8 Steps to PPP Loan Forgiveness

The Paycheck Protection Program (PPP), which establishes forgivable loans administered by the Small Business Administration (SBA), is a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Then, at the end of 2020, the CARES Act was improved by the passage of the Economic Aid to the Hard-Hit Small Businesses, Nonprofits, and Venues Act (new act). In addition to providing more funding to the PPP, the new act also greatly streamlined the forgiveness process for loans of $150,000 or less. Section 1106 of the CARES Act lays out the statutory rules relating to PPP loan forgiveness if your loan is greater than $150,000. In general, whether all or a portion of a PPP loan can be forgiven depends on the amounts for specified expenditures by the borrower during your chosen Covered Period. For these larger loans, you will need to complete up to eight distinct steps in order to secure the SBA’s forgiveness of your PPP loan. 1. Determine the correct form of application to use: 3508 standard form or 3508EZ. 2. Select the best Covered Period for forgivable expenses for your unique business situation. 3. Track forgivable costs during the Covered Period, which include: • Payroll and owner-compensation • Benefit costs, such as health care, company-paid life insurance and retirement contributions as well as local payroll taxes paid by the company • Certain facilities costs 4. Provide and retain required source documents for all

Covered Period costs submitted for forgiveness. 5. Consider, then apply, any reductions in forgiveness that can arise from reductions in FTE and/or wage levels. 6. Consider, then apply, either of the safe harbors related to step 5 above. 7. Complete the borrower certifications required by the SBA. 8. Submit your application to Heritage Bank. We will review your forgiveness application and forward to the

SBA for funding.

AN ESTIMATED

100,000+JOBS

WERE IMPACTED BY THESE LOANS

ROUND 1 4, 6 4 2 R O UND 2 1, 724 6,366 LOANS NEW CUSTOMERS $1.19 BILLION ROUND 1 $897. 4 M R OUND 2 $297.1 M

AVERAGE LOAN SIZE ROUND 1: $193,000 ROUND 2: $172,000 {

APPLICATION FOR FORGIVENESS

To seek forgiveness, a PPP loan borrower completes and submits one of three SBA forgiveness forms: • Form 3508 PPP Loan Forgiveness

Application (standard application) • Form 3508EZ PPP Loan Forgiveness

Application (simplified application) • Form 3508S PPP Loan Forgiveness

Application (for loans of $150,000 or less) All three applications are in the process of being electronically updated by the SBA to reflect the new act and can be used as of March 5, 2021. Of particular note, the new version of Form 3508S is greatly streamlined as it eliminates the calculation of forgiveness and instead relies exclusively on each applicant’s certifications regarding eligibility for the program and use of funds. Steps 4-6 on the previous page don’t apply, as no calculations need be made or presented on Form 3508S. For PPP loans in excess of $150,000, a PPP loan borrower may complete and submit on Form 3508 or the updated Form 3508EZ. Both forgiveness applications for larger loans consist of: (i) borrower information, (ii) the Covered Period selected, (iii) a summary of forgivable costs, and (iv) borrower representations and certifications. Form 3508EZ requires fewer calculations than the 3508. Borrowers can use Form 3508EZ if they meet at least one of the following three requirements: 1.The borrower is self-employed, does not have any employees and did not include any employee salaries in its PPP loan application. 2.The borrower did not reduce: (a) the number of its employees or the average paid hours of employees between January 1, 2020, and the end of the applicable Covered

Period (or employee reduction safe harbors were met related to the inability to re-hire employees or hire similarly qualified employees), and (b) any employee’s salary or wages by more than 25% during the applicable covered period when compared to the period from

January 1, 2020, to March 31, 2020. 3.The borrower did not reduce any employee salary or hourly wages by more than 25% during the applicable Covered Period when compared to the period from

January 1, 2020, to March 31, 2020, and the borrower was unable to operate at the same level of business activity as before February 15, 2020, during the Covered

Period due to compliance with applicable COVID-19 government requirements or guidance issued by CDC, OSHA or the Secretary of

Health and Human Services.

Heritage Bank uses an electronic portal for all forgiveness applications. The forgiveness portal includes an integrated application process, so we will not be accepting paper versions of the forms, either delivered to our offices or uploaded into the portal. Until that time, you may review the application forms and their instructions as a tool to help you plan and organize your forgiveness effort. Contact your relationship manager or visit HeritageBankNW.com for information.

Swim in a Collapsed Volcano OREGON

Crater Lake was formed over 7,700 years ago when a violent eruption triggered the collapse of a tall volcano. Today, boasting an intense blue shade, it’s one of the deepest lakes in the U.S. You can also hike the surrounding forest that’s home to 15 species of conifers and a wide array of wildlife.

Discover Olympic National Park WASHINGTON

Spanning nearly a million acres, Olympic National Park has it all: forests, beaches and mountains. This park serves as an incredible national playground for both scientists and visitors. You can go boating, fishing, camping, backpacking, skiing and even hike through the Hoh Rainforest, one of the only protected temperate rain forests in the Northern Hemisphere.

Raft the Rogue River OREGON

The Rogue River flows 215 miles, from Crater Lake National Park all the way to the Pacific Ocean. Surrounded by forests, meadows, rock formations and steep canyons, the river is famous for its whitewater rafting, steelhead and salmon fishing, hiking trails and extraordinary wildlife viewing opportunities.

Kayak the San Juan Islands WASHINGTON

There are 172 named islands and reefs that make up the “San Juan Islands.” The four most popular islands are San Juan Island, Orcas Island, Lopez Island and Shaw Island. Among

Exploring the Pacific Northwest

The Pacific Northwest is known for its lush forests, scenic coastlines and towering mountains. Whether you’re new to the region, a lifelong resident or just visiting on vacation, there’s an abundance of outdoor activities for everyone. Here are some of our favorite spots to explore.

all the lodging, dining and tourism activities, one of the most popular is kayaking. You can paddle your own or sign up for a guided tour. If you’re lucky, you might even catch a glimpse of an orca whale. It’s the best place in the world to see them in the wild.

Explore Lava River Cave OREGON

Imagine walking one and half hours through a mile-long lava tube. At the Deschutes National Forest in Oregon, you can do just that. Lava River Cave formed from a volcanic eruption some 80,000 years ago and offers a self-guided tour where you first descend 55 stairs to a combination of flat boardwalk, uneven surfaces and stairways. Great for beginners, the cave has railings and concrete steps, and the visitor center has maps and lanterns for rent.

As a bank that’s “grown up” in the PNW, we’re lucky to live in a place surrounded by so many natural playgrounds. That’s also why we offer our customers a number of extras—like cell phone protection, roadside assistance and travel insurance—so you have peace of mind wherever your adventure takes you. Have you been to any of the places above? Share your story with #TravelWithHeritage!