SBA Paycheck Protection Program
August 5, 2020 Update
Late afternoon on June 3, the U.S. Senate approved Bill H.R. 7010 (H.R. 7010) which approved a few changes to the original CARES Act Bill:
- extended the 8-week “covered period” to 24 weeks; allowing more time to use the funds available
- Note: the earlier of 24 weeks after initial disbursement of funds, or December 31, 2020
- extended the maximum “covered period” to extend out from June 30, 2020 until December 31, 2020
- extended the deadline to allow for re-hiring certain eligible employees back to full employment by December 31, 2020 to qualify for loan forgiveness
- increased the allowable use of proceeds to 40% for non-payroll eligible expenses
- extension of deferral for first payment
- allows for flexibility on maturity date extensions for loans with a remaining balance after the application of forgiveness
As of August 5, there is yet another Bill in discussions in the House that outlines a wide array of changes to this program, so we ask for patience as we await this as well.
The SBA published two revised forgiveness applications (see below): an EZ-Application and Regular Application. The EZ-Application instructions provides a checklist to determine if your business is eligible to use this version, otherwise will require use of the Regular Application. Additionally below is a link to the FAQ’s on PPP Loan Forgiveness published August 4, 2020:
These versions both include instructions to begin reviewing to determine which version is appropriate for your business. We are finalizing these application versions into an eSign version that we will send out once the SBA Portal is open to allow us the ability to submit information directly to the SBA. The SBA Portal is tentatively slated to open on August 10, and once confirmed open we will begin accepting forgiveness applications. As done during the original application processing for SBA PPP loans we will require the use of our online DocuSign forgiveness application, but if you have already completed a handwritten/typed-in version feel free to send us a copy as it will help us to pre-fill as much of the information as we can into the electronic version we will send and requires an electronic signature.
We do have the ability for each borrower to access the loan details and upload documents securely. If you would like to obtain access, please contact email@example.com and we can assist with setting up access online. This is a secure method to share documents. If you request access to our portal and begin uploading documents, at that time we will assign a processor to begin reviewing. We have already received numerous requests for access to our secure portal along with document uploads, full use of the funds and supporting documentation. These requests will be given initial priority as we have them in a queue for eSign forgiveness applications, underwriting review and submission to the SBA.
Please also be aware the CARES Act outlined a time period of up to 60 days for the SBA to approve requests for forgiveness. If approved, the SBA has up to 90 days to issue repayment of any forgiveness amounts.
Northpoint Commercial Credit, LLC, has partnered with Vibrant Credit Union based in Moline, Illinois, to be one of the leading providers for the SBA Paycheck Protection Program. Vibrant Credit Union is federally insured by the NCUA and is able to provide commercial deposit and treasury management services to help your business function more efficiently.
|7(a) LOAN PROGRAM||STANDARD||PAYCHECK PROTECTION PROGRAM|
|DEFERMENT OF PAYMENTS||N/A||Minimum of 6 months (recently extended to 10 months)|
|USES||Acquire land; purchase existing building; convert, expand or renovate buildings; acquire and install fixed assets; acquire inventory; purchase supplies and raw materials; purchase a business, start a new business; leasehold improvements; term working capital, or refinance certain outstanding debts||Payroll support, including paid sick, medical or family leave, and costs related to the continuation of group health care benefits during those periods of leave; employee salaries, interest portion of mortgage obligations, rent, utilities, and any other debt obligations incurred before the covered period.|
|SBA GUARANTEE||85% for loans up to $150,000 and 75% for loans greater than $150,000||100%|
|COLLATERAL||Lenders are not required to take collateral for loans up to $25,000. For loans in excess of $350,000, the SBA requires that the lender collateralize the loan to the maximum extent possible up to the loan amount.||No collateral required|
|FORGIVENESS OF LOAN||N/A||The following costs may be eligible for forgiveness: (1) payroll costs, (2) any payment of interest on a covered mortgage obligation (which will not include any prepayment of or payment of principal on a covered mortgage obligation), (3) any payment on any covered rent obligation, (4) any covered utility payment.|
For the most up to date guidance and FAQ’s please visit the U.S. Treasury website at:
When will Northpoint/Vibrant Credit Union begin accepting applications for forgiveness of PPP loans?
- We are tentatively expecting to begin accepting forgiveness applications August 10; pending verification of the SBA portal. As noted above, we are also awaiting a House Bill that may make significant changes to the forgiveness process.
- We ask everyone for patience in the early part of the forgiveness process as there is still quite a bit of clarification and questions anticipated, and possible technical delays as we have previously seen. We anticipated being able to work through the forgiveness applications in phases based on the original funding of loans but with the delays caused by SBA/Treasury we are now faced with nearly every borrower who has reached the minimum 8-week threshold. Keep in mind, the timeline was extended intentionally for use of the funds but also to help lenders handle the volume of applications.
How should I prepare for the PPP Forgiveness Process?
- Review and determine which Forgiveness Application form is most appropriate based on the instructions.
- Request access to our secure upload portal via firstname.lastname@example.org.
- Begin uploading supporting documentation that matches your use of funds in accordance with PPP guidelines, rules and FAQ’s.
- Communicate with your assigned processor once you have uploaded documents which application form is most appropriate.
- Maintain supporting documentation and any additional documentation that may be beneficial as questions may arise from underwriting.
What documentation will I be required to submit along with the PPP Forgiveness Application?
- Please review the PPP Forgiveness Application Form Instructions which outlines both the required supporting documentation
- Please pay special attention to the section labeled “Documents that Each Borrower Must Maintain but is Not Required to Submit” – by accepting the terms of the SBA PPP loans, each Borrower is subject to potential review/audit by the SBA, so you will be required to maintain all supporting documentation for a period of six years after the date the loan is forgiven or repaid in full.
What can I use allocated loan dollars for?
- Payroll costs
- Payments for the continuation of group health care benefits, which includes paid sick, medical and family leave and insurance premiums
- Employee salaries, commissions or similar compensations
- Interest payments on any business mortgage obligation on real or personal property that was incurred before February 15, 2020 (but not any prepayment or payment of principal)
- Payments on business rent obligations on real or personal property under a lease agreement in force before February 15, 2020
- Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020
- Eligible “Non-payroll costs” listed above cannot exceed 40% of the loan forgiveness amount
- Note: the forgiveness interim final rule outlines two options for the eligible 8-week “covered period” for payroll costs; the start date from the date of loan disbursement, or the “alternative payroll covered period”. Be sure to review these sections depending on how your payroll is paid.
- The 8-week “covered period” was recently changed to 24-weeks
Loan Forgiveness Process?
- Borrower submits completed Loan Forgiveness Application (SBA Form 3508EZ or 3508) along with required supporting documentation to Lender
- Documentation requirements:
- SBA Form 3508EZ or 3508
- Required supporting documentation as outlined in SBA Form 3508EZ/3508 to support payroll and non-payroll eligible expenses (see Instructions for required support documentation to provide)
- Additional information that is optional in SBA Form 3508EZ/3508 or requested by Lender
- Documentation requirements:
- Lender will review the Application and Supporting documentation and may request additional information
- Lender has 60 days from receipt of a completed application to issue a decision to the SBA for final decision
- If approved, the Lender will request payment from the SBA at the time of decision
- The SBA has 90 days to remit payment of forgiveness amount plus any accrued interest through the date of payment to the Lender
- Any remaining balance not forgiven must be repaid on or before the maturity date of the Note
What if my forgiveness request is denied or partially approved?
- Lenders will provide appropriate notification for any denials or partial approval of forgiveness requests
- The SBA provides 30 days to dispute these decisions
Would I be eligible for loan deferment on payments?
- Lenders are required to provide complete payment deferment relief of covered loans for a period of no less than 10 months following the date of disbursement of the loan
- However, interest will continue to accrue on PPP loans during the eligible deferment period
Are there any other conditions?
- During the “covered period” the SBA is waiving typical SBA fees
- During the “covered period” the requirement that a small business concern is unable to obtain credit elsewhere shall not apply to a “covered loan”, which is removing the typical requirement the SBA be the lender of last resort.
- During the “covered period” for a “covered loan”, no personal guarantee shall be required and no collateral shall be required
- There will be no prepayment penalty for any payment made on a “covered loan”.
- For any remaining balance after application of forgiveness, the term shall be a period of 2 years with a published rate of 1.00%.
- Note: this was changed from 2 years to 5 years recently for those commitments secured on/after June 5, 2020. Any commitments prior to June 5, will be at the discretion of the lender; focused only on those with continued business hardship.
How long should the borrower retain documentation for PPP loans?
- the Borrower must retain PPP documentation in its files for six years after the date the loan is forgiven or repaid in full, and must permit the SBA or designated oversight office to access such files upon request.
Can I apply for more than one PPP loan?
- Not at this time.
*You should consult your own tax, legal and accounting advisors before engaging in any transaction.
**This is only an estimate and is not an agreement or confirmation by Northpoint Commercial Credit, LLC.