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PPP Loan Forgiveness Guidance for Ag Borrowers

PPP Loan Forgiveness Guidance for Ag Borrowers

This information is current as of September 25, 2020. For the latest information, please monitor our website or your email for updates.

In the wake of the COVID-19 pandemic, FNB was proud to lead the way in lending for the Paycheck Protection Program (PPP). We’ve made more than $1.5 million in PPP loans to agribusinesses through the program, which allowed for forgiveness of eligible expenses.

After months of waiting for the U.S. Small Business Administration (SBA) to provide guidance on the forgiveness process, we delayed accepting forgiveness applications in anticipation of further legislative changes by Congress. We had hopes that the changes would simplify the forgiveness process for both borrowers and lenders. However, those changes did not materialize timely, and we began accepting forgiveness applications on September 10.

If you received a PPP loan through FNB, you should be receiving occasional email updates from our SBA Hub about the forgiveness process. Because of the different requirements for agribusinesses, we wanted to provide some guidance specific for our ag customers. Please keep in mind that the legislative changes mentioned above are still possible, which could change the applications and the required supporting documentation. At this time, here are some helpful tips to ag borrowers applying for PPP loan forgiveness:

Choosing Your Application

In most cases, ag borrowers can apply for forgiveness using the EZ application. We encourage using the EZ Application, as there is less information required and it should be easier to complete. You can find the eligibility criteria for the EZ Application within the associated Instruction Sheet on our website.

Covered Period

It appears most beneficial for ag borrowers who applied for a PPP loan using Schedule C or Schedule F to use the 24-week period in order to qualify for full forgiveness by applying at week 12 after the initial loan disbursement date.

If you select an eight-week Covered Period, your loan may not be eligible for full forgiveness based on payroll costs alone. Based on current SBA guidelines, payroll calculations for the 8 and 24-week Covered Periods are as follows:

Max forgiveness using an 8-week Covered Period: 8/52 x $100,000 = $15,385

Max forgiveness using 24-week Covered Period: 2.5/12 x $100,000 = $20,833

If you choose the 24-week Covered Period, you can apply at any time forgiveness qualification occurs. There is no need to wait until the end of the 24 weeks.

Required Documentation

When you applied for your PPP loan, your supporting documentation should have included a 2019 Schedule C or Schedule F. We encourage all borrowers to attach this documentation as part of the forgiveness application.

If you have employees, you will also need to submit the proper payroll documentation verifying eligible cash and non-cash compensation during the selected Covered Period as part of your forgiveness application. This documentation includes 2020 Quarter 2 and Quarter 3 (when filed) IRS Forms 941 or 943.

You can find all of the applications, instruction sheets, document checklists, and more on our website at www.fnbsf.com/ppp-loan-forgiveness-application/. You can also reach out to your lender or our SBA Hub team at [email protected]

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