1

Host

• Daniel J. Santaniello, President and CEO, Fidelity Bank

2

Eugene J. WalshExecutive Vice President and COOFidelity BankRobert GiltnerPresidentMinuteLenderAngelo DeCesarisSenior Vice President & Business Relationship ManagerFidelity Bank

Presenters

3

Paycheck Protection ProgramSBA Forgiveness Guidance

4

Agenda• Disclaimer• What is established regarding Forgiveness • Demonstration of Portal/Fidelity Bank process• Required Documentation • Remaining Uncertainty• AICPA Recommendations• Resource links

5

Disclaimer:

• Any information discussed in this presentation is made with the understanding that Forgiveness standards may be subject to additional interpretation.

• Fidelity Bank recommends that all businesses consult with their accountants, lawyers, advisors as well as bankers for guidance in formulating strategies to achieve optimal loan forgiveness.

• Fidelity Bank offers no legal, accounting or banking recommendations with the proceeding discussion.

6

7

8

What is Established

9

What is Established• Paycheck Protection Loans may qualify for up to 100%

forgiveness.• Forgiveness is based on payroll expense (wages, SALT, health

care costs and retirement), qualified mortgage interest, lease and utility expense.

• Payroll expense can commence the PPP loan disbursement date OR the first day of the first pay period after the PPP loan disbursement date.

• Payroll expense must be no less than 75% and non-payroll expense must be no more than 25% of the forgivable amount.

10

What is Established• Payroll expenses must be documented by employee listed by name and last

4 digits of the SSN#.• Independent contractors, owner-employees, self-employed individuals, or

partners are ineligible; owner-employee exclusion does not apply if the owner is on the payroll.

• ‘FTE’ equals Ave weekly hours/40 or a simplified 40 hours/week = full-time, less is part-time.

• Forgiveness for Payroll is reduced by the fraction of average FTE between 2/15/20 thru 4/26/20 divided by the ‘chosen reference period’: 2/15/19 thru 6/30/19; 1/1/20 thru 2/29/20; or any12 week consecutive period between 5/1/19 thru 9/15/19 for seasonal workers. (aka ‘FTE Adjustment’)

11

What is Established

• FTE safe harbor applies if employees laid off between 2/15 – 4/26 are rehired by 6/30. FTE reduction exception is granted if employee was fired for cause, quit, or requested reduced hours.

• Salary/Hourly Wage Reduction, the sum of reduced wages for each employee (hourly or annual), is deducted from the sum of all forgivable costs.

• Sec. Mnuchin reported the government will conduct a ‘full audit’ of every PPP loan over $2 million: ‘This was a program designed for small businesses, not for public companies that had liquidity’.

12

What is Established

Forgivable amount is the lower of: i. Total Cost x FTE adjustment;

ii. The original PPP loan amount; or

iii. Payroll Cost divided by 75%.

13

Demonstration & Process

14

Demonstration & Process Your Forgiveness Online Application

• Login to the Fidelity Bank portal from links or emails• Applicants can be loan signers, accountants or other authorized applicants.

Demonstration & Process Your Forgiveness Online Application

• Your existing business and loan information will be displayed to automate part of your application for forgiveness.

16

Demonstration & Process Your Forgiveness Online Application

• Directions will be provided to complete your Forgiveness computation which has five parts and requires supporting documents.

• The site will allow you to complete the tables or upload the five worksheets.

17

Demonstration & Process Your Forgiveness Online Application

• Certify and submit request

18

Demonstration & Process

Fidelity Bank • Fidelity Bank will review and recommend to the SBA

• The SBA accept/reject Fidelity Bank’s recommendation

• The SBA will have 90 days to fund the forgiveness

• The loan will remain active until funding occurs

• Once funded the loan/portion of loan will be forgiven and remaining payments established

• Six months following original closing, the remaining balance will commence amortization over 18 months

19

Required Documentation per OMB Control Number 3245-0407

20

Required DocumentationPayroll:- Bank account statements or 3rd party payroll provider reports

documenting cash compensation paid- Tax Forms for the Covered/Alternative Payroll Covered Period

- Form 941- State quarterly business & individual wage and unemployment

insurance filings- Payment receipts, cancelled checks, or account statements

documenting employer contributions to employee’s health insurance and retirement plans

21

Required Documentation

FTE:- Ave FTE between 2/15/19 and 6/30/19- Ave FTE between 1/1/20 and 2/29/20- Seasonal employer: the above or any consecutive 12-week

period between 5/1/19 and 9/15/19.

Documents include: Form 941, State quarterly business & individual wage and unemployment insurance filings.

22

Required DocumentationNonpayroll: (prior to 2/15/20 and for covered period)- Business mortgage interest payments: copy of lender amortization

schedule and receipts or cancelled checks OR lender statements from February 2020 and the months of the Covered Period thru 1 month after the end of Covered Period.

- Business rent or lease payments: Copy of lease agreement and receipts/cancelled checks OR lessor account statements from February 2020 and the months of the Covered Period thru 1 month after the end of Covered Period.

- Business utility payments: Copy of invoices from February 2020 thru the Covered Period and receipts, cancelled checks or account statements verifying those eligible payments.

23

Required DocumentationRetain (but not submit) for 6 years after loan forgiveness- Documentation supporting Schedule A Worksheet Table 1 including

Salary/Hourly Wage Reduction calculation;- Documentation supporting Schedule A Worksheet Table 2

(employees over $100,000)- Documentation regarding employee job offers, refusals, firings for

cause, voluntary resignations and written requests for reduction in work schedule.

- Documentation supporting Schedule A Worksheet “FTE Reduction Safe Harbor”

24

Remaining Uncertainty

• How to calculate forgiveness for Sole Proprietors, Partnerships and LLC’s

• How to handle Farm Income

• Final Documentation pertaining to the above entities

25

AICPA RecommendationsThe American Institute of CPAs, AICPA, has reviewed the ambiguities of PPP forgiveness, and is making the following broad recommendations for the PPP application and forgiveness process. We have no knowledge if these will be accepted.

The eight-week covered period under PPP should align with the beginning of a pay period, not the date loan proceeds are received.

The eight-week period should be flexible, with businesses able to choose to commence it once stay-at-home restrictions are lifted instead of when loan proceeds are received.

Full-time equivalents (FTEs) should be calculated using a simple wage-based proxy when hours worked are not tracked by the employer (e.g., for salaried workers or those paid by piece).

Payroll reduction calculations should be based on an employee’s average payroll per week in the eight-week period compared to the prior quarter, rather than comparing total compensation in the periods. Loan forgiveness is reduced if an employee’s compensation decreases by more than 25% but an eight-week period will naturally have 33% less payroll than a 12-week quarter.

26

Resource LinkLoan Forgiveness• https://www.paychex.com/business-loans/loan-forgiveness-

estimatorProgram Information• https://www.bankatfidelity.com/sba-cares-act-20/paycheck-

protection/• https://www.aba.com/advocacy/communityprograms/consumer-

resources/crisis-help/• https://bankingjournal.aba.com/2020/05/sba-releases-borrower-

application-instructions-for-ppp-loan-forgiveness

27

Questions & Answers

28