Lender’s Toolkit & Checklist

2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act Paycheck Protection Program (PPP)

Updated April 22, 2020 Cal McCastlain Dover Dixon Horne, PLLC 501.375.9151 [email protected] doverdixonhorne.com

Lender’s Toolkit & Checklist

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Program Overview and User Templates

This is our first update of the Lenders Toolkit. We are now several weeks into the PPP program and it is out of funds. BUT, it appears that more is on the way.

The updated Toolkit is being provided for the convenience of our clients and friends. While we believe the information to be correct and usable by Lenders, we strongly recommend that you contact your legal counsel to be certain these suggestions apply to your specific circumstances and end use.

Please advise us of any suggested changes or corrections you may find in working through the documents. In addition to this PDF document, we have attached two template files:

1) A Word file which is easily adapted to your specific needs2) An Excel file which contains several spreadsheets that can be used and adapted to your

particular circumstances as you take new applications and prepare for the formidable taskof assisting your customers with working through the PPP loan forgiveness. Specifically,the spreadsheets provide:

a. PPP loan amount calculatorb. Payroll expense calculator/trackerc. Non-Payroll expense calculator/trackerd. Reduction in Wages calculatore. Summary with forgiveness calculator

It is our hope that this Toolkit helps guide you and your customers through these difficult times.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27, 2020 created the Paycheck Protection Program (PPP) to assist small businesses impacted by the COVID-19 pandemic by providing 100 percent federally guaranteed loans to small businesses who maintain their payroll during the COVID-19 crisis. $349 billion was appropriated for this purpose and as of April 20, 2020, all of the initial funding had been appropriated. Currently, Congress is considering an additional $300 billion which should be acted on this week (April 22 – April 25th).

Based on early indication of the new funding, if the small business borrower maintains its payroll, the portion of the loan used for certain covered expenses including payroll, interest on mortgage obligations, rent, and utilities would be forgiven. Please remember though, this program has been changed frequently, and it is highly likely that the new appropriation will be subject to a similar level of revisions as Congress attempts to be certain the money will be used by those who need it most.

Administered by the Small Business Administration and officially launched on April 3, 2020, the PPP process and requirements provided lenders with a barebones, evolving framework for making these loans to their small business customers. The program had a very rocky start and you, as lenders, spent many hours attempting to access and input loan applications (which seemed to change on a daily basis). It appears that most of the bugs have been ironed out and the inputting process has been streamlined. This second round of funding should be easier.

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We are assuming that the SBA as well as the Department of Treasury will continue to provide additional and frequently updated information and clarifications.

For general program or regulatory questions, please contact Randy Dennis or Fred Wood at DD&F at (501) 374-2600 or via email at [email protected] or [email protected].

For all legal questions, please contact Cal McCastlain at Dover Dixon Horne, PLLC one of our attorney partners, at (501) 375-9151 or via email at [email protected].

This document is based on the PPP rules as in effect on April 22, 2020. The rules issued to date clearly provide that more rules will be issued for this program, particularly on the forgiveness provisions of the PPP loans. Also, complications in the rollout of the PPP may lead to other unexpected rules or changes in the program processes. Lenders must make certain they are working with the latest rules and applicable SBA forms in effect, and monitor reliable sources for any developments impacting the PPP.

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Loan Application Checklist and Tool Kit for SBA Lenders Coronavirus Aid, Relief, and Economic Security Act

(The CARES Act)

[Please note that this Section assumes that Round 2 Funding will be approved.]

Application Phase: Round 1 Funding – This Round has finished, but we have left the information in since we anticipate that the same general rules will apply to Round 2 Funding.

1. Use the latest SBA Paycheck Protection Program Application Form. (SBA Form 2483(04/20))

2. Lender’s Loan Documents and loan requirements and procedures. Lenders may use theirown loan documents or the Note issued by SBA and attached as Attachment 1. Pleasenote that even though the PPP does not require original signatures, many lenders arerequiring an original signature to follow the electronic signatures or scanned documents.The link to the Promissory Note is on the SBA website. CLICK HERE. [We found thatwhile many lenders used the SBA document, all lenders we reviewed added provisions totailor the Promissory Note.]

3. Lenders should continue to review borrower’s existing loan documents; avoid defaults(restrictions on new debt, financial ratios, etc.).

4. Confirm whether SBA affiliates rules apply (Act Section 1102(a)(2)(D)(iv) and 13 CFR121.103). See Attachment 4 Affiliation Rules Applicable to PPP as of 4-3-20.

5. Request the borrower to complete the Borrower’s CARES Act Certificate for LoanApplication. (See Attachment 2 and its Exhibits A, B, C, D, E and F)

6. For Round 1 funding, the borrower’s payroll information was needed to determinemaximum amount of loan. We assume this will apply similarly to Round 2:

a. Lesser of $10 million, OR

b. Average total monthly payroll costs for 12 months prior to loan date, multiplied by2.5. You may use your average for the January 1, 2019 to December 31, 2019period. Payroll costs do not include compensation of an individual employee inexcess of annual salary of $100,000, as prorated for the covered period (February15, 2020—June 30, 2020). These payroll costs include a number of other employeerelated expenses that count as Payroll Costs. Attachment 2, Exhibit F is a sampleexcel worksheet that can be used for calculating Payroll Costs. An Excel file isincluded in the Templates.

c. Seasonal business may elect average monthly payroll for 12-week period beginningFebruary 15, 2019, or March 1, 2019 - June 30, 2019.

d. Self-employed individuals and independent contractors must provide the 2019Form 1040 Schedule C with their PPP loan application to substantiate the PPP loan

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https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

https://content.sba.gov/sites/default/files/2020-04/040720note.pdf

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compensation received (box 7), invoice, bank statement, or book of record that establishes self-employment. Additionally, the applicant must provide a 2020 invoice, bank statement, or book of record to establish that he or she was in operation on or around February 15, 2020.

e. Businesses owned by the Lenders’ outside directors or shareholders owning lessthan 30% equity interest in the Lender may get a PPP loan through the Lender aslong as standard procedures are followed (e.g., same documentation is required, nopriority in filing, etc.)

f. Shareholders owning 30% or more of equity in the Lender, officers of the Lender(including the Board Chairman) and key employees of the Lender are not allowedto obtain a PPP loan from that Lender but may for a different PPP lender.

7. Loan disbursements must be made no later than 10 days after approval of the loan. Nofurther guidance is currently available on this process.

Application Phase: Round 2 Funding

1. Round 2 Funding is likely to happen the week of April 20 and include an additional $310billion for PPP loans to small businesses. The Banking Associations have also lobbied forCongress to set aside funds for use by banks under $50 billion. As of this update, it appearsthat the legislation will allocate at least $30 billion for institutions under $10 billion inassets and another $30 billion for those with between $10 billion and $50 billion in assets.

2. Presently, you should follow the same steps as used in Round 1 but consider the following:

a. Take full advantage of the marketing value of the PPP program for yourcommercial and self employed customers.

b. Make sure your team remains ready to process any applications that were notsubmitted and/or approved before Round 1 Funding closed. Let your customersknow as soon as possible.

c. Make any adjustments needed to process more efficiently and quickly thanRound 1. We believe the Round 2 Funding will run out even more quickly thanRound 1’s twelve days. Several large nonbank lenders, including PayPal,Square and Intuit, are now ready to process loans and may have even greatercapability to originate loans speedily with their ability to automate the loanprocess through the Amazon-SBA interface.

d. Consider using analysts or administrative assistants or even contract personnelrather than Lenders to input the loan data so that the Lenders can spend theirtime marketing the new funding to other business customers of the Bank. Theinitial feedback is that many of our clients small businesses were not familiarwith the PPP program and missed the opportunity to participate. This processneeds to begin immediately as the funding may be imminent.

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Interim Measures for Liquidity

Consistent with the intent of the CARES Act, the Federal Reserve has created a long-term fixed-rate credit facility called the Paycheck Protection Program Lending Facility (“PPPLF”) to serve as match funding for a lender’s PPP credits. The funding is secured by the PPP loans and is available at 35 bps for the two-year term of the loans. See Attachment 5 – Term Sheet.

To facilitate the use of the PPPLF, the regulatory agencies adopted an interim final rule which neutralizes the regulatory capital effects of PPP loans to the PPPLF by not deeming those loans outstanding for the capital ratio purposes. It applies to both risk-based and leverage capital ratios, including the community bank leverage ratio.

For complete details, visit the Federal Reserve’s PPPLF FAQ web page: PPPLF FAQ Sheet After talking to the Federal Reserve staff, it is clear that this facility is already opening up the ability to borrow on the PPP notes and provide funds to loan during round two. It should be noted that by using the PPPLF, the growth in PPP loans are capital neutral, both on your leverage ratio and on your risk-based ratios.

Tracking and the Very Important Forgiveness Phase

1. SBA has not released any forms to be used or issued specific guidance as to whatsupporting documentation will be needed to grant forgiveness of the loans. In any event,with regard to Payroll Costs and other expenses that are allowable to be included inoverhead, when the time comes to request forgiveness, the borrower will need to providedocumentation to qualify for the forgiveness which will likely include, detailed payrollinformation, cancelled checks for eligible expenses, payment receipts, transcripts ofaccounts or other documents verifying payments for mortgages, leases and utilities.Attached as Attachment 3 is a Borrower Certificate for CARES Act Loan Forgiveness forthe Lender to use with the Borrower along with Exhibits A, B, and C containinginformation likely to be requested as support.

2. Lenders should either use the attached loan forgiveness calculator or develop a calculator(our model is provided as Attachment 6 and in the Templates attachment) which takesthe documented payroll costs and forgiveable nonpayroll expenses and reduces that numberbased upon cuts to full-time employees or salary/wage cuts. You may want to provide theloan forgiveness calculator to your customers and/or their accountants to help them trackthe payments. We would anticipate additional guidance to be issued by the SBA beforethe expiration of the eight week period following the initial wave of funding. A comparablecalculator should be provided for independent contractors, sole proprieters, nonprofits andpartnerships.

3. Though not required, many of our clients have suggested that the borrower have the PPPproceeds deposited into a new dedicated checking account for tracking purposes withlender or other instituion. IF YOU PUT THE FUNDS IN AN EXISTING ACCOUNT,BE SURE THAT THE ACCOUNT IS NOT TIED TO A LINE OF CREDIT THAT ISPAID DOWN AUTOMATICALLY.

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IMPORTANT NOTE: Continue to emphasize to your borrowers that proceeds must be used on allowable costs within 8 weeks of receipt of loan proceeds.

4. Seven weeks after funding, the lender should advise the SBA of the expected forgiveness amount. That starts the clock running on the SBA’s requirement to acquire the forgiven part of the loan.

5. At eight weeks, all loan forgiveness information should be final, and the lender can verify to the SBA the estimates provided at seven weeks. This should shorten the time period of the SBA payment down to eight days.

6. As the lender, you must issue a decision on forgiveness application within 60 days of receipt of application for forgiveness. (Act Section 1106(g)).

This document is based on the PPP rules as in effect on April 22, 2020. The rules issued to date clearly provide that more rules will be issued for this program, particularly on the forgiveness provisions of the PPP loans. Also, complications in the rollout of the PPP may lead to other unexpected rules or changes in the program processes. Lenders must make certain they are working with the latest rules and applicable SBA forms in effect, and monitor reliable sources for any developments impacting the PPP.

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ATTACHMENT 1

PROPOSED SBA PROMISSORY NOTE FOR THE PAYCHECK PROTECTION PROGRAM

[PLEASE NOTE THAT THE LENDER MAY USE ITS OWN PROMISSORY NOTE]

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NOTE SBA Loan #

SBA Loan Name

Date

Loan Amount

Interest Rate

Borrower

Operating Company

Lender

1. PROMISE TO PAY:

In return for the Loan, Borrower promises to pay to the order of Lender the amount of

_______________________________________________________________________________________ Dollars, interest on the unpaid principal balance, and all other amounts required by this Note.

2. DEFINITIONS:

“Collateral” means any property taken as security for payment of this Note or any guarantee of this Note.

“Guarantor” means each person or entity that signs a guarantee of payment of this Note.

“Loan” means the loan evidenced by this Note.

“Loan Documents” means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.

“SBA” means the Small Business Administration, an Agency of the United States of America.

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SBA Form 147 (06/03/02) Version 4.1

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3. PAYMENT TERMS:

Borrower must make all payments at the place Lender designates. The payment terms for this Note are:

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4. DEFAULT:

Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower or Operating Company:

A. Fails to do anything required by this Note and other Loan Documents;

B. Defaults on any other loan with Lender;

C. Does not preserve, or account to Lender’s satisfaction for, any of the Collateral or its proceeds;

D. Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SBA;

E. Makes, or anyone acting on their behalf makes, a materially false or misleading representation to Lender or SBA;

F. Defaults on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower’s ability to pay this Note;

G. Fails to pay any taxes when due;

H. Becomes the subject of a proceeding under any bankruptcy or insolvency law;

I. Has a receiver or liquidator appointed for any part of their business or property;

J. Makes an assignment for the benefit of creditors;

K. Has any adverse change in financial condition or business operation that Lender believes may materially affect Borrower’s ability to pay this Note;

L. Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without Lender’s prior written consent; or

M. Becomes the subject of a civil or criminal action that Lender believes may materially affect Borrower’s ability to pay this Note.

5. LENDER’S RIGHTS IF THERE IS A DEFAULT:

Without notice or demand and without giving up any of its rights, Lender may:

A. Require immediate payment of all amounts owing under this Note;

B. Collect all amounts owing from any Borrower or Guarantor;

C. File suit and obtain judgment;

D. Take possession of any Collateral; or

E. Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement.

6. LENDER’S GENERAL POWERS:

Without notice and without Borrower’s consent, Lender may:

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A. Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

B. Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs. If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance;

C. Release anyone obligated to pay this Note;

D. Compromise, release, renew, extend or substitute any of the Collateral; and

E. Take any action necessary to protect the Collateral or collect amounts owing on this Note.

7. WHEN FEDERAL LAW APPLIES:

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

8. SUCCESSORS AND ASSIGNS:

Under this Note, Borrower and Operating Company include the successors of each, and Lender includes its successors and assigns.

9. GENERAL PROVISIONS:

A. All individuals and entities signing this Note are jointly and severally liable.

B. Borrower waives all suretyship defenses.

C. Borrower must sign all documents necessary at any time to comply with the Loan Documents and to enable Lender to acquire, perfect, or maintain Lender’s liens on Collateral.

D. Lender may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

E. Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.

F. If any part of this Note is unenforceable, all other parts remain in effect.

G. To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of Collateral at a sale.

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10. STATE-SPECIFIC PROVISIONS:

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11. BORROWER’S NAME(S) AND SIGNATURE(S):

By signing below, each individual or entity becomes obligated under this Note as Borrower.

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ATTACHMENT 2

________________ [Insert Company Name} (the “Company”) CERTIFICATE

FOR LOAN UNDER CARES ACT

The undersigned, being duly sworn, deposes and certifies that this Certificate is executed and delivered to ________________ ( the “Lender”) in order to induce the Lender to extend a loan (the “Loan”) to the Company under and in accordance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and that:

1. CARES Act Certification. As required by the CARES Act, the Company certifies as follows: a. The Company was operating on February 15, 2020, and on that date had

employees for whom the Company paid salaries and payroll taxes, or paid independent contractors, as reported on Form 1099-MISC.

b. Current economic uncertainty makes the Company’s loan request necessary to support the Company’s ongoing operations.

c. The Company will use the funds from the Loan to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments. The undersigned understands that if the funds are knowingly used for unauthorized purposes, the federal government may hold me legally liable such as for charges of fraud. The undersigned understands that not more than 25 percent of Loan proceeds may be used for non-payroll costs.

d. Documentation verifying the number of full-time equivalent employees on payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight-week period following this Loan will be provided to the Lender.

e. Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Not more than 25 percent of the forgiven amount may be for non-payroll costs.

f. During the period beginning on February 15, 2020 and ending on December 31, 2020, the Company has not and will not receive another loan under the Paycheck Protection Program.

g. The undersigned further certifies that the information provided for the application for the Loan and the information provided in all supporting documents and forms is true and accurate in all material respects. The undersigned understands that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.

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h. The undersigned acknowledges that the Lender will confirm the eligible loan amount using tax documents the Company has submitted. I/We affirm that these tax documents are identical to those submitted to the Internal Revenue Service. I/We understand, acknowledge, and agree that the Lender can share the tax information with SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

2. Corporate Documents. Attached hereto as Exhibit A is a true, correct, and complete copy of the Articles of [Incorporation][Organization] of the Company, together with any and all amendments thereto, as now on file with the [__Insert State__] Secretary of State, and no action has been taken by the Company, or the Company’s officers or directors, to amend, modify, repeal, or supersede said Articles of [Incorporation][Organization], the same being in full force and effect in the attached form as of the date hereof. Attached hereto as Exhibit B is a true, correct and complete copy of the Company’s [By-Laws] [Operating Agreement] now in effect. No action has been taken by the Company or the Company’s officers or directors to amend, modify, repeal, or supersede said [By-Laws] [Operating Agreement], the same being in full force and effect in the attached form as of the date hereof. Attached hereto as Exhibit C is a true, correct and complete copy of the Resolution of the Company authorizing the Company to incur the Loan and directing its officers to execute the documents necessary to consummate the Loan. [Optional Information Request 1 – to comply with BSA Requirements, Exhibit D includes a BSA Beneficial Ownership Certificate (CDD Rev1 2-4-13). Please note that this duplicates some of the information requested in this Attachment 2, Corporate Documents.] [Optional Information 2 – to comply with the Lender’s underwriting requirements, Exhibit E includes a list of information requested by some lenders.]

3. Other Names. The following is a list of all other names (including trade names or

similar appellations) used by the Company or any other business or organization to which the Company became the successor by merger, consolidation, acquisition, change in form, nature or jurisdiction of organization or otherwise, now or at any time during the past five years: ______________________________________.

4. Incumbent Officers. The Company’s officers are as follows: President: ___________________________ Secretary: ___________________________

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5. Owners. The Company’s owners and their respective ownership interests, are as follows:

Name %

6. Employer Identification Number. The Company’s tax identification number is _____________________.

7. Company’s Offices and Place of Business. The Company’s chief executive’s

office and primary place of business is located at

_____________________________________. EXECUTED on the _______ day of __________, 2020. ___________________________________ STATE OF _________________) ) ss. COUNTY OF __________ ) SUBSCRIBED AND SWORN to before me, a Notary Public, this _____ day of _____________, 2020.

___________________________________ Notary Public My Commission Expires:

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ATTACHMENT 2

EXHIBIT A

[TO BE PROVIDED BY BORROWER]

Articles of [Incorporation][Organization] of the Company

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ATTACHMENT 2

EXHIBIT B


Company’s [By-Laws] [Operating Agreement]

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ATTACHMENT 2

EXHIBIT C


RESOLUTION OF

____________________ [Insert Company Name] (Authorizing Loan Under CARES Act)

The undersigned, being the President and Secretary of ABC, Inc., an [__Insert State___] [corporation][limited liability company] (the “Company”), do hereby certify that the following Resolution has been duly adopted by the Company and remains in full force and effect:

RESOLUTION

BE IT RESOLVED that ABC, Inc. (the “Company”), is authorized and directed to borrow $ from (“Lender”) under the terms authorized under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the more specific terms set forth in the loan commitment document at Attachment 2 attached hereto and incorporated herein (the “CARES Loan”).

BE IT FURTHER RESOLVED that _______________, the President of the Company, is authorized and directed, and in his or her sole discretion, to execute and enter into on behalf of the Company all instruments, documents, and certificates in connection with the CARES Loan, and to do all things and take all steps which __________________, in his or her sole discretion, deems necessary or appropriate to obtain, consummate, and close the CARES Loan in accordance with the terms authorized herein.

We do hereby further certify that (1) we are the duly elected officers as set forth by our names below and (2) no action has been taken by the Company, or its officers or directors to amend, modify, repeal or supersede the authorizations set forth in the above Resolution, the same being in full force and effect as of the date hereof.

DATED this _____ day of ____________________, 2020. __________________________________ ___________________________________ _______________________, President ________________________, Secretary

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ATTACHMENT 2

EXHIBIT D

Optional BSA Beneficial Ownership Certificate (CDD Rev1 2-4-13)

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OMB Control Number 1506-0070

31 CFR § 1010.230 CERTIFICATION REGARDING BENEFICIAL OWNERSOF LEGALENTITYCUSTOMERS

I. GENERALINSTRUCTIONS This is an optional form provided for your convenience. The required information may be provided in other formats. When completed, this form is provided to the financial institution where the account is opened. DO NOT SEND TO FinCEN.

Where may I obtain a copy of the form?

A copy (pdf) may be downloaded from the FinCEN website at www.fincen.gov under the “Filing Information” tab. The form may be completed on a computer using the free Adobe Reader software.

What is this form?

To help the government fight financial crime, Federal regulation requires certain financial institutions to obtain, verify, and record information about the beneficial owners of legal entity customers. Legal entities can be abused to disguise involvement in terrorist financing, money laundering, tax evasion, corruption, fraud, and other financial crimes. Requiring the disclosure of key individuals who own or control a legal entity (i.e., the beneficial owners) helps law enforcement investigate and prosecute these crimes.

Who has to complete this form?

This form must be completed by any person opening a new account on behalf of a legal entity with any of the following U.S. financial institutions: (i) a bank or credit union; (ii) a broker or dealer in securities; (iii) a mutual fund; (iv) a futures commission merchant; and (v) an introducing broker in commodities.

For the purposes of this form, a legal entity includes a corporation, limited liability company, or other entity that is created by a filing of a public document with a Secretary of State or similar office, a general partnership, and any similar business entity formed in the United States or a foreign country. Legal entity does not include sole proprietorships, unincorporated associa-tions, or natural persons opening accounts on their own behalf.

What information doIhave to provide?

When you open a new account on behalf of a legal entity, the financial institution will ask for information about the legal entity’s beneficial owner(s), including their name, address, date of birth and social security number (or passport number or other similar information, in the case of Non-U.S. persons). The financial institution may also ask to see a copy of a driver’s license or other identifying document for each beneficial owner listed on this form.

Beneficial owners are: (1) Each individual, if any, who owns, directly or indirectly, 25 percent or more of the equity interests of

the legal entity customer (e.g., each natural person that owns 25 percent or more of the shares of a corporation; and

(2)An individual with significant responsibility for managing the legal entity customer (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer).

The number of individuals that satisfy this definition of “beneficial owner” may vary. Under section (1), depending on the factual circumstances, up to four individuals (but as few as zero) may need to be identified. Regardless of the number of individuals identified under section (1), you must provide the identifying information of one individual under section (2). It is possible that in some circumstances the same individual might be identified under both sections (e.g., the President of Acme, Inc. who also holds a 30% equity interest). Thus, a completed form will contain the identifying information of at least one individual (under section (2)), and up to five individuals (i.e., one individual under section (2) and four 25 percent equity holders under section (1))

a legal entity may have multiple “beneficial owners,” this form requires you to list only those that own 25% or more (up to five) under each of the two prongs of the definition above. If appropriate, the same individuals may be listed under both prongs.

Rev. 6.6 Aug. 2017 23

CERTIFICATION OF BENEFICIAL OWNER(S) The information contained in this Certification is sought pursuant to Section 1020.230

of Title 31 of the United States Code of Federal Regulations (31 CFR 1020.230). All persons opening an account on behalf of a legal entity must provide the following information:

1. Last Name and title of Natural Person Opening Account 2. First Name 3. Middle Initial

4. Name and type of Legal Entity for Which the Account is Being Opened

4a. Legal Entity Address 4b. City 4c. State 4d. ZIP/Postal Code

SECTION I (To add additional individuals, see page 3)

Please provide the following information for an individual(s), if any, who, directly or indirectly, through any contract arrangement, understanding, relationship, or otherwise owns 25% or more of the equity interests of the legal entity listed above. Check here if no individual meets this definition and complete Section II.

5. Last Name 6. First Name 7. M.I. 8. Date of birth

(MM/DD/YYYY)

9. Address 10. City 11. State 12. ZIP/Postal Code

13. Country 14. SSN (U.S. Persons) 15. For Non-U.S. persons (SSN, Passport Number or other similar identification number)

15a. Country of issuance: Note: In lieu of a passport number, Non-U.S. Persons may also provide a Social Security Number, an alien identification card number, or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

SECTION II Please provide the following information for an individual with significant responsibility for managing or directing the entity, including, an executive officer or senior manager (e.g., Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, Treasurer); or Any other individual who regularly performs similar functions.

16. Last Name 17. First Name 18. M.I. 19. Date of birth

(MM/DD/YYYY)




I, __________________________ (name of person opening account), hereby certify, to the best of my knowledge, that the information provided above is complete and correct.

Signature: Date: (MM/DD/YYYY)

Legal Entity Identifier (Optional)

Rev. 6.7 Sept., 2017 24

Additional Section 1 - Second Beneficial Owner (If required)

Please provide the following information for an individual(s), if any, who, directly or indirectly, through any contract arrangement, understanding, relationship, or otherwise owns 25% or more of the equity interests of the legal entity listed above. 5. Last Name 6. First Name 7. M.I. 8. Date of birth

(MM/DD/YYYY)




Additional Section 1 - Third Beneficial Owner (If required) Please provide the following information for an individual(s), if any, who, directly or indirectly, through any contract arrangement, understanding, relationship, or otherwise owns 25% or more of the equity interests of the legal entity listed above. 5. Last Name 6. First Name 7. M.I. 8. Date of birth

(MM/DD/YYYY)


13. Country 14. SSN (U.S. Persons) 15. For Non-U.S.persons (SSN, Passport Number or other similar identification number)

15a. Country of issuance:

Additional Section 1 - Fourth Beneficial Owner (If required)

Please provide the following information for an individual(s), if any, who, directly or indirectly, through any contract arrangement, understanding, relationship, or otherwise owns 25% or more of the equity interests of the legal entity listed above. 5. Last Name 6. First Name 7. M.I. 8. Date of birth

(MM/DD/YYYY)



15a. Country of issuance: Note: In lieu of a passport number, Non-U.S. Persons may also provide a Social Security Number, an alien identification card number, or number

and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

Paperwork Reduction Act Notice

Public recordkeeping burden for this collection of information is estimated to average 30 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB control number. The OMB control number for this information collection is 1506-0070. You may submit comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, by calling the FinCEN Resource Center at 800-767-2825 or by email at [email protected]. Alternatively, you may mail us comments at Policy Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183. Please include 1506–0070 in the body of the text.

Rev. 6.7 Sept., 2017 25

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ATTACHMENT 2

EXHIBIT E

Optional List of Information Requested By Lenders

The SBA loans under Section 1102 of the CARES Act (sometimes referred to as "7(a) Loans") which are eligible for forgiveneare available to employers with less than 500 employees. Such loans will be handled through the client's lender (bank) anguaranteed 100% by the SBA. These are non-recourse loans.

Banks will need the following financial information in order to process the SBA loan application:

Check Here

Copies of payroll tax reports file with the IRS (including Forms 941, 940, state income and unemployment tax filing reports) for the entire year of 2019 and first quarter of 2020 (if available) should be presented. Copies of payroll reports for each pay period for the preceding 12 months. Such reports should includegross wages including PTO (which might include vacation, sick, and other PTO). This includes payroll reports through the pay period preceding the origination of the SBA loan.Documentation reflecting the health insurance premiums paid by the company under a group health planincluding owners of the company for the immediately preceding 12 months prior to the date of the SBA loan origination. Copies of the monthly invoices should suffice. (if you want to include these in the loan)Documentation of all retirement plan funding by the employer for the immediately preceding 12 monthsCopies of workpapers, schedules and remittances to the retirement plan administrator should be sufficie

Copies of payroll tax reports file with the IRS (including Forms 941, 940, state income and unemployment tax filing reports) for the 8 week period following the original of the loan. Copies of payroll reports for each pay period for the 8 week period following the origination of the loan. Gross wages including PTO (which might include vacation, sick, and other PTO) should be reflected. Documentation reflecting the health insurance premiums paid by the company under a group health planincluding owners of the company for the 8 week period following the origination of the loan should be provided. Copies of the monthly invoices should suffice. Documentation of all retirement plan funding by the employer for the 8 weeks following the origination o loan should be sufficient. Copies of workpapers, schedules and remittances to the retirement planadministrator should be available. Copies of all lease agreements for real estate and tangible personal property should be presented along wproof of payment during the 8 week period following the loan origination date. Copies of all statement of interest paid on debt obligations incurred prior to February 15, 2020 indicatingpayment amounts and proof of payment for the 8 week period following the loan origination date.Copies of cancelled checks, statements or other evidence of utilities paid during the "covered period" for 8 week period following the loan origination date.

Each lender may require more or less information. In addition, each borrower will need to make a certification that thedocumentation is true and correct, the amount for which forgiveness is being requested was used to make payments toretain employees and to make interest payments on covered mortgage obligations, covered rent obligations and coveredutility payments. In addition, the SBA may request further information. There will be NO forgiveness if the documentatiois not presented. The SBA will render a decision within 60 days after receipt of an application for forgiveness. The amount any loan forgiveness under this program is NOT taxable income.

FINANCIAL DATA NEEDED - 7(a) SBA LOAN AND FORGIVENESS UNDER THE CARES ACTChecklist of Documentation Required

This information will be needed to present to the bank to apply for the loan:

1) SBA Application completely filled out and executed

An Excel file of this document is included in Templates

7) 2019 Balance Sheet and Income Statement

2)

3)

4)

5)

6) Borrower Certification and Attestation Form

8) Most Current Filed Federal Tax Return

9) Articles of Organization, By-Laws or operating agreement (whichever applies)

10) Certificate of Beneficial Ownership

This information will be needed to present to the bank or SBA for Loan Forgiveness:

1)

2)

3)

4)

IMPORTANT NOTES:

5)

6)

7)

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ATTACHMENT 2

EXHIBIT F

Base Period Calculation Used in Initial Loan Application [EXCEL FILE IS INCLUDED IN EXCEL TEMPLATES]

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ATTACHMENT 3

[TO BE COMPLETED BY THE BORROWER FOR FORGIVENESS OF LOAN]

____________________ [Insert Company Name] (the “Company”) CERTIFICATE

FOR CARES ACT LOAN FORGIVENESS (Act Section 1106)

NOTE: Rules issued as of April 3, 2020, provide that SBA will issue additional rules for

CARES Act loan forgiveness. This certificate or similar certificates should be modified to reflect loan forgiveness rules issued after April 3, 2020.

The undersigned, being duly sworn, deposes and certifies that this Certificate is submitted and delivered to ______________________________ (“Lender”) in connection with the Company’s application for forgiveness of a certain loan, or portions thereof, extended by Lender to the Company in the amount of $ ______________________________ on or about ___________, 2020 (the “Loan”) under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), and that:

1. The average number of the Company’s fulltime equivalent employees per month for the period _________, 2020----____________, 2020 (8 week period beginning on the date of the origination of a covered loan) (the “Covered Period”) are shown at Exhibit A, attached hereto and incorporated herein.

2. The average number of the Company’s fulltime equivalent employees per month for EITHER i) February 15, 2019—June 30, 2019, ii) January 1, 2019 – December 31, 2019, OR iii) January 1, 2020-February 29, 2020 (whichever period selected being referred to as

the “Base Period”).. 3. The payroll tax filings reported to the Internal Revenue Service for the Covered Period and

Base Period are shown at Exhibit A, attached hereto and incorporated herein. 4. The State income, payroll and unemployment insurance filings submitted for the Covered

Period and Base Period are shown at Exhibit B, attached hereto and incorporated herein. 5. Documentation verifying payments on covered mortgage interest obligations, payments on

covered lease obligations and covered utility payments for the Covered Period are shown at Exhibit C, attached hereto and incorporated herein.

6. The documentation attached hereto and incorporated herein is true and correct in all material respects, and the amount of the Loan for which forgiveness is requested was used to retain employees, make interest payments on covered mortgage obligations, make payments on a covered rent obligation, or make covered utility payments.

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Dated this ___ day of ______, 2020 Signature Print name and title

STATE OF ______________ ) ) ss. COUNTY OF __________ ) SUBSCRIBED AND SWORN to before me, a Notary Public, this _____ day of _____________, 2020. ___________________________________ Notary Public My Commission Expires: ____________________

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ATTACHMENT 3

EXHIBIT A


Documentation for Payroll Costs

Determination for Covered Period

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ATTACHMENT 3

EXHIBIT B


The State and Local Payroll Taxes, Workers’ Comp and Unemployment Insurance Filings for the Covered Period

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ATTACHMENT 3

EXHIBIT C


Documentation Verifying Payments on Covered Overhead Payments for the Covered Period

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ATTACHMENT 4

Affiliation Rules Applicable to U.S. Small Business Administration Paycheck Protection Program

33

34

35

Paycheck Protection Program Lending Facility Term Sheet

Effective Date of Term Sheet: April 9, 2020.1

Facility: The Paycheck Protection Program Lending Facility (“Facility”), authorized under section 13(3) of the Federal Reserve Act, is intended to facilitate lending by eligible borrowers to small businesses under the Paycheck Protection Program (“PPP Loans”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Under the Facility, the Federal Reserve Banks (“Reserve Banks”) will lend to eligible borrowers on a non-recourse basis, taking PPP Loans as collateral.

Eligible Borrowers: All depository institutions that originate PPP Loans are eligible to borrow under the Facility. The Board is working to expand eligibility to other lenders that originate PPP Loans in the near future.

Lending Reserve Bank: Eligible borrowers participate in the Facility through the Reserve Bank in whose District the eligible borrower is located. For depository institutions, see Regulation D, 12 CFR 204.3(g)(1)–(2), for determining location.

Eligible Collateral: Only PPP Loans guaranteed by the Small Business Administration (“SBA”) are eligible to serve as collateral for the Facility.

Maturity and Acceleration of Maturity: The maturity date of an extension of credit under the Facility will equal the maturity date of the PPP Loan pledged to secure the extension of credit. The maturity date of the Facility’s extension of credit will be accelerated if the underlying PPP Loan goes into default and the eligible borrower sells the PPP Loan to the SBA to realize on the SBA guarantee. The maturity date of the Facility’s extension of credit also will be accelerated to the extent of any loan forgiveness reimbursement received by the eligible borrower from the SBA.

Rate: Extensions of credit under the Facility will be made at a rate of 35 basis points.

Fees: There are no fees associated with the Facility.

Collateral Valuation: PPP Loans pledged as collateral to secure extensions of credit under the Facility will be valued at the principal amount of the PPP Loan.

Principal Amount: The principal amount of an extension of credit under the Facility will be equal to the principal amount of the PPP Loan pledged as collateral to secure the extension of credit.

Non-Recourse: Extensions of credit under the Facility are made without recourse to the borrower.

Regulatory Capital Treatment: Under section 1102 of the CARES Act, a PPP Loan will be assigned a risk weight of zero percent under the risk-based capital rules of the federal banking agencies. On April 9, 2020, the Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation issued an interim final rule to allow banking organizations to neutralize the effect of PPP Loans financed under the Facility on leverage capital ratios.

Facility Termination Date: No new extensions of credit will be made under the Facility after September 30, 2020, unless the Board and the Department of the Treasury determine to extend the Facility.

1 The Board of Governors of the Federal Reserve System (“Board”) and Secretary of the Treasury may make adjustments to the terms and conditions described in this term sheet. Any changes will be announced on the Board’s website.

ATTACHMENT 5

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ATTACHMENT 6

Loan Forgiveness Calculator [EXCEL FILE IS INCLUDED IN EXCEL TEMPLATES]

Summary

Borrower XYZ ManufacturerPPP Loan Principal Amount 86,550.00$ Loan Origination Date 4/20/20208 week Payroll Period Ends: 7/4/20202 Year Loan Termination Date 4/20/2022Rate on Unforgivable Portion 1%

PPP Loan Amount 86,550.00$ 86,550.00$ 21,637.50$

ReductionsStep 1: Reduction in FTENumerator: Avg. FTE per month for 8 week post-loan period 35 35

40

36 Percentage Not Forgivable* 2.78%Amount Not Forgivable* (2,404.17)$

Step 2: Reduction in WagesAmount Not Forgiveable (from Reductions in Wages Worksheet )* (15,269.23)$

Forgiveness70,577.50$ 15,972.50$

Total Request for Forgiveness 86,550.00$ Less Reductions (if any) (17,673.40)$

Total Forgivable 68,876.60$ Amount Unforgiven 17,673.40$ Interest on Unforgiven Debt 1%Annual Interest Owed 176.73$

*appl icant has unti l June 30, 2020 to restore ful l -time employment andsa lary levels for any changes made between February 15, 2020 and Apri l 26, 2020

Total Forgivable Payroll Claimed for 8 week Post-Loan PeriodTotal Forgivable Non-Payroll Claimed for 8 week Post-Loan Period

Max Potential Forgivable-Payroll (At Least 75% of total)Max Potential Forgivable-Non-Payroll (Max 25% of total)

Denominator - Option 1: the average number of FTE employees per month employed by the company during the period from February 15, 2019 through June 30, 2019 36 Denominator - Option 2: the average number of FTE employees per month employed by the company during the period from January 1, 2020 through February 29, 2020

37