Dear Valued PPP Client,
I hope you and your families are doing well during this time. As our society continues to navigate through the pandemic and also prepare to head into an election season, we want to provide you with an update on the Paycheck Protection Program (PPP) Loan Forgiveness process. While we believe Congress will ultimately act to ease forgiveness for PPP loans of $150,000 and less, we are disappointed to report that Congress has failed to act upon the pending legislation at this time.
Next week, you may hear that we have opened the PPP Loan Forgiveness Portal for loans over $150,000; however, due to the lack of action at this time by Congress, we are not accepting applications for loans $150,000 or less as we firmly believe this is not in your best interest.
Why is it not in your best interest to apply for forgiveness now?
- We believe Congress will ultimately act to ease the forgiveness process;
- Once acted upon, it is expected that a 1 – 2 page “certification” would need to be completed by you, requiring little-to-no additional documentation;
- This certification process would ensure the maximum forgiveness for your PPP loan and you can only apply for forgiveness one time;
- Processing your request prior to proposed easing legislation would require unnecessary and excessive documentation, including potential and unnecessary advisory services, and could ultimately reduce the forgiveness amount for your loan.
In Summary, requesting forgiveness now would add time and costs to you and potentially risk achieving the maximum forgiveness amount.
Time continues to be beneficial to you. Regarding timing, you will have until your loan maturity date to submit your forgiveness application. Principal and interest payments do not begin until 10 months after your “covered period” to apply for forgiveness. Below is from the SBA Interim Final Rule:
A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan—including before the end of the covered period—if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness. If the borrower applies for forgiveness before the end of the covered period and has reduced any employee's salaries or wages in excess of 25 percent, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period, as described in Part III.5. If the borrower does not apply for loan forgiveness within 10 months after the last day of the covered period, or if SBA determines that the loan is not eligible for forgiveness (in whole or in part), the PPP loan is no longer deferred and the borrower must begin paying principal and interest.
We will continue to provide you with updates and hope to relay the passing of legislation soon. Our goal remains to work with you to obtain the maximum forgiveness for your PPP loan while making the process as seamless as possible. We have greatly appreciated the opportunity to work with you during this time – many of you for the first time – and we look forward to working with you more as we emerge from the pandemic stronger and together.
As always, please feel free to contact your loan officer or myself directly with any questions or to discuss how we can better assist your banking needs.
Sincerely,
