Support With PPP Loan Forgiveness

Information and insights from HSBC US to help your business navigate the impact of novel coronavirus, with updates as the situation evolves.

Assisting our customers with PPP loan forgiveness

We’re dedicated to supporting you at every step of the Paycheck Protection Program (PPP).

We began opening our PPP forgiveness application in HSBC SmartServe in phases on July 20th based on your PPP loan funding date. You will receive an email from HSBC SmartServe when you can login and begin your loan forgiveness application. Please email us at caresact.hsbc@us.hsbc.com if you have not yet received this communication for further support.

To login to HSBC SmartServe visit https://smartserve.hsbc/ and enter your existing HSBCnet username and Security Device passcode (generated by your physical Security Device not via mobile app).

We will review your application for quality and completeness and reach out to you directly if more information is needed. Throughout the review process, we will be using HSBC SmartServe to update you on the status of your forgiveness request. Please come back often for ongoing updates. Note that guidance from the SBA on timing and submission of forgiveness application processing continues to evolve. HSBC is committed to following SBA guidelines and will review your application in a timely manner.

Before beginning your application, we recommend visiting the SBA website and reviewing its forgiveness guidance including the PPP loan forgiveness application and PPP Schedule A Worksheet, along with consulting with your accountant or advisers.

If you have questions about our PPP loan forgiveness process or the required documentation, the links and FAQs below will be a helpful resource.

Updated as of November 16, 2020

What is PPP Loan Forgiveness?

Up to 100% of the principal amount of a PPP loan plus accrued interest may be forgiven if you use the loan funds for forgivable uses over a 24-week period beginning on the date your PPP loan was disbursed (or for those borrowers whose loan was made before June 5, 2020, you may elect to have your loan forgiveness covered period be the eight-week period beginning on the date your PPP loan was disbursed).

To receive full loan forgiveness, you must use at least 60 percent of the PPP loan for eligible payroll costs, and not more than 40 percent of the loan forgiveness amount may be attributable to eligible non-payroll costs, such as rent, mortgage interest or utilities.

For example, if a you receive a $100,000 PPP loan, and during the covered period you spend $54,000 (or 54 percent) of the loan on payroll costs, then because you used less than 60 percent of your loan on payroll costs, the maximum amount of loan forgiveness you may receive is $90,000 (with $54,000 in payroll costs constituting 60 percent of the forgiveness amount and $36,000 in non-payroll costs constituting 40 percent of the forgiveness amount).

There are certain actions that may reduce the amount of forgiveness you qualify for, such as reducing the number of employees you have or reducing employee salaries or wages. (See below FAQs for more details)

The funds from PPP loans are not lines of credit. Any pay down or payoff of the PPP loan funds would permanently reduce the loan balance.

Any amounts forgiven, plus the interest associated with them will be considered canceled debt.

Please contact your accountant for specifics.

What is the timeline to spend the PPP loan funds? When does that timeline begin?

The amount of forgiveness of a PPP loan depends on how PPP loan funds are used over a twenty-four-week period (or eight-week period if elected by eligible borrowers) starting on the date your PPP loan funds are disbursed to your HSBC payroll account (“Covered Period”).  Certain PPP loan recipients with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the 24-week (168-day) period (or for loans received before June 5, 2020 at the election of the borrower, the eight-week (56-day) period) that begins on the first day of their first pay period following their PPP loan disbursement date (the “Alternative Payroll Covered Period”).  In no event may the Alternative Payroll Covered Period extend beyond December 31, 2020.

For non-payroll costs, they are eligible for forgiveness if they were:

  • paid during the covered period (but not the Alternative Payroll Covered Period which is used for payroll costs only); 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.

How can I be prepared to apply for PPP loan forgiveness?

You can prepare by collecting documentation for the use of loan funds specific to payroll, number of FTEs, non-payroll and other permitted expenses over the covered period. and preparing the appropriate SBA application documentation:

  • Visit the SBA website to review the forgiveness application forms, SBA Form 3508, SBA Form 3508EZ, and Form 3508S and determine which form applies to you.

  • Print out or save electronically the instructions for the form that you plan to complete.

  • To make your application process easier, we suggest printing the relevant application and prefilling the information before entering information into HSBC SmartServe.

  • If you are using SBA Form 3508, be sure to fill out the PPP Schedule A Worksheet too. HSBC will not require you to submit the worksheet.

  • Save the SBA instructions, your prefilled application form and if applicable SBA Form 3508 Schedule A Worksheet so that you can reference them when beginning and completing your forgiveness application in HSBC SmartServe. If you are using SBA Form 3508, you will not be able to complete the HSBC SmartServe application without the information from the PPP Schedule A Worksheet.

  • Be sure to consult with your tax and legal advisers with any questions you may have.

When can I use PPP loan forgiveness application Form 3508S?

You can apply for loan forgiveness using SBA Form 3508S only if your total PPP loan amount was $50,000 or less and you-together with any affiliates-did not receive PPP loans totaling $2 million or more.

What is the definition of the Covered Period’?

The Covered Period begins on the date your PPP loan was disbursed. The Covered Period ends either 24 weeks after the initial loan disbursement date or December 31, 2020 — whichever comes first.

If your initial loan disbursement date was before June 5, 2020, you can elect to use the original 8-week (56-day) Covered Period as an alternative to the 24-week extended Covered Period.

For administrative convenience, if you have a biweekly (or more frequent) payroll schedule you may elect to calculate eligible payroll costs using the 24-week (168-day) period (or, for loans received before June 5, 2020, you can elect, the 8-week (56-day) period) that begins on the first day of your first pay period following the date HSBC makes the first loan disbursement.

You do not need to tell us in advance of submitting your loan forgiveness application what covered period you are choosing. You will state your covered period in the loan forgiveness application in HSBC SmartServe upon applying for forgiveness.

If I selected a 24-week covered period, can I submit my PPP loan forgiveness application before those 24 weeks are complete?

Yes, there is no requirement to wait until the end of the covered period to submit your PPP loan forgiveness application. As per SBA guidance, a borrower may submit an application before the end of the covered period if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness, subject to the rules regarding maintenance of FTE and salary/wages.

Where do I apply for PPP loan forgiveness through HSBC?

Forgiveness is not automatic.

You must elect to apply for loan forgiveness. If you received your PPP loan through HSBC you will apply for loan forgiveness through HSBC SmartServe our centralized place to manage the PPP loan forgiveness process, including related tasks, documents and communications.

If you have received a Welcome to HSBC SmartServe email, please confirm your access to HSBC SmartServe as quickly as possible. To login visit https://smartserve.hsbc/ and enter your existing HSBCnet username and Security Device passcode (generated by your physical Security Device not via mobile app).

In order to access HSBC SmartServe for PPP loan forgiveness you will need to have an active HSBCnet login as well as have your physical Security Device. If you’ haven’t logged in to HSBCnet recently make sure your login and token are active and working. For helpful hints to get started with HSBCnet or reset your HSBCnet login please visit our Getting Started guide. If you need further help with HSBCnet logins and token, call the HSBCnet Help Desk at 888-685-4357.

We will not be accepting paper/scanned versions of the SBA application.

What if I receive a Welcome to HSBC SmartServe email but cannot login?

In order to access HSBC SmartServe for PPP loan forgiveness you need an active HSBCnet login and your physical security device. Only individuals that received the email with HSBC SmartServe instructions have been granted access (the email cannot be forwarded between colleagues). Follow the below instructions to access HSBC SmartServe:

To login, please visit https://smartserve.hsbc/ and enter your existing HSBCnet username and Security Device passcode (generated by your physical Security Device not via mobile app). If you have trouble logging in to HSBC Smart Serve please contact the HSBCnet Help Desk at 888-685-4357. If you don’t already have a physical security device to access HSBCnet or are having any issues with your physical security device you can also contact the HSBCnet Help Desk at 888-685-4357 for assistance.

When can I begin and submit my PPP loan forgiveness application?

We began opening our PPP forgiveness application in HSBC SmartServe in phases on July 20th based on your PPP loan funding date. You will receive an email from HSBC SmartServe when you can login and begin your loan forgiveness application. Please email us at caresact.hsbc@us.hsbc.com if you have not yet received this communication for further support.

You will need to login and indicate in HSBC SmartServe whether or not you will apply for loan forgiveness. Should you want to proceed with applying for PPP loan forgiveness, you will be able to begin your application and save your work in progress if you need to come back at a later time to finalize your application.

Based on SBA guidance we will begin accepting PPP loan forgiveness requests in HSBC SmartServe as early as August 18th. We will review your application for quality and completeness and reach out to you directly if more information is needed. Throughout the review process, we will be using HSBC SmartServe to update you on the status of your forgiveness request. Please come back often for ongoing updates. Note that guidance from the SBA on timing and submission of forgiveness application processing continues to evolve. HSBC is committed to following SBA guidelines and will review your application in a timely manner.

What if I don’t want to apply for PPP loan forgiveness?

You must elect to not apply for PPP loan forgiveness through HSBC SmartServe. There will be a selection check box for “I do not want to apply for loan forgiveness” at the top of the application form.

In order to access HSBC SmartServe for PPP loan forgiveness you will need to have an active HSBCnet login as well as have your physical Security Device. If you’ haven’t logged in to HSBCnet recently make sure your credentials and token are active and working. For helpful hints to get started with HSBCnet or reset your HSBCnet credentials please visit our Getting Started guide. If you need further help with HSBCnet logins and token, call the HSBCnet Help Desk at 888-685-4357.

When are payroll costs considered paid for purposes of the covered period or alternative covered period?

Payroll costs are considered paid on the day that paychecks are distributed or you originate an ACH credit transaction. Payroll costs incurred during your last pay period of the covered period or the 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) to be eligible for forgiveness. Payroll costs are generally incurred on the day the employee’s pay is earned (i.e., on the day the employee worked). For employees who are not performing work but are still on your payroll, payroll costs are incurred based on the schedule established by you (typically, each day that the employee would have performed work).

What are the permitted expenses for purposes of determining PPP loan forgiveness?

  • Payroll costs

    • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee); specific provisions apply to self-employed/sole proprietorships and general partners

    • 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; specific provisions apply to self-employed/sole proprietorships and general partners

    • State and local taxes assessed on compensation;

  • Nonpayroll Costs

    • Business rent payments under lease agreements for real or personal property dated before February 15, 2020.

    • Mortgage Interest on business mortgage obligations on real or personal property incurred before February 15, 2020.

    • Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.

What if my eligible payroll costs are equal to or more than my PPP loan amount?

When determining PPP loan forgiveness both eligible payroll costs and eligible nonpayroll costs may be included in the forgiveness amount applied for. The instructions for both the Form 3508 and Form 3508EZ state that for the nonpayroll costs you are not required to report payments that you do not want to include in the forgiveness amount. Given this, if you reach your maximum forgiveness amount applied for by reporting eligible payroll costs only, then you may consider not including eligible nonpayroll costs within your application if you do not want to include them in the forgiveness amount.

What documents will I need to include with my PPP loan forgiveness application?

Compile documentation for payroll, number of FTEs, and non-payroll expenses as laid out in the SBA Paycheck Protection Program Loan Forgiveness Application Instructions. You should start to gather this documentation to later upload it to our HSBC SmartServe platform. The documentation includes, but is not limited to, the following:

  • Supporting documentation for payment of salaries, wages and benefits, including payroll tax filings reported to the IRS – e.g. IRS Form 941 that best corresponds to the covered forgiveness period or payroll processor reports.

  • Receipts for business rent or lease payments

  • Evidence of business mortgage interest payments

  • Evidence of utility payments

  • Evidence of employee numbers and salary data

  • State income, payroll, and unemployment insurance filings

If I’m a sole proprietor, eligible self-employed individual, general partner or an independent contractor, do I submit different documentation?

For certain payroll related items, yes. The amount of your loan forgiveness is capped, and limited with respect to certain payroll costs. Please consult the SBA guidance and your accountant or lawyer.

To substantiate your request for loan forgiveness, if you have employees, you should submit IRS Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that best correspond to the covered period (with evidence of any retirement and health insurance contributions).

Any 2019 Form 1040 Schedule C that was provided at the time of the PPP loan application must be used to determine the amount of allocated net profit for the covered period.

Do I need to open a separate account for my PPP loan funds?

No, a separate account is not required. Please work with your Relationship Manager if you have additional account set up questions.

Will my loan forgiveness amount be reduced if I had reductions in my number of FTE employees, employees’ salaries, wages or hours, or if an employee resigns, asks for a reduction in hours or is fired for cause?

Two separate safe harbors potentially exempt you from any loan forgiveness reduction based on a reduction in full-time equivalent (FTE) employee levels:

Safe Harbor 1: Applicable if you, in good faith, are able to document that your business was unable to operate between February 15, 2020, and the end of the Covered Period, at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020, and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

Safe Harbor 2: Applicable if both conditions are met:

1. You reduced your FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and
2. You restored your FTE employee levels to your FTE employee levels in the pay period that included February 15, 2020, by the date of your loan forgiveness application or December 31, 2020 — whichever comes first.

Additional FTE reduction exemptions apply in the following scenarios:

1. Any position for which the you made a good faith, written offer to rehire an individual who was an employee on February 15, 2020, and you were unable to hire a similarly qualified employee for unfilled positions on or before December 31, 2020.
2. Any position for which you made a good faith, written offer to restore any reduction in hours (for the same salary/hourly wages) during the Covered Period (or Alternative Payroll Covered Period) that was rejected by the employee
3. Any employee who during the Covered Period (or Alternative Payroll Covered Period): (a) was fired for cause, (b) voluntarily resigned, (c) voluntarily requested and received reduction in hours

The safe harbor for salary/hourly wage reduction is applicable if both conditions are met:

1. You reduced the average annual salary or hourly wages paid in the period beginning February 15, 2020, and ending April 26, 2020; and
2. You restored the average annual salary or hourly wages paid to the levels in your pay period that included February 15, 2020, by no later than December 31, 2020.

If I apply for forgiveness when will my PPP loan be forgiven?

Once you submit your loan forgiveness application within HSBC SmartServe, we will review your application for quality and completeness and reach out to you directly if more information is needed. The SBA has up to 90 days to review the PPP loan and forgiveness documentation once HSBC has submitted your completed application to the SBA. Once approved by the SBA, your forgiveness status will be communicated to you. The decision may be an approval (in whole or in part); denial; or (if directed by the SBA) a denial without prejudice due to a pending SBA review of the loan. In the case of a denial without prejudice, you may subsequently request that we reconsider your application for loan forgiveness, unless the SBA has determined that you are ineligible for the PPP loan.

What happens if I use funds from the PPP for non-eligible expenses?

Per SBA guidance, if you use PPP funds for unauthorized purposes, the SBA will require you to repay those amounts as they will not be forgiven.

If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If one of your shareholders, members, or partners uses PPP funds for unauthorized purposes, the SBA will have recourse against the shareholder, member, or partner for the unauthorized use.

Please consult your accountant for specific advice.

Can the SBA review my PPP loan, including whether I was eligible for the PPP loan?

Yes. The SBA may review any PPP loan of any size at any time. If the SBA undertakes such a review, they will contact us and we will notify you. During the period of SBA review, we are not allowed to approve the application for forgiveness until the SBA notifies us that it has completed its review.

If the SBA determines that you are ineligible for a PPP loan, SBA will direct us to deny the loan forgiveness application. Further, if the SBA determines that you are ineligible for the loan amount or loan forgiveness amount claimed, the SBA will direct us to deny the loan forgiveness application in whole or in part, as appropriate. The SBA may also seek repayment of the outstanding PPP loan balance or pursue other available remedies.

What if a portion of my PPP loan is not forgiven?

For loans which are partially forgiven, the payment schedule for the unforgiven portion will be calculated and you will be advised of your next repayment date and amount due.

Loan payments will be deferred as per SBA requirements and 1% interest will continue to accrue. The key loan terms are:

Term: 2 years (or 5 years for loans approved by the SBA on or after June 5, 2020)

Interest Rate: 1%

What is an Economic Injury Disaster Loan (EIDL) advance and how does it affect my potential loan forgiveness?

In response to the Coronavirus (COVID-19) pandemic, the SBA made available to all small business owners as a direct loan administered and disbursed by the SBA an Economic Injury Disaster Loan (EIDL) advance of up to $10,0000. Generally, this loan advance will not have to be repaid, however, as required by the terms of the EIDL advance and the CARES Act (section 1110(e)(6)) if a business received an EIDL advance in addition to a Paycheck Protection Program (PPP) loan, the amount of the EIDL advance will be deducted by the SBA from the PPP loan forgiveness amount applied for by you and submitted to the SBA by us. If you received an EIDL advance, it will reduce the amount of forgiveness you have applied for.

If I have an EIDL loan advance will that advance amount be deducted from the amount of my PPP loan forgiveness?

Yes, if you have received an EIDL loan advance the SBA will reduce your PPP loan forgiveness amount by the amount of the EIDL advance you received. If you received an EIDL advance in excess of the amount of your PPP loan amount you will not receive forgiveness on your PPP loan. We will therefore notify you of the date your first loan payment is due.

What happens after I submit my PPP loan forgiveness application and supporting documentation?

After you have uploaded the required documents to HSBC SmartServe, an analyst from the HSBC Business Relief Team will ensure your application is complete and that you have attested to the accuracy of the documentation and information.

The HSBC analyst will also conduct a review of the information submitted within the application and the required supporting documents.

If documentation or information is missing, you will receive an email from HSBC SmartServe to login and upload and/or correct missing documentation and/or information. Please do this as promptly as possible. Please add communications.no-reply@hsbc.com to your safe list so that these emails will not go to your spam folder.

Once complete, customer applications will be submitted to the SBA. We are awaiting additional guidance on how the SBA reviews of forgiveness applications will be conducted.

What is the first payment date of my PPP loan?

On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) was signed into law, amending the CARES Act. One of the changes under the Flexibility Act is to PPP loan payment deferrals. As a result of the Flexibility Act, your first payment date will be different than what is stated in your U.S. Small Business Administration Note. We will update you with your first payment date via email. The general rules to the changes are:

  • If you submit a 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 that we receive a response from the SBA regarding your loan forgiveness amount. For wholly forgiven loans we will notify you when we receive payment from the SBA. For loans which are partially forgiven or not forgiven, the payment schedule for the unforgiven portion will be calculated and you will be advised of your next repayment date and amount due. As a reminder, interest continues to accrue during the deferment period.

  • If you do not submit a loan forgiveness application within 10 months after the end of your loan forgiveness covered period, you must begin paying principal and interest after that period. For example, if your PPP loan was disbursed on June 25, 2020, the 24-week period ends on December 10, 2020. If you do not submit a loan forgiveness application by October 10, 2021, you must begin making payments on October 10, 2021.

  • Additionally, if SBA determines that the loan is not eligible for forgiveness (in whole or in part), the PPP loan is no longer deferred and the borrower must begin paying principal and interest.

What is the maturity date of my PPP loan?

If your PPP loan received an SBA loan number on or after June 5, 2020, the loan has a five-year maturity. If your PPP loan received an SBA loan number before June 5, 2020, the loan has a two-year maturity, unless you and HSBC mutually agree to extend the term of the loan to five years. The promissory note for the PPP loan will state the term of the loan. If you have questions about an extension or want to request an extension from 2 to 5 years please use the comment box at the bottom of the ‘Welcome to SmartServe’ support task in HSBC SmartServe to ask our team.

What happens if I have plans to sell my business or change ownership after I’ve received my PPP loan from HSBC?

If you received a PPP loan from HSBC and are considering a sale of all or part of your business, whether via a stock sale or asset sale, or a change in ownership (of any percentage) please contact your HSBC Relationship Manager as soon as possible. Certain approvals from HSBC and/or the SBA are required for changes in ownership and sales of the business in part or full, and taking action without prior approval could result in a default under your PPP loan documents and SBA program requirements. You also remain responsible for the PPP loan regardless of an ownership change. Additionally, you remain responsible for obtaining, preparing, and retaining all required PPP forms and supporting documentation and providing those forms and supporting documentation to us or to the SBA upon request  The SBA has outlined its required procedures for changes of ownership of an entity that has received PPP funds in the following procedural notice: https://home.treasury.gov/system/files/136/PPP-Procedural-Notice-PPP-Loans-and-Changes-of-Ownership.pdf. Your PPP loan documents also contain HSBC consent requirements in excess of the PPP procedural notice requirements, and should be reviewed prior to undertaking any transaction.

What questions should I direct to my accountant or my lawyer?

The calculations and other information in your forgiveness application and the determinations and certifications you make in connection with your application are your responsibility, so we strongly encourage you to consult with your accounting, legal and other advisors in preparing your forgiveness application. They can provide guidance on application related questions and determinations, including:

  • Questions about preparing and completing the forgiveness application, including questions and determinations around eligible expenses and employee and salary maintenance.

  • Questions surrounding rehiring: when, how, delays, raises, consistency of employee headcount.

  • Questions about variable salary expenses: commissions, tips, etc.

  • Questions on other permitted vendor payables that can or cannot be included in the up to 40% of loan funds not allocated to payroll. .

Where do I go if I have questions?

It depends on what question you have and what step of the process you are in:

  • For questions about preparing and completing the forgiveness application, including questions and determinations around eligible expenses, employee and salary maintenance, please consult your accountant or lawyer.

  • For questions about access to HSBCnet, please reach out to your Relationship Manager or our HSBCnet Help Team at 1-866-357-4722.

  • Once you’ve confirmed your access to HSBC SmartServe you may speak to our analysts by going to the Welcome to SmartServe support task on the Overview page and using the comment box at the bottom of the page.

Be sure to check this page for loan forgiveness information. We’re continuously updating these resources as more guidance is released.

 

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