HERE FOR YOU

We’re stepping up our efforts to assist our small business customers.

Richwood Bank has helped fund $61 million for our community businesses through the SBA Paycheck Protection Program. We have successfully accepted and helped more than 700 businesses. We are continuing to personally communicate with each of these applicants.

Questions you may be asking + required documents needed

What are the modifications to PPP as of June 4, 2020?

Congress agreed to modify the Paycheck Protection Program after both the House and Senate passed the H.R. 7010 Paycheck Protection Program Flexibility Act. To know what that means for your PPP Loan, click here.

What requirements allow the PPP Loan to be forgiven?

A borrower is eligible for loan forgiveness equal to the amount the borrower spent on all qualified expenses noted above during the 8-week period beginning on the date of the origination of the loan.

Tracking all of these expenses is vital for loan forgiveness.

Payroll costs, interest on mortgage obligation, rent, lease utilities, additional wages are detailed above.

On another positive note, forgiven amounts will not be considered cancellation of indebtedness income for federal tax purposes. Your credit will not be affected by utilizing a PPP loan.

Do I return my funds or walk away?

We’ve created a checklist of questions to ask yourself to help you decide which way to proceed.

If I am a seasonal or new business, what should my payroll reporting include?

For purposes of calculating “Average Monthly Payroll”, most Applicants will use the average monthly payroll for 2019, excluding costs over

$100,000 on an annualized basis for each employee. For seasonal businesses, the Applicant may elect to instead use average monthly payroll

For the time period between February 15, 2019 and June 30, 2019, excluding costs over $100,000 on an annualized basis for each employee.

For new businesses, average monthly payroll may be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000 on an annualized basis for each employee.

What are the main terms of the PPP Loan if an amount is not forgiven?

Any amount not forgiven as described above will bear interest at a maximum rate of 4 percent and mature no later than 10 years after the amount of forgiveness is applied. Payments on PPP loans will be deferred for 6 to 12 months.

Is it possible the forgiveness amount will be reduced?

The amount of loan forgiveness calculated above is reduced if there is a reduction in the number of employees (i.e., failure to maintain the average number of full-time equivalent employees versus the period from either February 15, 2019, through June 30, 2019, or January 1, 2020, through February 29, 2020, as selected by the borrower) or a reduction of greater than 25% in wages paid to employees. Specifically, the amount forgiven is reduced to the extent that compensation for any individual making less than $100,000 per year is reduced by more than 25 percent measured against the most recent full quarter.

Reductions in the number of employees or compensation occurring between February 15, 2020, and 30 days after enactment of the CARES Act will generally be ignored if the action (layoff or salary reduction) is reversed by June 30, 2020.

Post pandemic, how do I apply for forgiveness to my PPP Loan?

There will be an application for loan forgives. We will include it when it is available. In the meantime, to be fully prepared with the correct documentation, you’ll be required to include proof that the funds were used as required by SBA.

  • Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings. If you’re using Richwood Payroll, we can assist with gathering these.
  • Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
  • Certification from Richwood Bank certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

I'm a Sole Prop. How do I determine the forgivable payroll expense (Owner Compensation Replacement)?

The amount of “owner compensation replacement” you’re eligible to claim for forgiveness is calculated by multiplying your reported net income in 2019 on your Schedule C by 8/52 (or 0.154).

A simple example:

You filed your Form 1040 and Schedule C for 2019, where you reported $27,300 in net income.

Your monthly “payroll cost” would be $2,275, so you qualified for $5687.50 in PPP funding.

To calculate your maximum owner compensation replacement, you would multiply $27,300 by 8/52.

$27,300 * 8 / 52 = $4,200

The $4,200 would be fully eligible for forgiveness.

What about agricultural related businesses?

Along with increasing funding to the PPP loan program, the bill passed by congress and signed by the president has now added agriculture to the eligible industries for the SBA EIDL program.
Please see this Ag EIDL article for additional information.

Can I get more than one PPP Loan?

No. Each loan will be registered under your Taxpayer Identification Number at SBA to prevent multiple loans to the same entity.

What if my employees are not willing to return to work?

Many businesses are reopening and receiving PPP funds, but some employees are not willing to return, which can cause staffing issues and finding new team members.
ODJFS has a form for employers to confidentially report staff choosing unemployment.

How do I access my money once it has been funded?

Customers

If you already are using Online Banking, either on the Retail or Business side, you should see your new checking account. If you do not see the account, please call and let us know. We will get it setup for you.

Non-Customers

You can log into online banking by going to our website, www.RichwoodBank.com. You will need to select Enroll Now under Online Banking. This can be found towards the middle of the screen. Please complete the following steps as well:

  1. Type of Account: Checking
  2. Account Number: The account number and signature card are within the documents that we sent you for signatures. The signature card shows the individual that is the signer on the account. If this needs updated please call us.
  3. PIN: This is the last four digits of your social security or EIN.
  4. Next, you will complete your Security Question and Security Answer.

There are a variety of options to access your money:

  1. You are able to initiate an ACH from your current financial institution and pull the money from the Richwood Bank account. Our routing number is 044106588.
  2. BillPay can be used to pay bills directly from your PPP account.
  3. TransferNow can be used to send funds to your account at another financial institution. This is an option within the Online Banking Portal.
  4. Cashier Checks can be printed at any of our branch locations and picked up through the drive thru.
  5. You have the option of printing checks for the account at any of our branch locations. The cost for the first page of checks is $3, each page after is $5 each. One page includes three checks. You will be able to pick up these checks through any of our branch locations in the drive thru.

Helpful how-to videos:

Online Banking video:  https://richwoodbank.com/learn-personal/

External Transfer video: https://richwoodbank.com/learn-personal/

What is the Paycheck Protection Program (PPP) meant to do?

Passed unanimously on March 27, 2020, the Paycheck Protection Program prioritizes millions of Americans employed by small businesses by directing $349 billion towards job retention and business operating expenses.

The Paycheck Protection Program is designed to provide a direct incentive for small businesses to keep their workers on payroll by providing each small business a loan up to $10 million for payroll and certain other expenses.

The goal of PPP is to provide cash-flow assistance through 100% federally guaranteed loans to business owners who maintain their payroll during this emergency.

If all employees are kept on payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100 percent of the loan is forgivable. This timeframe is retroactive to February 15, 2020, so employers can bring workers who may have already been laid off back onto payrolls.

What types of businesses are eligible?

Businesses – including eligible non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors described in the Small Business Act – with 500 or fewer employees may apply.

Almost every business is eligible for PPP loans if they (a) meet the applicable North American Industry Classification System (NAICS) Code-based size standard or other applicable 7(a) loan size standard, both alone and together with its affiliates; or (b) have an employee headcount that is lower than the greater of (i) 500 employees or (ii) the employee size standard, if any, under the applicable NAICS Code. Businesses that fall within NAICS Code 72, which applies to accommodations and food services, are also eligible if they employ no more than 500 people per physical location.

To research ineligible business types, visit this SBA webpage.

What expenses can I cover using a PPP loan?

If business owners maintain their payroll, the loan amount is forgiven, as long as the loan funds are verified for use of permitted purposes:

  • Payroll costs
  • Mortgage payments
  • Lease obligations and business-related rent under agreement before February 15, 2020
  • Interest on prior indebtedness
  • Utilities in force prior to February 15th such as electricity, gas, water, transportation, telephone, or internet access
  • Additional wages paid to tipped employees

The goal is to help workers remain employed, as well as help affected small businesses and our economy snap-back quicker after the crisis.

How can Richwood Bank expedite the process?

PPP lender advocates at the local level will be required to verify whether an applicant was in operation on February 15, 2020, and either had employees for whom they paid salaries and payroll taxes or paid independent contractors. Applicants will not be required to demonstrate repayment ability.

We will also assist by verifying your Good Faith Certification letter which must be completed, signed, and dated at the time of the application.  The letter that we can validate for you, must state that due to the COVID-19 pandemic, you’re experiencing uncertainty of economic circumstances which makes the loan request necessary to support ongoing operations. You must clarify that you intend to use the funds to retain workers and maintain payroll or to make mortgage, rent, and utility payments.

Once you sign and date it, we’ll also verify that as an eligible recipient, you do not have an application pending for a loan under the Paycheck Protection Program for the same purpose and duplicative amounts of the applied for or received covered loan during the period beginning February 15, 2020 and ending on December 31, 2020.

What are the benefits of a PPP Loan?

In addition to keeping (and retaining) your employees on payroll, the goal is to help small businesses and our local economy recover quickly once the threat of COVID-19 is over.

The benefits include:

  • Forgiveness of the loan when requirements are met
  • No SBA fees
  • At least six months of deferral with maximum deferrals of up to a year
  • No collateral or personal guarantee required
  • Loan forgiveness amounts on non-taxable

How do I complete my closing documents?

You will receive an email from “Right Signature.” This email will contain your closing documents for the PPP Program. Please read these carefully and complete the forms as instructed. The forms will automatically upload back to us. Completing these forms is important as we can not fund without them.

Once the completed forms are received, they are processed, and your PPP account is then funded.

How to calculate maximum amount I can borrow from PPP?

How you calculate your maximum loan amount depends upon whether or not you employ other individuals.

If you have no employees, the following methodology should be used to calculate your maximum loan amount:

i. Step 1: 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, you are not eligible for a PPP loan.

ii. Step 2: Calculate the average monthly net profit amount (divide the amount from Step 1 by 12).

iii. Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5.

iv. Step 4: Add the outstanding amount of any Economic Injury Disaster Loan (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). Regardless of whether you have filed a 2019 tax return with the IRS, you must provide the 2019 Form 1040 Schedule C with your PPP loan application to substantiate the applied-for PPP loan amount and a 2019 IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record that 7 establishes you are self-employed. You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020.

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

i. Step 1: Compute 2019 payroll by adding the following: a. Your 2019 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), up to $100,000 annualized, if this amount is over $100,000, reduce it to $100,000, if this amount is less than zero, set this amount at zero; b. 2019 gross wages and tips paid to your employees whose principal place of residence is in the United States computed using 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 c. 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 (primarily under state laws commonly referred to as the State Unemployment Tax Act or SUTA from state quarterly wage reporting forms). 8

ii. Step 2: Calculate the average monthly amount (divide the amount from Step 1 by 12).

iii. Step 3: Multiply the average monthly amount from Step 2 by 2.5. iv. 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). You must supply your 2019 Form 1040 Schedule C, Form 941 (or other tax forms or equivalent payroll processor records containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or equivalent payroll processor records, along with evidence of any retirement and health insurance contributions, if applicable. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation on February 15, 2020.

What paperwork is required for the application?

Business owners must provide several documents, in two distinct parts – 1. All information of payroll filings for your staff and 2. All information tied to the fiscal history of your business.

Please note – having all of these required documents ready will ensure faster processing.

Proof of payroll expense documentation*:

  • IRS Form 940 annually and 941 quarterly for 2019 (if applicable)
  • 2019 payroll summary report with corresponding bank statement (Click Here For Example)
  • Breakdown of payroll benefits -vacation, allowance for dismissal, group healthcare benefits retirement benefits, etc.
  • Monthly payroll costs for the 12 months preceding the loan*
  • IRS Form 1040 Schedule C (Sole Prop., 1099, Self Employed)

*If you use Richwood Payroll, we can help gather this information in one report

Business financial paperwork:

  • SBA Form 2483 completed by each owner
  • Copy of Articles of Incorporation, and/or Operating Agreement

Please note that as this new program evolves, additional documents may be requested, if needed. We will keep this site up to date if any are added.

What counts as payroll costs?

Payroll costs include:

  • Salary, wages, commissions, or 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;
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

Who is considered a business owner for the PPP application?

Any applicant who is an Individual as well as each 20% or greater owner needs to sign as an Applicant Business. All parties listed below are considered owners for the application, as defined in 13 CFR § 120.10, as well as “principals.”

For a sole proprietorship, the sole proprietor

For a partnership, all general partners, and all limited partners owning 20% or more of the equity of the firm

For a corporation, all owners of 20% or more of the corporation

For limited liability companies, all members owning 20% or more of the company

Any Trustor (if the Applicant is owned by a trust)

Have questions for us?

We’re here to help.

I am so thankful to be doing business with a local bank who has offered nothing but outstanding service! You all have been just incredibly wonderful, as I can honestly say, it’s nice to not feel like just a “number” when calling into the bank, like I have experienced with Chase. I will slowly be transitioning our accounts with Richwood for our personal and business needs!

Lori Stephens