September 3, 2020
Please continue to visit this page for updates.
To help you better understand and comply with the rules and requirements of your Paycheck Protection Program (PPP) loan, we are sharing information from the U.S. Treasury and other resources. Check back often for updates.
PPP Loan Forgiveness Application
We realize many of you are looking to start the forgiveness process for your company’s Paycheck Protection Program (PPP) loan. The media coverage regarding the SBA’s forgiveness process has been significant. Unfortunately, Congress still has not acted on numerous bipartisan proposals designed to make your forgiveness request and our decision-making and reporting process simpler. Despite this, we are ready to accept and review PPP loan forgiveness applications and documentation for completeness should you want to move forward at this time.
Simply visit the U.S. Treasury Department’s webpage to obtain the appropriate forgiveness application and related instructions.
Complete the appropriate application (SBA Form 3508 or SBA Form 3508EZ) per the instructions. Once completed, you may submit this information by contacting your SBA PPP loan officer. You are encouraged to do this only if you are sure of 100% forgiveness of your loan according to the instructions.
For many of you though, it may make sense to continue to wait to see what type of action Congress takes. The proposed bipartisan bills, if passed, may significantly reduce the complexity of, and documentation requirements for, forgiveness of smaller dollar PPP loans (specifically $150,000 and under but possibly as much as $2 million and under). Of course, if you decide to wait, we will notify you should Congress pass new forgiveness legislation that impacts you.
An Update on the PPP for Business Customers
During these difficult times, bankESB is proud to have assisted so many of our business customers with a loan through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).
As you know, this program was put in place by the SBA in a very short period of time. As a result, the SBA has continued to publish new and updated advisories to assist borrowers in understanding and complying with the rules of the program. To help answer our PPP loan customers’ questions, we will be updating this webpage with information from the SBA and other resources to help you understand the program’s rules and requirements.
Be sure to visit the U.S. Department of Treasury’s webpage dedicated to The Cares Act Assistance for Small Businesses, which provides regular updates from the SBA.
SBA PPP Loan Forgiveness Application Now Available
On May 15, the SBA released its Paycheck Protection Program Loan Forgiveness Application (SBA Form 3508) that borrowers must complete to receive full or partial forgiveness for loans issued under the Paycheck Protection Program. Please click on the link above to begin to familiarize yourself with the information that will be required for seeking forgiveness when your eight-week covered period ends.
The SBA plans to issue additional guidance regarding PPP loan forgiveness. These updates may result in changes to the loan forgiveness application, instructions, and process. Also, recent news accounts have indicated that the SBA and Congress are considering changes to the program to provide additional flexibility to borrowers. We will update you once we hear more from the SBA.
Updated SBA PPP Loan Frequently Asked Questions (FAQs)
On May 19, the SBA updated its Frequently Asked Questions that addresses borrower and lender questions about the PPP program. You may access the full version of the most recent FAQs by clicking on the link above. Please review this guidance and any future updates carefully.
Of particular interest, borrowers have had numerous questions regarding loan forgiveness rules as well as any safe harbor that exists if the borrower later determines that the loan was not “necessary to support ongoing operations” and wishes to repay it. These two issues are addressed below and are excerpts from the questions and answers contained in the FAQ document:
Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?
Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.
Question: FAQ # 31 reminded borrowers to review carefully the required certification on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?
Answer: SBA is extending the repayment date for this safe harbor to May 14, 2020. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor. SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.
- U.S. Department of Treasury CARES Act Assistance for Small Businesses
- Small Business Administration (SBA) COVID-19 Small Business Guidance and Loan Resources
- Mass.gov COVID-19 Resources and Guidance for Businesses
- CDC Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019
We’re Here to Help!
If you have questions about your PPP loan or any of the information above, please contact your Commercial Loan Officer.
This information is for informational purposes only and is not intended to provide tax, accounting, legal or financial advice with respect to the handling of your PPP loan.