Lender approved partial PPP forgiveness ?

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Topic Author
RIMDBogle
Posts: 237
Joined: Thu Jul 12, 2018 10:13 pm

Lender approved partial PPP forgiveness ?

Post by RIMDBogle »

Lender approved partial PPP forgiveness ?
====================================

I own an S-corp and am the only employee.

I received for 1st PPP loan in 2020 and my bank approved partial PPP forgiveness after submitting PPP forgiveness application.

My business is S-Corp. We submitted forms such as 941, 401K contribution etc. We spent more than PPP loan amount for payroll for that specified period.

If my original loan (less than 30K) was approved by SBA according to our tax docs provided to them with my PPP application, why they look differently for forgiveness.

We asked the lender to provide their justification for reduced forgiven loan amount with worksheet. They are not forth comming and not allowing us to reach PPP loan officer.

It look like my lender want us to exhaust time limit actions with this run around.

We learned that a S-Corp business is eligible for FULL loan forgiveness.

What are the options , we have to claim FULL loan forgiveness?

Thanks for your guidance.
Cyclone
Posts: 312
Joined: Sun Jan 10, 2010 9:48 pm

Re: Lender approved partial PPP forgiveness ?

Post by Cyclone »

Normally the answer here is to ask your PPP lender, but you said they aren't talking.

The PPP rules have been changed as the program goes along, so maybe you qualified for full forgiveness at one time and now you don't. That's about all I know.
theplayer11
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Joined: Tue Jul 22, 2014 8:55 pm

Re: Lender approved partial PPP forgiveness ?

Post by theplayer11 »

loans under $150k should require no documentation with form 3508s. Is it Bank of America?
You are entitled to an appeal and the bank is required to give you an explanation.
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StevieG72
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Re: Lender approved partial PPP forgiveness ?

Post by StevieG72 »

S-Corp owner here, my understanding is that the bank does not make the decision, they are just the middleman.

My PPP forgiveness application was submitted to bank, then forwarded to SBA.

If you are not getting answers from the bank contact the SBA. Myself & all of my peers that took out PPP loans were granted full forgiveness.

Did you submit the 3508EZ form? If so that was the wrong one, unfortunately the name of the form is misleading. The 3508S is the form you should have used, no documentation required.
Fools think their own way is right, but the wise listen to others.
theplayer11
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Re: Lender approved partial PPP forgiveness ?

Post by theplayer11 »

StevieG72 wrote: Sun Jul 18, 2021 7:15 am S-Corp owner here, my understanding is that the bank does not make the decision, they are just the middleman.

My PPP forgiveness application was submitted to bank, then forwarded to SBA.

If you are not getting answers from the bank contact the SBA. Myself & all of my peers that took out PPP loans were granted full forgiveness.

Did you submit the 3508EZ form? If so that was the wrong one, unfortunately the name of the form is misleading. The 3508S is the form you should have used, no documentation required.
actually the bank does a review and issues a decision to the SBA. The SBA can also review any application they choose.
Shalom Aleichem
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Re: Lender approved partial PPP forgiveness ?

Post by Shalom Aleichem »

S Corp owner and ppp loan. My understanding also is the bank doesn’t decide they just forward documentation to the sba. Also you choose the time period (I forget - ten weeks?) presumably of your greatest expenses. Iirc expense include salary, benefits, rent, utilities and possibly retirement contributions. I get a little mixed up between the new and the old ppp.
theplayer11
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Re: Lender approved partial PPP forgiveness ?

Post by theplayer11 »

Shalom Aleichem wrote: Sun Jul 18, 2021 6:00 pm S Corp owner and ppp loan. My understanding also is the bank doesn’t decide they just forward documentation to the sba. Also you choose the time period (I forget - ten weeks?) presumably of your greatest expenses. Iirc expense include salary, benefits, rent, utilities and possibly retirement contributions. I get a little mixed up between the new and the old ppp.
not true, don't have time but you can google it.
theplayer11
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Re: Lender approved partial PPP forgiveness ?

Post by theplayer11 »

https://home.treasury.gov/system/files/ ... edures.pdf

"As a general matter, the lender will
review the application and make a
decision regarding loan forgiveness. The
lender has 60 days from receipt of a
complete application to issue a decision
to SBA. If the lender determines that the
borrower is entitled to forgiveness of
some or all of the amount applied for
under the statute and applicable
regulations, the lender must request
payment from SBA at the time the
lender issues its decision to SBA. SBA
will, subject to any SBA review of the
borrower’s loan(s) or loan application(s),
remit the appropriate forgiveness
amount to the lender, plus any interest
accrued through the date of payment,
not later than 90 days after the lender
issues its decision to SBA. "
Shalom Aleichem
Posts: 263
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Re: Lender approved partial PPP forgiveness ?

Post by Shalom Aleichem »

theplayer11 wrote: Sun Jul 18, 2021 6:22 pm
Shalom Aleichem wrote: Sun Jul 18, 2021 6:00 pm S Corp owner and ppp loan. My understanding also is the bank doesn’t decide they just forward documentation to the sba. Also you choose the time period (I forget - ten weeks?) presumably of your greatest expenses. Iirc expense include salary, benefits, rent, utilities and possibly retirement contributions. I get a little mixed up between the new and the old ppp.
not true, don't have time but you can google it.
That was my understanding when I applied for forgiveness. It's not up to the bank. Definitely you choose the time period you want to count when making the calculation for forgiveness and definitely it includes salary benefits rent - all those numbers were requested when I submitted my forgiveness application. I think we are only disagreeing on who makes the decision. It makes sense to me - it's not the bank's money. It's the SBA's.
Shalom Aleichem
Posts: 263
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Re: Lender approved partial PPP forgiveness ?

Post by Shalom Aleichem »

theplayer11 wrote: Sun Jul 18, 2021 7:21 pm https://home.treasury.gov/system/files/ ... edures.pdf

"As a general matter, the lender will
review the application and make a
decision regarding loan forgiveness. The
lender has 60 days from receipt of a
complete application to issue a decision
to SBA. If the lender determines that the
borrower is entitled to forgiveness of
some or all of the amount applied for
under the statute and applicable
regulations, the lender must request
payment from SBA at the time the
lender issues its decision to SBA. SBA
will, subject to any SBA review of the
borrower’s loan(s) or loan application(s),
remit the appropriate forgiveness
amount to the lender, plus any interest
accrued through the date of payment,
not later than 90 days after the lender
issues its decision to SBA. "
Well there you go. I would defer to that before I would defer to my common sense! Lord knows my common sense is not so reliable!
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Lee_WSP
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Location: Arizona

Re: Lender approved partial PPP forgiveness ?

Post by Lee_WSP »

Shalom Aleichem wrote: Sun Jul 18, 2021 7:27 pm
theplayer11 wrote: Sun Jul 18, 2021 6:22 pm
Shalom Aleichem wrote: Sun Jul 18, 2021 6:00 pm S Corp owner and ppp loan. My understanding also is the bank doesn’t decide they just forward documentation to the sba. Also you choose the time period (I forget - ten weeks?) presumably of your greatest expenses. Iirc expense include salary, benefits, rent, utilities and possibly retirement contributions. I get a little mixed up between the new and the old ppp.
not true, don't have time but you can google it.
That was my understanding when I applied for forgiveness. It's not up to the bank. Definitely you choose the time period you want to count when making the calculation for forgiveness and definitely it includes salary benefits rent - all those numbers were requested when I submitted my forgiveness application. I think we are only disagreeing on who makes the decision. It makes sense to me - it's not the bank's money. It's the SBA's.
As you've discovered, it is actually the bank's money. The SBA reimburses the bank.

However, it makes no sense for the bank to want to pursue repayment when getting a check from the SBA is far simpler.
Shalom Aleichem
Posts: 263
Joined: Tue Mar 16, 2021 8:55 pm

Re: Lender approved partial PPP forgiveness ?

Post by Shalom Aleichem »

Lee_WSP wrote: Sun Jul 18, 2021 8:46 pm
Shalom Aleichem wrote: Sun Jul 18, 2021 7:27 pm
theplayer11 wrote: Sun Jul 18, 2021 6:22 pm
Shalom Aleichem wrote: Sun Jul 18, 2021 6:00 pm S Corp owner and ppp loan. My understanding also is the bank doesn’t decide they just forward documentation to the sba. Also you choose the time period (I forget - ten weeks?) presumably of your greatest expenses. Iirc expense include salary, benefits, rent, utilities and possibly retirement contributions. I get a little mixed up between the new and the old ppp.
not true, don't have time but you can google it.
That was my understanding when I applied for forgiveness. It's not up to the bank. Definitely you choose the time period you want to count when making the calculation for forgiveness and definitely it includes salary benefits rent - all those numbers were requested when I submitted my forgiveness application. I think we are only disagreeing on who makes the decision. It makes sense to me - it's not the bank's money. It's the SBA's.
As you've discovered, it is actually the bank's money. The SBA reimburses the bank.

However, it makes no sense for the bank to want to pursue repayment when getting a check from the SBA is far simpler.
Mea culpa! Mea culpa! Mea maxima culpa!
optimize_daily
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Joined: Tue Jul 20, 2021 12:43 pm

Re: Lender approved partial PPP forgiveness ?

Post by optimize_daily »

Hi, Did the lender offer to waive the excess borrowed amount of your loan?

Also an S-Corp Owner and PPP Loan Recipient: I was informed recently by bank that they conducted a loan review and discovered that my loan amount is not fully supported by the SBA PPP rules, resulting in an excess borrowed amount. The bank indicated it is going to waive the excess funded principal amount of my loan. Additionally, because this waived amount may impact my federal and state taxes, the waived amount will be supplemented by a courtesy incremental 24% payment to help cover taxes. The bank (Wells Fargo) claims I do not have to repay the waived amount nor the 24% incremental payment. Also, I should not include this waived loan amount in my PPP loan forgiveness application. I guess I have no choice but to record these waived amounts as revenue.

When I called the bank to ask for the actual $ value they determined as 'excess', they did not want to tell me. I spent 45 min on phone until someone finally 'unoffically' provided me the $ value. I asked for the calculation logic they used but I could not get anyone that knew / would provide it to me. I have until this Friday to accept / reject their 'offer' to waive the excess amount + amount to cover taxes. I'm concerned that by accepting their offer, I am accepting their calculation logic, even though they won't share it. Did you also get this? If so, are you going to accept it?
WAROB
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Joined: Fri Jan 22, 2021 12:13 pm

Re: Lender approved partial PPP forgiveness ?

Post by WAROB »

Was the partial forgiveness amount $20,833 or similar. They might be capping single member comp at the salary limit if you didn’t put any other costs on your forgiveness application.
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StevieG72
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Re: Lender approved partial PPP forgiveness ?

Post by StevieG72 »

This is the exact wording in an email form the bank I worker with….

”We are pleased to inform you that your application for Small Business Administration (SBA) Paycheck Protection Program (PPP) loan forgiveness has been reviewed in accordance with the SBA program guidance. We have submitted your forgiveness request to the SBA.
The SBA now has up to 90 days to review and accept, change, or possibly deny the forgiveness application. We will contact you when we hear from the SBA on the final disposition of your forgiveness request.”


The poster that mentioned maximum owner compensation capped at $20,833 is definitely something that could have reduced forgiveness amount.
Fools think their own way is right, but the wise listen to others.
optimize_daily
Posts: 2
Joined: Tue Jul 20, 2021 12:43 pm

Re: Lender approved partial PPP forgiveness ?

Post by optimize_daily »

WAROB wrote: Tue Jul 20, 2021 4:15 pm Was the partial forgiveness amount $20,833 or similar. They might be capping single member comp at the salary limit if you didn’t put any other costs on your forgiveness application.
Good news on the $20,833 limit: "The $20,833 cap on owner-employee compensation applies to cash compensation only. It’s not an overall compensation limit as the SBA had stated in its prior interim guidance. Under new rule, the owner-employee can add retirement benefits on top of the cash compensation, creating a new higher cap. On top of the $20,833, the S corporation is also eligible for loan forgiveness for
  • payments of state and local payroll taxes,
  • and employer retirement contributions, capped at 20.83 percent of 2019 employer retirement contributions on behalf of the owner-employee."
Topic Author
RIMDBogle
Posts: 237
Joined: Thu Jul 12, 2018 10:13 pm

Re: Lender approved partial PPP forgiveness ?

Post by RIMDBogle »

Thanks for your reply.

I am not able to get any communication from my lender about my loan forgiveness determination amount.

The assigned rep making escalations after escalations, but I did not see a resolutions.

I received a demand letter to repay my loan payment + interest.

How do we raise our grievances ?

Thanks for your guidance.
WAROB
Posts: 63
Joined: Fri Jan 22, 2021 12:13 pm

Re: Lender approved partial PPP forgiveness ?

Post by WAROB »

You could see if you are able to reach out to anyone at the SBA regarding your forgiveness. Ultimately it is the SBA that grants forgiveness and reimburses your lender. Different lenders have different internal application verification processes though.

How long of a covered period did you list on your forgiveness application? Did your payroll cost line match the total loan amount?

You said you are the only employee so my first thought is that the lender is limiting the forgiveness on the owner salary limitation as mentioned above. As others pointed out you should still be able to use other costs to get to your full forgiveness amount. I’d keep trying to climb the chain of leadership at your lender until you get some response or show up at a branch in person and ask to speak with someone.
Topic Author
RIMDBogle
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Re: Lender approved partial PPP forgiveness ?

Post by RIMDBogle »

Thanks for your guidance.

I find

Rules and RegulationsFederal Register8283 Vol. 86, No. 23 Friday, February 5, 2021

https://home.treasury.gov/system/files/ ... edures.pdf

says:
owner compensation replacement, calculated based on 2019 or 202019net profit20as described in subsection 3.c. below; forgiveness of such amounts is limited to either (a) the prorated portion of 2019 or 2020 net profit for a covered period up to 2.5 months, or (b) 2.5 months’ worth (2.5/12) of 2019 or 2020 net profit (up to $20,833) for a covered period greater than 2.5 months,21excluding any qualified sick leave equivalent amount for which a credit is claimed under section 7002 of the Families First Coronavirus Response Act (FFCRA) (Pub. L. 116–127) or qualified family leave equivalent amount for which a credit is claimed under section 7004 of FFCRA;
It is not talking about adding Retirement on top of 20833.

It is not talking about Employer FICA as well.

Thanks for your guidance.
Topic Author
RIMDBogle
Posts: 237
Joined: Thu Jul 12, 2018 10:13 pm

Re: Lender approved partial PPP forgiveness ?

Post by RIMDBogle »

Thanks for reviewing my thread.

Any thoughts for my questions?

I did find many PPP Loan Forgiveness Calculator , when I did google search

What is the calculator this forum members used for Forgiveness calculation?

Thanks for sharing.
Topic Author
RIMDBogle
Posts: 237
Joined: Thu Jul 12, 2018 10:13 pm

Re: Lender approved partial PPP forgiveness ?

Post by RIMDBogle »

Thanks for your response.

I am able to get some answers fro my lender. Here is what they say.
You are an S-Corp and based on SBA's April 24, 2020 guidance on how S-Corp should calculate their PPP Loan amount requests the correct maximum loan amount was 20833
Is it correct ?

Thanks for your guidance.
WAROB
Posts: 63
Joined: Fri Jan 22, 2021 12:13 pm

Re: Lender approved partial PPP forgiveness ?

Post by WAROB »

Based on the 2.5 months of payroll calculation yes that is correct.

As you posted above you are able to use medical insurance and employer tax expenses for the forgiveness application. What they are saying is that they gave you too much money to begin with. Most likely calculated off your entire payroll (your salary) as opposed to the limited amount for business owners. An S-Corp could have received a much larger loan if they had multiple employees and a larger payroll.
Topic Author
RIMDBogle
Posts: 237
Joined: Thu Jul 12, 2018 10:13 pm

Re: Lender approved partial PPP forgiveness ?

Post by RIMDBogle »

Thanks for weighing in. I have an update.

After doing some research and active follow up with lender. They agree to correction appeal to SBA.

SBA approve full forgiveness of my PPP.

Thanks for this forum guidance.
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