PPP Loan Forgiveness

Eligibility requirements	What you’ll need
Loan amounts equal to or less than $150,000	PPP 3508S Loan Forgiveness Application
Loan amounts greater than $150,000	PPP 3508 Loan Forgiveness Application OR PPP 3508EZ Loan Forgiveness Application

What resources are available for borrowers looking for more detailed information about the PPP loan forgiveness process?

Borrowers looking for more information should visit https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses and https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/ppp-loan-forgiveness

Who can advise or help a business interpret SBA guidance around eligibility and documentation requirements?

Please visit SBA.gov for more information regarding eligibility and requirements. The SBA also provides local assistance via 68 district offices and a nationwide network of resource partners. To find nearby resources, please visit: https://www.sba.gov/local-assistance

Did the Economic Aid Act of December, 2020 make any changes to the forgiveness process?

The Act made many changes, including simplifying the forgiveness process for PPP loans of $150,000 and below; allowed for additional eligible covered non-payroll costs; repealed the requirement that EIDL advances be withdrawn from the forgiveness amount; provided the ability for borrowers to select their covered period as any date between 8 weeks and 24 weeks from loan disbursement, which in effect, eliminated the requirement that the covered period end on 12/31/20.

How can a borrower apply for forgiveness?

The borrower must complete the Loan Forgiveness Application (SBA Form 3508, 3508EZ, 3508S). Borrowers can submit this documentation directly to the lender (Webster Bank) at any Webster Banking Center. The lender will review the application and make a decision regarding loan forgiveness. Per SBA guidance, the lender has 60 days from receipt of a complete application to issue a decision to the SBA. The SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the lender no later than 90 days after the lender issues its decision to SBA.

Can a borrower apply for forgiveness after the deferral period ends and they have started making payments?

Though borrowers must begin making payments after the deferral period ends, they can apply for forgiveness at any point before the loan matures. If the forgiveness amount remitted by SBA exceeds the remaining principal balance of the PPP loan (because the borrower made scheduled payments on the loan after the initial deferment period), the lender (Webster Bank) must remit the excess amount, including accrued interest, to the borrower.

Is Webster participating in the SBA’s Direct Forgiveness Program?

At this time, Webster is not participating in the SBA’s Direct Forgiveness Program. Webster Bank is accepting PPP Loan Forgiveness applications. Borrowers can submit this documentation directly to the lender (Webster Bank) at any Webster Banking Center.

Is there a simplified application process for loans equal to or less than $150,000?

For loan amounts equal to or less than $150,000 the borrower may be eligible to submit application form 3508S. This is a one page application form, and the borrower is not required to submit documentation supporting payroll and non-payroll expenses.

If I currently have a pending Forgiveness application for $150,000 or less in process with Webster, should I submit a new request using the new 3508S form?

Webster strongly encourages all applicants that are eligible to leverage the 3508S Form. Reapplying will allow borrowers to take advantage of the new streamlined process established by the SBA.

The Loan Forgiveness Application asks for both an ‘SBA PPP Loan Number’ and a ‘Lender PPP Loan Number’, where can these be found?

The SBA PPP Loan Note (included in the Webster Bank closing documents sent via DocuSign) contains these and other important elements the borrower will need to complete the Loan Forgiveness Application. The SBA PPP Loan Number is located on Page 1, Section 1 of the SBA PPP Loan Note. The Lender PPP Loan Number from Webster Bank (10-digits beginning with 4750) is located on Page 1 in the top right corner of the SBA Loan Note. Borrowers may also look on the email sent to them from Webster Bank inviting them to apply for forgiveness.

How do I know if my application was received, and what is the next step?

A Webster Bank colleague from our Business Credit Center will email you a confirmation shortly following receipt of the application. Webster Bank reviews applications for completion in the order that they are received. If it is found to be incomplete, Webster Bank will contact the borrower via email to finalize the application. Once Webster Bank receives the completed application, a decision will be made within 60 days. Webster Bank will notify approved borrowers via email when the application is submitted to the SBA, and will notify via mail when the SBA sends Forgiveness payment to Webster Bank.

If I need to supply additional or updated documents, how do I supply those documents to Webster Bank?

If you receive a request for documentation via email, please follow the instructions provided in that email.

How will Webster Bank notify an applicant if additional documentation is required?

Webster Bank will notify the applicant via email and make a request for additional documentation. This email will include instructions for submitting the required documentation.

I received a secure email from Webster Bank that I am unable to open. What should I do?

Please reach out to your local Banking Center, Relationship Manager or call us at 800.482.2220 to determine the content of the email.

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

In general, payroll costs paid or incurred during the covered period are eligible for forgiveness.

When does the covered period begin?

The covered period starts on the date the lender (Webster Bank) disburses the PPP loan to the borrower. It ends on any date between 8-weeks up to 24-weeks, from the date of disbursement.

What is the maturity date of a PPP loan?

If a PPP Loan received an SBA loan number on or after June 5, 2020, the loan has a five-year maturity. If a PPP loan received an SBA loan number before June 5, 2020, the loan has a two-year maturity. Borrowers can find the PPP Loan term in section 3(a) of the PPP Loan promissory note.

In case my loan is not forgiven, how do we extend the pay back terms to 5 years?

Modification of terms for repayment are determined after the SBA completes their review of the forgiveness application. Borrower must request a modification if they wish to extend the maturity date.

If a borrower has already made their first PPP loan payment by the time the Forgiveness application is approved, can they still qualify for 100% forgiveness? Would they get a credit for an amount that they have already made as a payment?

If the amount remitted by the SBA to the lender (Webster Bank) exceeds the remaining principal balance of the PPP loan (because the borrower made scheduled payments on the loan after the initial deferment period), the lender must remit the excess amount, including accrued interest, to the borrower.

If a borrower received a PPP loan but some of its employees are already receiving unemployment and receiving payment will prevent them from receiving unemployment benefits, how will that affect the borrower in terms of applying for forgiveness?

Guidance regarding these circumstances is available in the SBA Paycheck Protection Program FAQs available at https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses.

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

The amount of compensation of owners who work at their business that is eligible for forgiveness depends on the business type. In addition to the specific caps, the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation is capped at $20,833 per individual in total across all businesses in which he or she has an ownership stake. For borrowers that elect to use an eight-week Covered Period, this cap is $15,385. For more information, please visit the the FAQ section published by the SBA.

How will Webster Bank communicate forgiveness decisions to a borrower?

Webster Bank will notify the borrower of the forgiveness amount paid by the SBA. If the forgiveness amount paid by SBA is less than the amount in the forgiveness decision issued by the lender to the SBA, the lender (Webster Bank) must also notify the borrower of the amount in the lender’s forgiveness decision. If only a portion of the loan is forgiven, or if the forgiveness request is denied, any remaining balance due on the loan must be repaid by the borrower on or before the maturity of the loan. When the SBA remits the forgiveness payment to the lender, the lender is responsible for notifying the borrower of remittance by SBA of the loan forgiveness amount and the date on which the borrower’s first payment is due, if applicable.

If a PPP loan is forgiven, how will forgiveness be applied?

If the PPP Forgiveness application is approved in full, then the debt owed by the borrower is "forgiven" and the SBA remits the Forgiveness Funds to the lender (Webster Bank). In accordance with the PPP Loan Note section 3.a., the PPP Forgiveness funds are applied by the lender first to the interest and then the principal owed.

Is interest forgiven on a PPP loan?

Yes. 100% of the PPP loan, including principal and interest, are eligible for forgiveness, as long as the borrower used the funds in accordance with the SBA guidelines.

Does the EIDL Advance have to be subtracted from the PPP Loan amount eligible for forgiveness?

No.

What if the SBA denies the application for forgiveness?

If the SBA determines in the course of its review that the borrower was ineligible for the PPP loan based on the provisions of the CARES Act, SBA rules or guidance available at the time of the borrower’s loan application, or the terms of the borrower’s PPP loan application, the PPP Loan may not be eligible for loan forgiveness. Borrowers looking for additional information can visit https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

If Webster Bank approves an application and it is ready for SBA, is there any reason it would be denied or changed after that point?

The SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment. The lender (Webster Bank) is responsible for notifying the borrower of the forgiveness amount paid by the SBA to the lender. If the forgiveness amount paid by SBA is less than the amount in the forgiveness decision issued by the lender to the SBA, the lender will notify the borrower of SBA's decision and of the amount in the lender’s forgiveness decision as well as the date that borrower’s first payment is due, with the amount of the payments.

What are examples of why a loan would not be fully forgiven?

The lender (Webster Bank) must complete the review of the forgiveness application and issue a decision, which may take the form of an approval (in whole or in part); denial; or a denial without prejudice due to a pending SBA loan review. The borrower shall not receive forgiveness without submitting all required documentation to the lender. Examples of potential reasons for approval in part would include but would not be limited to (1) failure to provide appropriate documentation to support the full amount being requested, (2) identification of ineligible expenses being claimed by the Borrower, or (3) Failure to submit a complete forgiveness application, including borrower certifications, and supporting documentation for eligible expenses may result in a denial.

What are examples of why a forgiveness application would be denied?

The lender (Webster Bank) may deny forgiveness at its discretion. Example reasons for denial would include but would not be limited to: (1) failure to provide appropriate documentation to support the forgiveness amount; (2) fraud; or (3) other reasons as determined by Legal or the EFC (Enterprise Financial Crimes) unit. The borrower shall not receive forgiveness without submitting all required documentation to the lender. Failure to submit a complete forgiveness application, including borrower certifications and supporting documentation for eligible expenses may result in a denial.

If the borrower’s application for forgiveness is denied by the lender, can they reapply or request a second look?

The lender (Webster Bank) must notify the borrower in writing that the lender has issued a decision to SBA denying the application. The SBA reserves the right to review the lender's decision in its sole discretion. Within 30 days of notice from the lender, the borrower may notify the lender that it is requesting that SBA review the lender's decision. Within 5 days of receipt of the borrower's request for review, the lender must notify the SBA of the request. The SBA will notify the lender if the SBA declines a request for review. If the SBA accepts a borrower's request for review, the SBA will notify the lender of the results of the review, and the lender must send a copy of the decision to borrower.

Will there be an amendment or dispute process if a borrower does not agree with a forgiveness amount/decision, or it is discovered an error was made?

If the lender (Webster Bank) makes the decision to deny a borrower’s request for forgiveness (in full or in part), a notification will be sent to the borrower. The borrower has thirty (30) days from the date of the notification to inform Webster Bank that they are requesting an SBA review of the lender decision.

Once a loan forgiveness decision is made, does the covered period/deferment end and the borrower begin repaying 30 days from the date the bank received payment?

Example: Borrower's loan is partially forgiven on October 15, 2020. Is the first payment due by the borrower on November 15, 2020? If the borrower has a balance after the SBA has approved the PPP forgiveness, the lender (Webster Bank) will notify the borrower of the first payment due date and amount of payment. If the loan is not signed up for auto debit, it can be paid by mail or any Webster Bank branch.

Will borrowers receive an updated loan agreement or modification to reflect the extended deferral period on the SBA PPP loan?

No. With the passing of the PPP Flexibility Act of 2020, all borrowers were automatically granted a deferral period of 16 months. There is no need or requirement to modify loan agreements.

How can a borrower pay off the remaining balance of their loan if it is not 100% forgiven?

If the borrower has a balance after the SBA has approved the PPP forgiveness, all payments are due as scheduled. There is no prepayment penalty if borrower pays off the balance before the maturity date. If the loan is not signed up for auto debit, it can be paid by mail or any Webster Bank branch.

Can a borrower request automatic debit for their monthly installment payment?

If a Borrower wishes to establish automatic debit for their PPP payments once the deferral period is over, they may do so by contacting their local Webster Branch bank representative.

Can a borrower pay their loan earlier than 2 years or 5 years, as applicable?

Yes. There are no prepayment penalties or fees.

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