on Wednesday, July 29, 2020
- Economic Impact Payment
- The CARES Act was passed in March, this $2 trillion economic relief packages will help provide assistance to American consumers and businesses struggling as a result of the Coronavirus pandemic.
The IRS Economic Impact Payment Information Center is a great resource to learn more about who is eligible for the Economic Impact Payments (also known as stimulus payments) and when your payment may be arriving. Click on the information center button below to learn more about how to get your payment and next steps:
The Economic Impact Payments are automatic for most taxpayers. No further action is needed by taxpayers who filed tax returns in 2018 and 2019 and most seniors and retirees.
If you need to update or enter your bank account information on the IRS site to get your payment, you will need to know your account number (checking or savings) and Northwest Bank's routing number: 273970682.
For further questions, visit the Economic Impact Payment Information Center Frequently Asked Questions.
Impact Payment Information Center
- Paycheck Protection Program
The Small Business Administration (SBA) and U.S. Department of the Treasury have created The Paycheck Protection Program, which authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.
Northwest Bank provides aid to more than 1,200 small businesses through the Paycheck Protection Program. Read the full article here.
Learn More About the Paycheck Protection Program
- IRA & Tax Advantage Accounts
Making Contribution for 2019 Tax Year | Since the IRS tax return filing deadline has been extended to July 15, 2020, the deadline for tax advantage contributions has also been extended. This means that IRA, HSA, and CESA customers have until July 15, 2020 to make a contribution for the 2019 tax year.
Withdrawals | IRA customers under age 59 ½ can withdraw up to $100,000 from their IRA without a 10% IRS early withdrawal penalty. The customer will be responsible for reporting the distribution as an exception when they file their 2020 taxes and will still be responsible for paying regular income taxes on their distribution.
Minimum Distribution | IRA customers are not required to take their Required Minimum Distribution (RMD) for 2020. This includes Traditional IRAs, SEP IRAs, Conduit IRAs, and Beneficiary IRAs.,P.
If you have further questions on how the CARES Act could affect you financially, please speak with a tax professional.
- Online transfers made after 6:00 pm CST will be effective the following business day. Generally, transfers/withdrawals from your Savings or Money Market Account are limited to six per Calendar Month (Savings)/Statement Cycle (Money Market) by Federal Regulations. When you exceed the transfer limitation, your account is subject to an Excess Transaction Fee of $2.00 per transfer over six. Until further notice, the Excess Transaction Fee of $2.00 will not be imposed on transactions exceeding six per month/statement cycle.
PAYCHECK PROTECTION PROGRAM
The Paycheck Protection Program is a relief program to eligible Northwest Bank customers.
The Small Business Administration (SBA) and U.S. Department of the Treasury have created The Paycheck Protection Program to provide customers relief to providing funding to help Americans employed by small businesses toward job retention and certain other expenses.
The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to
small businesses to pay their employees during the COVID-19 crisis. This program provides small business customers with funds to pay up to eight weeks of payroll costs including benefits as well as mortgage interest, rent and utilities.
View full details about the Paycheck Protection Program from the U.S. Treasury Department:
Program Overview | Information for the Borrower | Borrower Application | FAQs
- Loan Amount: 2.5 x Average Monthly Payroll
- Terms: Two year loan (at 1.0% fixed rate) with no prepayment penalties or fees
- Payments: Loan payments will be deferred for six months, interest payments thereafter. Principal due at maturity.
- No collateral or personal guarantees are required
- Neither government nor lenders will charge small businesses any fees
- Funds can be used for
- Payroll costs including benefits
- Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
- Interest on mortgage obligations, incurred before February 15, 2020
- Rent, under lease agreements in force by February 15, 2020
- Utilities, for which service began before February 15, 2020
Funds are provided in the form of loans that maybe forgiven based on the employer:
- Keeping employees on the payroll or quickly rehiring employees and maintaining salary levels. If full-time headcount declines, or if salaries and wages decrease then forgiveness will be reduced.
- Using the funds to cover payroll costs, interest on mortgages, rent and utilities
- At least 75% of the forgiven amount must be used to cover payroll
- Payroll costs are capped at $100,000 on an annual basis for each employee
Request loan forgiveness by submitting a request to Northwest Bank. The request needs to include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. Northwest Bank must make a decision on the forgiveness within 60 days.
*Details and guidelines on the Paycheck Protection Program are established by the SBA. Northwest Bank is not responsible for creating the terms, details or guidelines.
WHO IS ELIGIBLE FOR PPP LOAN
- Small Businesses with 500 or Fewer Employees
- Businesses with more than 500 employees are eligible in certain industries - Click Here for more detail.
- Eligible Nonprofit Organizations
- Veterans Organizations
- Tribal Concerns
- Self-Employed Individuals
- Sole Proprietorships
- Independent Contractors
For this program, the SBA’s affiliation standards are waived for small businesses:
- In the hotel and food services industries (Click Here for NAICS code 72 to confirm)
- That are franchises in the SBA’s Franchise Directory (Click Here to check)
- That receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.
HOW DO YOU APPLY
The Paycheck Protection Program application deadline has been extended through August 8, 2020. Please submit the following items to a Northwest Bank Business Banker:
- Completed Paycheck Protection Program Application
- Applicable Documentation of the last 12 months of payroll
Download The Application
View full terms of the program at www.sba.gov. There is a funding cap, so we encourage you to apply as soon as you can! We are ready to support you though this difficult time. Some of our offices are operating with limited lobby access to appointments only. Feel free to contact your Commercial Banker who will assist you. The Paycheck Protection Program is to eligible Northwest Bank customers.
Request An Appointment Contact A Business Banker
PROCESSING PPP LOAN FORGIVENESS APPLICATIONS
The SBA gave banks instructions on what we will need to do to process PPP loan forgiveness applications. We must;
- confirm receipt of the borrower’s certifications contained in SBA Form 3508 or 3508EZ (forgiveness applications),
- confirm receipt of the documentation the borrower must submit to aid in verifying payroll and nonpayroll costs,
- confirm the borrower’s calculations on the borrower’s SBA Form 3508 or 3508EZ, including the dollar amount of the payroll and nonpayroll calculations, and
- confirm that the borrower made the forgiveness amount calculation correctly.
The SBA has promised to provide access to their new system for us to submit applications by August 10th. When we submit an application through the PPP Forgiveness Platform we will recommend an amount to be forgiven based our on review of the forgiveness application and supporting documents. The SBA has 90 days from the date of the bank’s submittal to process the payment. Once this payment is received, we will inform the borrower.
Here's what we recommend you do.
- If your PPP loan is under $150,000. Document the use of your PPP funds. There is a chance that the SBA will create a different process for smaller PPP loans that would greatly reduce the amount of paperwork needed for forgiveness. It may be required for you to complete one of these forms in the future, however, we do not recommend that you complete the SBA Form 3508 or 3508EZ at this time.
- For loans greater than $150,000. Document the use of your PPP funds. Familiarize yourself with Forms 3508 and 3508EZ. Click here for to obtain a copy of the forms, then scroll to the Forgiveness section. Identify which form pertains to your business. If you have used all of your PPP funds consider completing the form.
Our bankers are informed on the process and ready to answer your questions. Contact a Business Banker Today for more details.
PAYCHECK PROTECTION PROGRAM FLEXIBILITY ACT
We have some good news for many PPP borrowers. On June 5th President Trump signed the Paycheck Protection Program Flexibility Act, which relaxes several key provisions of the PPP loan forgiveness process. The bill implements the following changes:
- Extends the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. (No action needed by PPP borrowers to take advantage of this extended covered period)
- Lowers the requirements that 75% of a borrower's loan proceeds must be used for payroll costs and that 75% of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60% for each of these requirements.
- Provides a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before Feb. 15, due to compliance with requirements or guidance related to worker or customer safety requirements related to COVID-19.
- Provides a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on Feb. 15, and unable to hire similarly qualified employees for unfilled positions by Dec. 31.
- Increase to five years the maturity of PPP loans that are approved by the SBA on or after June 5.
- Extends the deferral period for borrower payments of principal, interest and fees on PPP loans to the date that the SBA remits the borrower's loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower's loan forgiveness covered period). This would require an amended promissory note, however we don't recommend our PPP borrowers take this action yet as we expect more guidance soon.
- Confirms that June 30 remains the last date on which a PPP loan application can be approved.
U.S. Treasury Secretary Steven Mnuchin and Jovita Carranza, U.S. Small Business Administration administrator, issued a joint statement promising to issue rules and guidance, a modified borrower application, and a modified loan forgiveness application implementing the changes to the PPP. The SBA has not given banks the specific information and process we'll use when submitting your forgiveness application.
"EZ" PAYCHECK PROTECTION PROGRAM
The SBA released a new PPP loan forgiveness application recently. The “EZ” Paycheck Protection Program loan forgiveness application requires less documentation and fewer calculations. Form 3508EZ applies to borrowers who meet any one of these three criteria:
- Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
- Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.
The 3508EZ is an easier form to complete and can be used by many of our PPP borrowers. SBA also updated the regular Form 3508 to reflect recent changes made by Congress in the PPP Flexibility Act. Below are links to both forms and instructions on how to complete them.
PPP Frequently Asked Questions
Do I need to look for other funds before applying for Paycheck Protection Program?
No. The SBA is waiving their usual requirements that you try to obtain some or all the loan funds from other sources (i.e. Credit Elsewhere requirement)
What is the time frame on this program?
The program is open until June 30, 2020. There is a funding cap, so we encourage you to apply as soon as you can. (deadline has been extended to August 7th, 2020)
How many loans can I take out under this program?
What can I use the funds from this program for?
- Payroll costs (including benefits)
- Interest on mortgage obligations, incurred before February 15, 2020
- Rent, under lease agreements in forced before February 15, 2020
- Utilities, for which service began before February 15, 2020
What is considered a payroll cost?
- Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
- Employee benefits
- Costs for vacation, parental, family, medical or sick leave
- Allowance for separation or dismissal
- Payments required for the provisions of group health care benefits including insurance premiums
- Payment of any retirement benefit
- State and local taxes assessed on compensation
- Sole proprietor or independent contractor can include: wages, commissions, income or net earnings from self-employed (capped at $100,000 on an annualized basis for each employee)
How large can my Paycheck Protection Program loan be?
Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. This amount is subject to a $10 million cap. Seasonal or new business will use a different applicable time periods for your calculation.
Does the Program cover paid sick leave?
Yes, the Paycheck Protection Program covers payroll costs, which include employee benefits such as costs for parental, family, medical or sick leave. However, it is worth noting that the CARES Act expressly excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116–127). Click here to learn more about the FFCRA’s Paid Sick Leave Refundable Credit.
What amount of my loan will be forgiven?
You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent and utility payments over the eight weeks after getting the loan. (It is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.)
Also, you will owe money if you do not maintain your staff and payroll levels.
- Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
- Level of Payroll: Your loan forgiveness will be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
- Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
What will my loan terms look like?
- Interest rate: 1.0% fixed rate
- Due Date of Loan: In 2 years - There are no prepayment penalties or fees
- Payments: All payments are deferred for 6 months; however interest will continue to accrue over this period.
Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement. However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.
As part of the application, what do I need to certify?
- Current economic uncertainty makes the loan necessary to support your ongoing operations.
- The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
- You have not and will not receive another loan under this program.
- You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
- Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities.
- Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs
- All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
- You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.