On December 21st, the U.S. Congress approved a new COVID-19 Relief Bill that includes reauthorization of the Paycheck Protection Program (PPP). The bill contains several amendments to the PPP and forgiveness process for existing PPP loans.
These changes, which will be implemented by the Small Business Administration (SBA), include new rules, a new application for the second round of PPP funds and a new forgiveness form for existing PPP loans of $150,000 or less.
While we can’t guarantee the exact date of when the changes will take place, we can safely predict they will happen sometime in January of 2021.
PPP related changes include:
- $284 billion in new funds for the Paycheck Protection Program, which is re-opening after closing in August. Of the $284 billion, $15 billion will be set aside specifically for first time and second time PPP borrowers and issued by community financial institutions.
- Businesses, some nonprofits, self-employed workers and independent contractors are among those who are eligible to apply for PPP loans.
- Existing PPP borrowers may apply for a second loan, provided they have 300 or fewer employees and can demonstrate a 25% reduction in gross receipts during a quarter in 2020 compared with the same quarter in 2019.
- First time PPP borrowers will be subject to the program’s original eligibility rules.
- A simplified forgiveness process for PPP loans of $150,000 or less. Borrowers will need to complete a one-page certification attesting compliance with program requirements, along with other documentation.
- Repeal of the requirement that PPP borrowers deduct the amount of any Economic Injury Disaster Loan (EIDL) advance from their forgiveness amount.
What does this mean for you?
- If you currently have a PPP loan of $150,000 or less, and you have not yet applied for forgiveness, you may want to hold off until the new forgiveness application is available.
- If you have applied for forgiveness, and we have not yet underwritten your file, we will be in touch to see if you would rather submit the one page certification, or if we should review your documentation, which may require further additional records from you.
We will contact you.
We will let you know as soon as the SBA releases eligibility rules for the new round of PPP loans as well as the new application form.
The SBA is also expected to release additional guidance on how they will handle the EIDL advance funds that were previously withheld from forgiveness payments. We will let you know as soon as we have more information.
Please be assured that we will always communicate directly with you. Feel free to contact us if you have any questions about your this process or your relationship with Merrimack County Savings Bank.
For PPP related questions please contact Terrie McQuillen at 603.409.0476, firstname.lastname@example.org, or Bob Sharpe at 603.879.8524, email@example.com.
As your local bank, we are proud to help you with your PPP Loan, and we will continue to keep you updated. On behalf of all of us here at Merrimack County Savings Bank, we wish you, your staff and your family a safe and happy holiday season.
The Merrimack Commercial Lending Team