount before deductions for taxes, employee benefits payments, and similar payments, or the net amount paid to employees?

  • A166) Are only salaries or wages covered by loan forgiveness, or can a borrower pay lost tips, lost commissions, bonuses, or other forms of incentive pay and have such costs qualify for loan forgiveness?

  • A167) What expenses for group health care benefits will be considered payroll costs that are eligible for loan forgiveness?

  • A168) What contributions for retirement benefits will be considered payroll costs that are eligible for loan forgiveness?

  • A169) How is the amount of owner compensation that is eligible for loan forgiveness determined?

  • A170) Are any individuals with an ownership stake in a PPP borrower exempt from application of the PPP owner-employee compensation rule when determining the amount of their compensation that is eligible for loan forgiveness?

  • A171) Are nonpayroll costs incurred prior to the covered period, but paid during the covered period, eligible for loan forgiveness?

  • A172) Are nonpayroll costs incurred during the covered period, but paid after the covered period, eligible for loan forgiveness?

  • A173) If a borrower elects to use the alternative payroll covered period for payroll costs, does the alternative payroll covered period apply to nonpayroll costs?

  • A174) Is interest on unsecured credit eligible for loan forgiveness?

  • A175) Are payments made on recently renewed leases or interest payments on refinanced mortgage loans eligible for loan forgiveness if the original lease or mortgage existed prior to February 15, 2020?

  • A176) Covered utility payments, which are eligible for forgiveness, include a “payment for a service for the distribution of . . . transportation” under the CARES Act. What expenses does this category include?

  • A177) Are electricity supply charges eligible for loan forgiveness if they are charged separately from electricity distribution charges?

  • A178) Are amounts attributable to the business operation of a tenant or sub-tenant of the PPP borrower or, in the context of home-based businesses, household expenses, eligible for forgiveness?

  • A179) Are rent payments to a related party eligible for loan forgiveness?

  • A180) If a seasonal employer elects to use a 12-week period between May 1, 2019 and September 15, 2019 to calculate its maximum PPP loan amount, what period in 2019 should be used as the reference period for calculating any reductions?

  • A181) Will a borrower be subject to a reduction to its forgiveness amount due to a reduction in FTE employees during the covered period if the borrower offered to rehire one or more laid off employees but the employees declined?

  • A182) In calculating FTE reduction exceptions in Table 1 of the PPP Schedule A Worksheet on the Loan Forgiveness Application (SBA Form 3508 or lender equivalent), do borrowers include employees who made more than $100k in 2019 (those listed in Table 2)?

  • A183) How do borrowers calculate the reduction in their loan forgiveness amount arising from reductions in employee salary or hourly wage?

  • A184) For purposes of calculating the loan forgiveness reduction required for salary/hourly wage reductions in excess of 25% for certain employees, are all forms of compensation included or only salaries and wages?

  • A185) What should a lender do if a borrower submits documentation of eligible costs that exceed a borrower’s PPP Loan Amount?

  • A186) If a borrower submits a timely loan forgiveness application, does the borrower have to make any payments on its loan prior to SBA remitting the forgiveness amount, if any?

  • A187) Can PPP lenders use scanned copies of documents, E-signatures, or Econsents for loan forgiveness applications and loan forgiveness documentation?

  • A188) When a borrower submits SBA Form 3508S or lender’s equivalent form, the lender shall:

  • A189) Should the lender report loan forgiveness to the IRS for loans forgiven under the PPP?

  • A190) What is the impact of SBA’s lien requirements on EIDL loans over $25,000 on a borrower’s ability to obtain other financing for business operations?

  • A191) SBA will deduct the amount of any EIDL advance received by a PPP borrower from the forgiveness amount remitted to the lender. How will a lender know the amount of the EIDL advance that will be automatically deducted by SBA?

  • A192) How should a lender handle any remaining balance due on a PPP loan after SBA remits the forgiveness amount to the lender?

Mortgage Lending

Loan Modification/Accounting

  • C01) Do federal bank regulators support lender modifications of loans?

  • C02) What types of modifications can a bank make to a loan when requested by the borrower?

  • C03) Can the bank make a minor loan modification that does not result in a significant financial impact on the contractual relationship or the bank’s accounting for that loan?

  • C04) How do I know if my loan modification results in an insignificant delay or insignificant shortfall in cash flows to determine what type of modification I am making?

  • C05) If I make a minor loan modification what happens to my interest accruals?

  • C06) What if the bank grants a concession to the borrower or modifies a loan that results in a significant delay or shortfall in contractual cash flows? See also Q7. and Q8.

  • C07) When can a loan classified as a TDR be returned to accrual status? See also Q8.

  • C08) Does my bank need to consider and reflect the impact of TDRs on modifications that are made to loans based on the impact of the COVID-19 pandemic?

  • C09) What is the impact of amendments made by both Congress through legislation and the federal banking regulators on the implementation of the current expected credit loss model (CECL)?

  • F07) Did the banking agencies extend the deadline for filing call reports for the first quarter of 2020?

  • H02) As banks continue to work with their customers on loan modifications resulting from COVID-19, will the FHLBs continue to require a wet ink signature on a modification agreement for their Mortgage Purchase and Mortgage Purchasing Finance Programs?

  • H01) Are the FHLBs in the system coordinating to ensure consistency in their treatment of collateral and collateral haircuts, etc.?

  • A97) Will SBA review individual PPP loan files?

Federal Reserve Lending Support

  • E01) What changes has the Federal Reserve made to the discount window in response to the current crisis?

  • E02) What is the Main Street Small Business Lending Program?

  • E03) Is the Federal Reserve supporting the SBA’s Paycheck Protection Program?

  • E04) Will the Federal Reserve support mortgage servicers?

  • E05) What else is the Federal Reserve doing to support credit in the broader economy?

Deposit Insurance, Exams and Reporting

  • F01) Does the CARES Act authorize the FDIC to fully insure noninterest bearing transaction accounts?

  • F02) How will the FDIC define a noninterest bearing transaction account?

  • F03) Does the CARES Act also authorize the FDIC to insure the debt of banks and bank holding companies?

  • F04) Can community banks use a lower community bank leverage ratio?

  • F05) Does the CARES Act provide any authority for lowering lending limits?

  • F06) Will the banking agencies reduce their focus on exams during the COVID-19 outbreak?

  • F07) Did the banking agencies extend the deadline for filing call reports for the first quarter of 2020?

Compliance and BSA

Operations

  • F01) Does the CARES Act authorize the FDIC to fully insure noninterest bearing transaction accounts?

  • F02) How will the FDIC define a noninterest bearing transaction account?

  • F03) Does the CARES Act also authorize the FDIC to insure the debt of banks and bank holding companies?

  • F04) Can community banks use a lower community bank leverage ratio?

  • F05) Does the CARES Act provide any authority for lowering lending limits?

  • F06) Will the banking agencies reduce their focus on exams during the COVID-19 outbreak?

  • F07) Did the banking agencies extend the deadline for filing call reports for the first quarter of 2020?

  • J03) What procedures should banks follow if an employee or customer has tested positive for COVID-19?

  • J02) What should employees do with respect to handling cash?

  • J01) Are bank employees considered essential workforce?

  • J07) When should an employee suspected or confirmed to have COVID-19 return to work?

  • J08) What other resources has the CDC made available for businesses?

Agriculture FAQs

  • K02) Are agricultural producers, farmers, and ranchers eligible for PPP loans?

  • K03) Are agricultural and other forms of cooperatives eligible to receive PPP loans?

  • K01) Are there any benefits for farmers and ranchers in the coronavirus aid bill?

Payroll Tax Deferral

  • L01) What do I, as an employer, need to know about the payroll tax deferral provision of the CARES Act?

  • L04) Are any employers excluded from deferral?

  • L05) What questions remain unanswered regarding PPP borrowers and payroll tax deferral?

  • L02) What happens to payroll tax deferral in 2021?

Employee Retention Tax Credit

  • L07) Employee Retention Tax Credit: Who is eligible for the employee retention tax credit?

  • L08) Employee Retention Tax Credit: What is the amount of the credit?

  • L09) Employee Retention Tax Credit: How is the credit applied or redeemed?

  • L10) Employee Retention Tax Credit: Can an employer receive both the Employee Retention Tax Credit and the tax credit for payment of emergency paid sick leave and emergency paid family and medical leave under the Families First Coronavirus Response Act?

Net Operating Loss Carryback

  • L14) Can I benefit from the Net Operating Loss provision of the CARES Act?

  • L20) My bank is an S-corp. How can I benefit from the NOL changes?

  • L15) If I have a net operating loss, how do I file for a refund of prior year taxes paid and when can I expect to see the refund?

Expanded Business Interest Deduction

Remittance

EIP Stimulus Payment

  • N6) What if I am typically not required to file a tax return?

  • N14) Are Economic Impact Payments subject to garnishment orders?

  • B01) I’m concerned about my branches being flooded with EIP checks. What is the plan for distributing these payments?

  • B02) How will people who do not typically file returns (e.g., some seniors) receive their rebate payments?

  • B03) What is the timing of the payments?

  • B04) Who qualifies for a payment and how is the amount calculated?

  • B05) Is the EIP stimulus payment taxable?

  • B06) Is there a way for my bank to verify an EIP check?

  • B07) What do I need to know about the routing numbers associated with EIPs?

  • B08) What should an RDFI do if a U.S. Treasury payment is made to a closed account?

  • B09) Are Economic Impact Payments subject to garnishment orders?

  • B10) Does an individual who has died qualify for an Economic Impact Payment?

  • B12) We are worried about individuals presenting fraudulent IRS economic impact checks. What can a bank do to reduce the risk of accepting a fraudulent paper check?

  • B11) What should an individual do to return an Economic Impact Payment to the IRS?

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