***CEF has closed their application for the Paycheck Protection Program (PPP) to allow for processing time by the SBA’s new deadline of August 8th, 2020. 

The Paycheck Protection Program (PPP), authorized under the Coronavirus Aid, Relief, and Economic Securities (CARES) Act, provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.

Need more information on the PPP loans and the CARES Act? View our CARES Act and PPP summary here.

PPP Forgiveness Process (Updated July 2, 2020)

As of July 2, 2020  the SBA/Treasury has not issued any definitive guidance regarding the processing of PPP forgiveness applications by the lenders administering the program (i.e. CEF).  CEF will provide PPP forgiveness instructions to all CEF PPP borrowers as soon as guidance and systems are provided by the SBA/Treasury. Please note, there is at least a 10 month window of time for which each PPP borrower has to submit their PPP forgiveness application so, once guidance/systems are in place, there will be adequate time to complete the forgiveness process.  

As a CEF PPP borrower there is no immediate action for you to take, regarding forgiveness, other than to continue to check back here and in your email for any updates. You can also check the SBA PPP website for any updates they may post.  On the SBA website you will find links to the forgiveness application forms the SBA has published however, we ask that you do not submit these to us. You may study them as guidance, however, we will email you the steps and forms from our systems to help streamline the forgiveness process as best we can for you.  

Again, please do not send any completed SBA forms to CEF.  We will provide further instructions and guidance for you as soon as we receive that information from the SBA.

 

Paycheck Protection Program Resources:
Visit our COVID-19 Small Business Resource Hub
Check Out Our Small Business Resource Blog

 

PPP Overview:

Fully Forgiven: Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).

Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

Must Keep Employees on the Payroll—or Rehire Quickly: Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. If full-time headcount declines, or if salaries and wages decrease, forgiveness will be reduced.

All Small Businesses Eligible: Small businesses (including nonprofits) with 500 or fewer employees are eligible. Businesses with more than 500 employees are eligible in certain industries.

Thanks to Our Lending Partners Who Helped Make This Possible

PPP Program and App FAQs

  • Who can apply?

    Small businesses and nonprofits – 501(c)(3)s, including religious organizations, with 500 or fewer employees; self-employed individuals and independent contractors. Business in certain industries can have more than 500 employees if they meet applicable SBA size standards for those industries. 

    For purposes of loan eligibility, the CARES Act defines the term employee to include “individuals employed on a full-time, part-time, or other basis.” A borrower must, therefore, calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold.

    This loan has a maturity of 2 years and an interest rate of 1%. The maximum loan amount is up to $10 million. (Note: Colorado Enterprise Fund’s PPP program has a maximum loan amount of up to $250,000.)

    Businesses must be operating with paid employees on February 15, 2020; be able to certify the need for funds during the COVID-19 emergency, and be able to certify the use of funds to retain workers.

  • What makes a loan eligible for forgiveness?

    Applicant/Borrower will not be responsible for any loan repayment if:

    • Employee numbers and compensation levels are maintained; and
    • A minimum of 75% of the loan proceeds are to go towards payroll costs (and the balance towards eligible non-payroll costs.
  • What can the funds be used for?

    Eligible payroll costs:

    • Salary, wages, commissions, and tips (capped at $100,000 on an annualized basis for each employee);
    • Employee benefits including 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; and payment of any retirement benefit; and
    • State and local taxes assessed on compensation.

     

    Eligible non-payroll costs:

    • Rent
    • Mortgage interest payments (but not mortgage prepayments or principal payments)
    • Utility payments
    • Interest payments on any other debt obligations that were incurred before February 15,2020; and/or
    • Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020
      • If Applicant received an SBA EIDL loan from January 31, 2020 through April 3, 2020, Applicant can apply for a PPP loan
      • If Applicant’s EIDL loan was not used for payroll costs, it does not affect Applicant’s eligibility for a PPP loan
      • If Applicant’s EIDL loan was used for payroll costs, Applicant’s PPP loan must be used to refinance its EIDL loan
      • Process from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on this PPP loan
  • What is excluded from payroll costs?
    • Any compensation of an employee whose principal place of resident is outside of the US;
    • The salary, wages, commissions and tips paid to any individual employee in excess of an annual salary of $100,000, prorated as necessary;
    • Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA and Railroad Retirement Act taxes, and income taxes required to be withheld from employees; and
    • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act
  • How do you calculate the loan amount?
    • Step 1: Total all eligible payroll costs for the last 12 months for employees whose principal place of residence is the US
    • Step 2: Subtract any salary, wages, commissions, or tips paid to all employees in excess of an annual salary of $100,000
    • Step 3: Calculate average monthly payroll costs: Divide Step 2 by 12
    • Step 4: Multiply Step 3 by 2.5
    • Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid)
  • What documents do applicants need to submit?
    • Picture of primary owner/applicant Drivers License
    • Month end detailed payroll report for February 2020
    • Payroll Tax form 940 from 2019
    • Latest form 941 filed
    • Articles of Organization Schedule C (if you are a sole proprietor)
    • Most recent personal Tax Return
    • Most recent business Tax Return
  • How do you calculate the max amount of the loan for a sole proprietor (with employees)?

    If you have employees, the following methodology should be used to calculate your maximum loan amount:

    • Step 1: Compute 2019 Payroll by adding the following:
      • Find your 2019 IRS Form 1040 Schedule C line 31 net profit amount (if you have not yet filed a 2019 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less, set this amount at zero.
      • 2019 IRS Form 941 Taxable Medicare wages & tips (line 5c- column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips; subtract any amounts paid to any individual employee in excess of $100,000 annualized and any amounts paid to any employee whose principal place of residence is outside the United States; and
      • 2019 employer health insurance contributions (health insurance component of Form 1040 Schedule C line 14), retirement contributions (Form 1040 Schedule C line 19), and state and local taxes assessed on employee compensation (State Unemployment Tax Act or SUTA from state quarterly wage reporting forms).
    • Step 2: Calculate the average monthly amount (divide the amount from Step 1 by 12).
    • Step 3: Multiply the average monthly amount from Step 2 by 2.5.
    • Step 4: Add the outstanding amount of any EIDL made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid).

     

    Documents you must provide:

    • IRS Form 1040 Schedule C if the applicant is a sole proprietor (with employees) for the following period ending December 31, 2019 (whether filed or not)
    • IRS Quarterly Form 941 (or equivalent payroll record)
    • State Unemployment Tax Act or SUTA from state quarterly wage reporting form
    • Evidence of any retirement and health insurance contributions
    • Payroll statement or similar doc from pay period that covered February 15, 2020 to establish you were in operations on or around February 15, 2020.
  • Do independent contractors count as employees?

    No. Independent contractors can apply for a PPP loan on their own so they do not qualify for purposes of a borrower’s PPP loan forgiveness.  (Unless you are an independent contractor applying for yourself.)

  • Can I apply for the PPP through more than one lender?

    If you currently have a pending application with another lender, it may be faster to pursue an existing application rather than submit a new one with Colorado Enterprise Fund.

    We encourage you to reach out to your lender to confirm that your application is still in the pipeline for submission. However, if you have not heard back from your lender or have no confirmation of your pipeline status, or in other words, consider your application “abandoned”, you may submit another application with us.

  • If I am a nonprofit, how do I complete the applicant ownership section?

    If you are a nonprofit 501(c) (3) organization, here are the steps to follow in the Owner/Authorized Signer tab of the application:

    Step 1: Under “Owner Name”, put in the name of the authorized signer for the entity

    Step 2: Select the “business entity” option (not “individual”)

    Step 3: Enter the authorized signer’s title (e.g. President, Executive Director, etc.)

    Step 4: Provide the TIN for the entity

    Step 5: Under owner’s SSN, provide the SSN and date of birth for the authorized signer. You will also need to upload a photo ID for the authorized signer.

    Step 6: Provide authorized signer’s address

    Step 7: Provide name, address and date of birth for any additional authorized signers or officers for the organization

    Step 8: Upload photo IDs for each listed authorized signer or officer

    Step 9: Provide the date of incorporation for your entity and upload formation documents.

PPP Loan Forgiveness FAQs

  • What can I use the PPP funds for?

    The proceeds of a PPP loan are to be used for: i. payroll costs (as defined in the Act and in 2.f.); ii. costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums; iii. mortgage interest payments (but not mortgage prepayments or principal payments); iv. rent payments; v. utility payments; vi. interest payments on any other debt obligations that were incurred before February 15, 2020; and/or vii. refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020.

    Source: Interim Final Rule 1

  • What qualifies as ‘‘payroll costs?’’

    Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or similar compensation.

    Source: Interim Final Rule 1

  • Is there anything specifically excluded from payroll costs?

    Yes. The Act expressly excludes the following: i. Any compensation of an employee whose principal place of residence is outside of the United States; ii. The compensation of an individual employee in excess of an annual salary of $100,000, prorated as necessary; iii. Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees; and iv. Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Pub. L. 116–127).

  • How can I have most or all of the PPP funds forgiven?

    The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. That is, the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgiveable purposes described below and employee and compensation levels are maintained. The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the eight-week period following the date of the loan. However, not more than 25 percent of the loan forgiveness amount may be attributable to non-payroll costs.

    Source: Interim Final Rule 1

  • If we don't meet the full payroll threshold within the 8-week period, can our loan be partially forgiven for the amount of payroll that we used?

    Yes, if your business does not meet the full payroll threshold within the 8 weeks starting with the date that funds were disbursed, or if you are a borrower with a biweekly (or more frequent) payroll schedule during the eight-week (56-day) period that begins on the first day of their your pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”), the loan can be partially forgiven. Please note that at least 75% of the potential forgiveness amount was used for payroll costs. For more information, see Interim Final Rule on Paycheck Protection Program posted on April 2, 2020 (85 FR 20811).

    https://home.treasury.gov/system/files/136/PPP–IFRN%20FINAL.pdf

  • Will we be taxed on the PPP money?

    Not in Colorado. PPP funds are not taxable at the Federal level, but for now, the IRS has provided guidance stating that expenses paid using PPP funds will not be tax-deductible. This can be changed through future legislation. As Colorado has “rolling conformity” to Federal taxable income rules, PPP funds are not taxable at the state level either.

     

    Sources:

    https://www.forbes.com/sites/brianthompson1/2020/05/20/sba-approving-economic-injury-disaster-loans-eidls-what-you-need-to-know/#4d7331d66120

    https://taxfoundation.org/small-business-loan-forgiveness-sba-ppp-loan-taxed/

  • When do payments need to be made to qualify for PPP loan forgiveness?

    Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the eight-week (56-day) Covered Period (or Alternative Payroll Covered Period) (“payroll costs”). Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period). For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period. Count payroll costs that were both paid and incurred only once.

     

    Nonpayroll costs eligible for forgiveness consist of: (a) covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 (“business mortgage interest payments”); (b) covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (“business rent or lease payments”); and (c) covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 (“business utility payments”). An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount.

    Source: PPP Loan Forgiveness Application

  • For loan forgiveness, do I have to keep the same amount of part time employees or full time equivalent? I'm reading conflicting reports.

    For loan forgiveness calculations, you do not need to keep the same amount of part-time or full time equivalents. Only the total FTE is considered, not the mix of full time and part time employees. The PPP Loan Forgiveness Application uses the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period. For each of your employees, you’ll need to enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.

  • Can you confirm that our required head count and payroll $ requirement will be reduced for any documented employees who quit or refuse to return to work?

    The PPP Loan Forgiveness Application discusses several situations that will reduce the number of FTE required maintain during the covered period or the safe harbor date of 6/30/20 to obtain loan forgiveness. They are: (1) any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; (2) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours. In all of these cases, include these FTEs if the position was not filled by a new employee. Any FTE reductions in these cases do not reduce the Borrower’s loan forgiveness.

    Source: PPP Loan Forgiveness Application

  • Do we figure FTE's from 1/20/2020-2/29/2020 or 2/15/2019-6/30/2019? Why is this so complicated?

    Yes, For purposes of this calculation, the reference period is, at the Borrower’s election, either (i) February 15, 2019 to June 30, 2019; (ii) January 1, 2020 to February 29, 2020; or (iii) in the case of seasonal employers, either of the preceding periods or a consecutive twelve-week period between May 1, 2019 and September 15, 2019. For each employee, follow the same method that was used to calculate Average FTE on the PPP Schedule A Worksheet. FTE can be calculated as a fraction of a 40 hour work week, with 1.0 FTE being a full 40 hour per week employee. Workers who work more than 40 hours still count as 1.0 FTE. Alternatively, you may count all less than 40 hour per week workers as .5 FTE each. Sum across all employees during the reference period and enter that total on this line.

    Source: PPP application, line 11 instructions on P. 5

     

    Please note that there is a safe harbor that make these calculations unnecessary. Per the PPP Application “safe harbor under applicable law and regulation exempts certain borrowers from the loan forgiveness reduction based on FTE employee levels. Specifically, the Borrower is exempt from the reduction in loan forgiveness based on FTE employees described above if both of the following conditions are met: (1) the Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and (2) the Borrower then restored its FTE employee levels by not later than June 30, 2020 to its FTE employee levels in the Borrower’s pay period that included February 15, 2020.”

  • Exactly what documentation will be requested for determination of forgiveness. It would be great to know now, so that as we move forward after having received the PPP loan, we can be sure to document everything properly.

    Please see page 10 of the PPP application; this full page includes both “Documents that Each Borrower Must Submit with its PPP Loan Forgiveness Application” and “Documents that Each Borrower Must Maintain but is Not Required to Submit”

    https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf

  • I've heard that we should open a separate bank account and put this money in it, so we can clearly show that it went to payroll expenses. Is that a good idea?

    There is no requirement that a separate bank account should be used for the use of PPP funds, all requirements pertain to your documenting expenditures eligible for forgiveness. However, one such requirement is that you provide along with your PPP loan forgiveness app “Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees”. If you would like to minimize information provided as part of your application for loan forgiveness, you may want to set up a separate bank account for PPP payment purposes only. Also, as expenses paid using PPP funds are not tax deductible, using a separate account will simplify the calculation of your business taxes owed for 2020 considering payroll, rent, and utilities would generally be tax-deductible except for during the 8 week covered period.

  • What happens if my PPP loan is not fully forgiven?

    If a PPP loan is not fully forgiven, the interest rate will be 100 basis points or one percent. The maturity of the PPP loan is two years. No payments of principal or interest are required for the first six months of the loan starting with funds disbursement.

     

    Source: Interim Final Rule 1:

    https://home.treasury.gov/system/files/136/PPP–IFRN%20FINAL.pdf