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The Small Business Administration (SBA) and the Treasury Department released new guidelines and an updated application for all Paycheck Protection Program (PPP) loans under $50,000. Originally, Congress and the SBA were targeting loans under $150,000, so the reduced loan amount is a significant change.
Machias Savings Bank will send PPP forgiveness applications via email for the following loan categories:
On August 11, we emailed forms to customers with loans greater than $150,000.
On October 9, we emailed forms to customers with loans between $50,000 and $150,000.
If your loan is under $50,000 you will receive your form during the week of November 9th, the day of the week depends on your place in the alphabet.
All PPP loan forgiveness applications will arrive electronically to the email address you used on your original application from email@example.com. If you have not received a forgiveness application by the dates listed above, please contact Machias Savings Bank. For questions regarding PPP loan documentation and the workflow process for requesting loan forgiveness, contact your relationship banker. Please consult your accountant if you have any questions or concerns regarding the forgiveness of your PPP loan.
For loans under $50,000, if you have changed your email address from what was used on your original application, please contact your business banker before November 1.
For more information on PPP loan forgiveness, please access the forgiveness toolkit below!
The process is simplified when the borrower's payroll costs are sufficient to cover the loan's full amount. It significantly limits the amount of supporting documentation the borrower is required to collect and submit.
On Wednesday, November 18th, the IRS issued a ruling that borrowers expecting Paycheck Protection Program loan forgiveness applications to be approved must disallow a deduction for qualified 2020 expenses in 2020 tax returns, even in situations where the forgiveness application has not been approved or filed by the end of the year.
Earlier this year, the IRS said that qualified expenses that generate PPP loan forgiveness are non-deductible. Wednesday’s ruling was issued in response to questions raised about non-deductible expenses in situations where the expenses are paid in 2020 and the forgiveness of the loan may not occur until 2021. While ABA acknowledged the reduction in uncertainty afforded by the guidance, it warned that the interpretation could accelerate non-deductibility with a negative effect on PPP borrowers’ cash flow. Please consult your accountant if you have any questions or concerns regarding the IRS's newly issued guidance.
If you are using non-payroll expenses to reach your full forgiveness amount, you must document that those expenses were in place before February 15, 2020, and continued throughout your covered period. For example, your payments on mortgages, rent, and utilities should show up on your January and February statements as proof of documentation. If applicable, you will need to submit a copy of your statements. (See below for SBA list of eligible expenses.) When submitting documentation for non-payroll expenses, review the required documentation closely, as multiple documents are often required for validation.
Eligible Non Payroll expenses: (1) Business mortgage interest payments in place before February 15, 2020 (2) Business rent or lease payments in force prior to February 15, 2020, and (3) Business utility payments for services which began before February 15, 2020, like electricity, gas, water, transportation, telephone, or internet access.
We are required to deliver the forgiveness application to you, the customer via email. If you would like to forward the form emails to another party, you sure can. Remember, if you/they click "Save for Later' you will promptly receive a new email with a refreshed link to use for completing the application later. You'll need to forward the new link! Remember, the final step in the application process is to sign it using DocuSign, don't send this email to anyone else; SBA requires you to sign the application.
SBA has set a deadline for borrowers. You have up to 10 months to apply for forgiveness following the end of your covered period. If you have not applied for forgiveness within that time frame, then the PPP loan would go into repayment.
In the beginning, the PPP only had an 8 week covered period by which a borrower needed to use their money. As the program developed, they expanded the covered period to 24 weeks to give borrowers more flexibility with using the funds.
Oftentimes choosing to use a 24 week covered period provides additional flexibility. It gives the borrower a longer time frame to incur/pay payroll costs and increases limits on the amount they can pay individual employees.
Using a 24 week covered period does not mean you have to wait the full 24 weeks to apply for forgiveness. You may apply once you've incurred enough costs to cover your loan amount. Some borrowers may need the full 24 weeks but may do this in significantly less time.
Average FTE - this stands for Average Full-Time Equivalency. Average FTE is calculated as follows:
No. Distributions are not included in the owner-employee cash compensation. K-1 disbursements could be included for partnerships only.
Most payroll records provide sufficient information so that you do not need to complete Tables 1 and 2 on the Schedule A Worksheet. You should be able to attach your records instead of filling out the tables, assuming your records give SBA the info needed to fill out the app. Once the application is in review, if something additional is needed, we'll be in touch with you!
That depends on your loan size. We will send PPP forgiveness applications via email for the following loan categories:
The email will come from firstname.lastname@example.org - Machias Savings Bank PPP Loan Forgiveness (Do Not Reply).
We deliver your email to the same address you used at the time of your PPP Loan Application. If your email address has changed, please contact your Relationship Officer, and we'll get a new email sent to the updated email address.
Yes. Please note that for security reasons, once you upload documents here, if you choose 'Save for Later' on Tab 4 under Next Step, you will not see the documents you previously uploaded, but they are safely stored away at Machias Savings Bank. You do not need to upload them again.
Each time you get an email with a new link, any link in older emails will no longer work. If you didn't actually submit yet, that means you've received a reminder email from us with a refreshed link. We send you one of these links every 30 days that you haven't taken action. Search your email box for 'PPP Loan Forgiveness, MSB,' and you'll find a new link that will work.
Yes! Your loan officer can get them to the Underwriting Team if you could not put them in the workflow.
Sole props with employees would need a combination of Schedule C for the Owner's Comp plus appropriate payroll documentation similar to other types of borrowers. Again most borrowers using payroll companies will have comprehensive payroll reports sufficient to document employee (non-owner) payroll.
Employee Doc Requirements:
For Sole Proprietors with no employees, the Forgiveness process is greatly simplified from SBA's initial guidance. When you got your loan, you may have been encouraged to keep track of the checks you write yourself as evidence of payroll, use a portion of the forgiveness money toward eligible expenses, and keep all the proof of those payments. The final guidance is much different now. When you choose a 24 week covered period, you open your ability to use up your total loan amount as payroll costs. This will simplify your forgiveness request. When you fill out your electronic application, under the Documents tab in the Payroll section, you will only provide us your 2019 Schedule C. We do not need any copies of bank statements, cleared checks, 941s, or any other documentation. For the next tab called Forgiveness Calculations on Line 1. Payroll Costs you will input the dollar amount of your loan and leave Lines 2, 3, and 4 blank. It's really that simple.
If you still elect to use forgivable expenses to reach full forgiveness then you will need to include all the required documentation and statements to prove the expenses were in existence prior to February 15, 2020, as well as evidence that they were in place during the entire covered period. Pay special attention to the direction provided in the application to ensure you provide a complete package of information.
For Sole Proprietors with no employees who have had no business structure changes since applying, you will enter a 1 (you count as an employee) in the "Employees at Time of Loan Application" and a 1 in the "Employees at Time of Forgiveness Application."
Yes. You do need to provide it even if you did before. The application and Schedule C are considered the "complete" package, so you will need to upload that document even if you gave it to your bank in the past.
If you and affiliates together did not receive PPP loans over $2 million, leave the box empty. Only select the box if together with affiliates you received more than $2 million in PPP loans.
You should always check with your CPA as they may have different or better resources regarding any tax law changes. Here's what we have interpreted at this time:
Federal Income Tax
Let's say your business is a C corporation that received $100,000 in a PPP loan. You used that money entirely on payroll expenses and qualified for loan forgiveness. The $100,000 you receive won't be included in taxable income at the end of the year.
But you won't get a $100,000 tax deduction for the expenses you incurred. That means you could have an extra $21,000 tax liability at the end of the year ($100,000 * 21% corporate tax rate) that you wouldn't have if you were allowed to take the deductions as normal.
While the PPP did provide you with an extra $100,000, you're losing $21,000 in tax deductions that you'd normally get. In this example, you're still going to have a net benefit of $79,000 from the program."
State of Maine Income Taxes
You should always check with your CPA as they may have different or better resources regarding any tax laws changes. Here's what we have interpreted at this time:
The Maine tax code is currently written that forgiven loans will be treated as taxable income for state income taxes.
You do not have to fill out a different electronic form or application even though it indicates an expiration that has passed. Our experience with SBA is that the expiration dates on their forms are arbitrary and do not expire.
There's no specific IFR or instructions for "audits" of PPP. But they do happen. As the borrower, you will need to retain specific information used for the various forgiveness application types and those requirements are explained in the PPP Forgiveness application instruction.
Borrowers - Retain everything that you provided the bank and the required documents you didn't need to provide the bank. Keep it handy for 6 years following the forgiveness date of your loan.
Please be aware that any EIDL Advances will be deducted from your PPP forgiveness amount, which could leave you with a balance owed on your PPP loan after your forgiveness is processed.
As a customer of Machias Savings Bank, the focus is on you. We will enhance your banking relationship by working with you to discover your banking needs. We will be there when you need us.
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