We at People’s Bank are pleased to have funded your SBA Paycheck Protection Loan. Now the question is, how should your organization be utilizing these loan proceeds? While SBA has not released their final guidance, we recommend the following:

1. Create a plan to properly utilize the loan proceeds for eligible expenses.  Eligible expenses include the following items:
   1. Payroll costs including cash compensation, health benefits, and retirement benefits, etc.
   2. Interest on mortgage on property owned before February 15, 2020.
   3. Rent for a lease in force before February 15, 2020.
   4. Certain utility costs for which service began before February 15, 2020.
2. Be mindful that the eight-week period for determining what portion of the PPP loan may be forgiven, the Covered Period, starts on the date the loan was disbursed. This may require you to run an early payroll at the end of the 8 weeks to get your full payroll costs in.
3. Deploy the plan you crafted related to the payment of eligible expenses during this Covered Period.
4. Retain all documentation on the eligible costs incurred during the Covered Period. 

Dear PPP Loan Customer,

Last night the Small Business Administration and Treasury Department released revised guidance to reflect those changes that came into effect as a result of the Paycheck Protection Program Flexibility Act. PPP IFR Revisions to First Interim Final Rule.

This updated guidance codifies several changes to the PPP program. Specifically, it:

•  Reminds us the last day we can obtain an SBA loan number for a PPP loan is June 30, 2020.
• Confirms that borrowers using less than 60% of their PPP loan amount for payroll costs during the forgiveness covered period will still be eligible for partial loan forgiveness.
• Provides a five-year maturity for loans made on or after June 5, 2020 and provides an option for loans made prior to that date to extend maturity from two years to five years at the mutual agreement of the borrower and lender.
• Extends the loan forgiveness period from eight weeks to 24 weeks.

SBA signaled that it will issue additional guidance on loan forgiveness and loan review procedures. They did not indicate when that would be coming but we commit to letting you know just as soon as we get information. 

These are very positive changes. Having more flexible program requirements will make it easier for you to maximize your loan forgiveness. Please continue to watch for additional email communication as we learn more. 

Your People’s Bank Team

Dear PPP Loan Customer,

Today, President Trump signed the “Paycheck Protection Program Flexibility Act” into law. 

What does this mean for you?

People’s Bank is one step closer to being able to introduce our Forgiveness Application process.  More importantly, the passage of this Act means more flexibility for you, our borrowers.  The ease in requirements are designed to make it simpler for you to reach full or almost full forgiveness.

• The minimum amount a business must devote to maintaining payroll is reduced from 75% to 60%;
• The 8-week covered payroll period is now extended up to 24 weeks;
• Borrowers will have until December 31, 2020 to restore workforce levels and wages to pre-pandemic levels; 
• The repayment of any unforgiven amount can now be extended up to a term of 4 ½ years if mutually agreed upon by borrower and lender; and
• Payroll tax deferment

Now that the bill has been signed into law, SBA and the US Treasury will publish the new Forgiveness Application form and guidance. In the meantime, our People’s Bank Team will be developing tools to assist in the completion of the Forgiveness Application.    

Please keep watching our website for updates.

Your People’s Bank Team

Dear PPP Loan Customer,

We are not yet accepting PPP loan Forgiveness applications.

People’s Bank anticipates significant changes to the PPP loan program and forgiveness application document in the coming weeks.

A new bill called the “Paycheck Protection Program Flexibility Act” has been passed by the House of Representatives and will soon go to the US Senate. This bill, if approved, will amend the current Cares Act to allow for program flexibility relief. Some of the proposed changes will have a significant impact on your forgiveness application. The changes include:

• Extension of the covered period from 8 weeks to 24 weeks;
• Push out the deadline to rehire workers from June 30^th to December 31^st;
• Increase in Non-Payroll Expense Limitation from 25% to 40% and still be eligible for forgiveness;
• Extension of loan maturity for the non-forgiven portion of the loan; and
• Potential payroll tax deferment.

The proposed bill can be found here Paycheck Protection Program Flexibility Act.

With the above changes expected to be made to the PPP loan program in the next couple of weeks, People’s Bank staff will continue to keep their finger on the pulse of all things related to the process of applying for forgiveness.

For now, please continue to watch for email updates each week. 

 

Regards,

Julia B. Beattie, Chief Lending Officer

Dear PPP Loan Funds Recipient,

On Friday night, the Small Business Administration released the much-anticipated interim final rule describing the loan forgiveness process, as well as borrower’s responsibilities for the Paycheck Protection Program.

This interim final rule is now available on our People’s Bank website along with other important information.  The document itself can be found here “PPP IFR Loan Forgiveness Guidance.”

Please review this guidance carefully.  This detailed documentation provides necessary information on how to complete and document your PPP Loan Forgiveness application.  We recommend you also pay close attention to examples given, as they look to be very helpful.

People’s Bank awaits additional and crucial procedures from SBA on how to submit your formal forgiveness request.  For now, we too, are carefully reviewing this guidance and developing a plan to assure a smooth and successful process. 

Next up, we will answer the question “How do I submit my PPP Loan Forgiveness application to People’s Bank?”.

Please continue to watch our website for updates and for additional tools to help in your loan forgiveness process.

 

Regards,

Julia Beattie, Chief Lending Officer

Dear PPP Loan Funds Recipient,

This past Friday, SBA released the much anticipated PPP Loan Forgiveness application. The application, along with supporting schedules, worksheets and instructions, is here (click here) PPP Forgiveness Application - SBA Form 3508 for your reference. Please do not submit this form or any documentation at this time.

The bank is in process of studying this information while we patiently wait for formal SBA Lender Guidance to ensure accurate implementation of forgiveness. We do not know yet when the formal lender guidance will be issued, but we hope it will be relatively soon. In the meantime, the Bank is developing a team of individuals who will specialize in the forgiveness of PPP loans. This will allow us to develop a center of expertise which in turn will help ensure consistent, efficient and timely processing of requests.

We’d like to remind you of a few aspects of the program and one new development specific to forgiveness that we believe will potentially diminish some concerns you may have:

• We are not yet aware of a specific time frame within which you must apply for forgiveness. Furthermore, all payments on PPP loans are deferred for 6 months from date of disbursement and so you will not feel any stress on your cash flow in making debt service payments for 6 months. This provides you some time to work with your bookkeeper and/or accountant to prepare the paperwork needed for forgiveness without incurring debt service strain on your cash flow.
• We learned with the forgiveness application that there is some leniency provided in the covered period to accommodate timing of payroll through what is referred to as an ‘Alternate Payroll Covered Period’ (described on p. 1 of the application).

It will be well-worth your investment of time to review the PPP Forgiveness Application - SBA Form 3508 (click here) in detail. Please be patient with us as we get our arms around this recently released information and as we wait for and, upon receipt, digest the formal lender guidance that will provide us with the required information needed to process the applications.

 We will post PPP loan forgiveness information to our website as it becomes available, but at a minimum through weekly updates. Please use this as a resource.

 

Regards,

Julia Beattie, Chief Lending Officer

 

 

 

Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

 

Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—are eligible. Businesses with more than 500 employees are eligible in certain industries.

 

 

Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap.

 

If your business has been impacted by COVID-19 and would like to start collecting the appropriate documents, use the application link here. You can then contact your People's Bank representative and they will give you additional information and the next steps as the SBA Paycheck Protection Program loan.  

• 4/14/2020 - Episode One
• 4/23/2020 - Episode Two
• 4/30/2020 - Episode Three
• 5/07/2020 - Episode Four