Coronavirus Aid, Relief and Economic Security (CARES) Act

Paycheck Protection Program

Sorry, we are no longer accepting Paycheck Protection Program loan applications.


Loan Forgiveness Application Update

PLEASE DO NOT SEND US YOUR LOAN FORGIVENESS APPLICATION YET.

On October 8, 2020, The SBA and U.S Treasury released a simpler forgiveness application for PPP loans of $50,000 or less (Form 3508S). This new application simplifies documentation requirements and removes some calculation requirements.

We are currently making updates to our online PPP Loan Forgiveness Portal to provide eligible borrowers the new simpler Form 3508S application, while also continuing to monitor other potential legislative activity that could simplify the Loan Forgiveness process for all borrowers.  If your loan amount is $50,000 or less, and total PPP loans to you and your affiliates is $2,000,000 or less , you may want to familiarize yourself with the new requirements of the Form 3508S on the U.S. Treasury website.

As previously indicated, in the coming weeks, we will be emailing clients inviting them to begin the Loan Forgiveness process by completing our online electronic Loan Forgiveness application. Please continue to check this page for updates.

As a reminder, “The PPP Flexibility Act”, which was signed on June 5, 2020, provides an extended loan payment deferral timeline. Under these revisions, as long as we receive your Loan Forgiveness application within 10 months after the end of your loan forgiveness covered period you will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to us (or notifies us that no loan forgiveness is allowed).  For more information on the PPP Flexibility Act, please visit the  U.S. Treasury website.


Preparing for Forgiveness

Now is a great time to prepare all of your documents and information that will be needed for the Loan Forgiveness Application process.

Please be aware that this or other PPP information provided is for your convenience, only. While the information provided is intended to be accurate it should not be construed as legal or financial advice. Consult your preferred tax, legal or financial advisor and the SBA’s and U.S. Treasury’s PPP site for details particular to your financial situation.

Below is a summary of the PPP Loan Forgiveness Application process that you will need to follow, and information on the documents you will need. The below are not complete definitions or representations of the PPP Forgiveness rules. 

On August 4, the SBA issued an updated Frequently Asked Questions (FAQs) aimed at helping borrowers navigate maximum loan forgiveness. We recommend you review this information as you prepare your Forgiveness Application material.


STEP 1 – BE PREPARED

  • Covered Period:
    • To qualify for loan forgiveness, your loan funds must be used for eligible costs incurred or paid during your covered period.  Your covered period is, at your discretion, either 8 weeks or 24 weeks, ending no later than December 31, 2020.  If your loan was approved on or after June 5, 2020, you must choose the 24 week covered period option. 
    • You do not need to opt-in or otherwise notify us in advance of your choice of covered period terms.
    • If eligible payroll costs are incurred during your covered period but paid after the end of your covered period, they are still eligible for forgiveness if paid on or before the next regularly scheduled payroll date (please note that “incurred” means the date the pay was earned). 
    • Other Covered Period Options: Your covered period begins on the day of your first PPP loan disbursement. If you have a biweekly (or more frequent) payroll cycle, you may choose to start your covered period on the first day of your next regular payroll cycle after your first PPP loan disbursement, if that is preferred.
  • Use the funds for eligible expenses (if paid or incurred during the covered period), including:
    • Payroll Expenses:
      • Spend at least 60% of the funds on eligible payroll expenses in order to receive the full amount of forgiveness.  You may spend more, but spending less may decrease your forgiveness amount.
      • Include only payroll costs for employees whose principal place of residence is in the United States. Do not include payroll costs for independent contractors (they should apply for forgiveness with their PPP lender).
      • Your forgiveness amount may be subject to the SBA’s FTE Reduction Rules. 
    • Non-Payroll Expenses:
      • Use the remainder of the funds on other eligible covered business expenses (business mortgage interest or rent or lease payments if your agreement was in place before 02/15/2020, and eligible business utility payments if your service began before 02/15/2020). 
      • These costs may not exceed 40% of your total forgiveness amount.
  • Gather the required supporting documents that you’ll need to submit along with your PPP Loan Forgiveness Application.


STEP 2 – APPLY ONLINE

  • Only those businesses who received a PPP Loan from Mechanics Bank are eligible to apply for Loan Forgiveness with us. If your PPP loan was approved and funded by another financial institution you must submit your Loan Forgiveness Application with them.
  • You must complete your PPP Loan Forgiveness Application electronically on our website. Once our electronic application is available, you will receive an email from us to begin the online application process and to upload your supporting documents. This will be similar to how you originally applied for your PPP loan with Mechanics Bank. Please DO NOT attempt to submit a PPP Loan Forgiveness Application downloaded from the SBA or U.S. Department of Treasury website). We will not accept those submissions.
  • You will complete either the Form 3508 Loan Forgiveness Application or streamlined Form 3508EZ Loan Forgiveness Application, depending upon your circumstances.  
  • More information on SBA PPP loan forgiveness eligibility and criteria can be found on the SBA or U.S. Department of Treasury website. Instructions for PPP Loan Forgiveness Application Forms 3508 and 3508EZ, including details on required supporting documents, can be found on the following pages:
    PPP Loan Forgiveness Application Form 3508 instructions
    PPP Loan Forgiveness Application Form 3508EZ instructions
  • Once our online Loan Forgiveness Application portal is available, you can enter information and save your progress as many times as you’d like until you are ready to submit. 
  • Please wait to submit your PPP Loan Forgiveness Application until you have collected and uploaded all required documents. 
  • You have time — there is no immediate need to apply for PPP loan forgiveness. Your loan payments are automatically deferred until your forgiveness amount is received by us from the SBA or, if you do not apply for forgiveness, 10 months after the end of your covered forgiveness period (either 8 weeks or 24 weeks). 
  • Correspondence will come from CaresAct@mechanicsbank.com (please be sure to check your spam folder or white list the email address with your email provider). You may receive additional emails from Bank personnel who are reviewing your Loan Forgiveness Application requesting to speak with you, or to validate information or documentation you provided.


STEP 3 - CONFIRMATION & APPROVAL TIMING

  • After you’ve submitted your PPP Loan Forgiveness Application, we will contact you if it is not complete.
  • Once you have completed the Application and submitted all required documentation, your Application will be reviewed and an approval decision will be made by us (within 60 days of receipt of your completed Application). Your Application and our decision will then be submitted to the SBA for their final eligibility decision.
  • The SBA make take up to 90 days from our submission to issue their eligibility decision.   We will notify you of remittance by the SBA of your loan forgiveness amount (or that the SBA determined that a lesser or no amount is eligible for forgiveness).
  • If your loan is not completely forgiven, you will receive a statement with the amount and date of your first payment for the unforgiven portion. Your PPP loan will operate just like a traditional term loan with monthly payments.


The information above is based on the Bank’s interpretation of laws, rules, regulations, and guidance provided by the SBA and U.S. Department of Treasury regarding the Paycheck Protection Program at the time this page was authored. While the information provided is intended to be accurate it should not be considered and is NOT INTENDED TO BE FINANCIAL OR LEGAL ADVICE. This page and its content may be updated periodically if there are changes to the Program. However, the Program is rapidly evolving and the Bank cannot be held responsible for any errors or omissions as a result of this. Please consult the SBA’s and U.S. Treasury’s websites for updated information. In the event of any discrepancies between the information on this site and the SBA’s or U.S. Treasury’s site, please follow official SBA or U.S. Treasury guidance.