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Paycheck Protection Program

 

This global crisis caused by the COVID-19 pandemic has severely impacted just about everything. Here we are seven months later and we continue to struggle with the many negative impacts on our community, our country and our families.  Our bank has worked tirelessly to provide information and comfort during these difficult times. Since the signing of the CARES ACT on March 27, 2020, our team at First National Bank of South Miami has taken great care to ensure that our clients have the most current and accurate information on the Paycheck Protection Program (PPP).

  

Latest PPP Update

 

It has been a few weeks since we have provided an update on the Paycheck Protection Program and the forgiveness process. The reason, quite simply, is because not much has moved in Washington. We are still waiting for action to authorize a potential blanket forgiveness, and we still await the possibility of PPP2. Regardless, I thought it beneficial to remind you of a few programmatic points and offer some thoughts for consideration.

 

When MUST I apply for forgiveness?

 

The good news is that you have up to 10 months from the END of your Covered Period to apply for forgiveness. For those who received a PPP loan prior to June 5th, you have the option to use an 8 week (56 day) or 24 week (168 day) Covered Period. If you received your PPP loan after June 5th then you must use the 24-week Covered Period. But, under NO circumstances can the Covered Period extend beyond December 31, 2020, even if you don’t get a full 24-week Covered Period.

 

Below are a few examples…

 

 

         

When SHOULD I apply for forgiveness? That depends and here is why:

 

If your PPP loan is less than $150,000. We continue to believe that there is a bi-partisan desire on the part of Congress and the President to authorize blanket forgiveness for these loans. Of course you will have to certify that the monies were appropriately used for allowable and forgivable expenses and you may be subject to a future audit; however, this would avoid the need for you to go through completing  the forgiveness application and submitting the documentation. Presumably, this would be a much simpler process.

The latest unofficial update is that they do not want to consider blanket forgiveness until after December 31,2020. This would be to ensure that businesses are using the monies appropriately.

Blanket forgiveness would save you quite a bit of time and since there is no real urgency to process the forgiveness application, you might consider simply waiting until January 2021 to see what happens in Congress.

 

If you have exhausted the PPP monies or plan on using the 8-week Covered Period. We are advising our clients to aggregate as much allowable and forgivable

PPP expenses as possible, even if it exceeds the PPP loan amount.

 

There are several reasons for this. First, as you know, the PPP process has been a dynamic one and the SBA has been continually altering the rules along the way. At this time, they have not indicated that there is a process by which a borrower can resubmit a PPP forgiveness application once one is submitted. While reasonableness dictates that a process should exist, the resubmittal process does not exist today and therefore we cannot assume one will. For this reason, submitting $150,000 in allowable and forgivable expenses for a $100,000 PPP loan can provide a meaningful cushion in the event the bank or the SBA identifies an itemized expense that may be deemed inappropriate, either because it was not incurred or paid within the Covered Period or simply because it was not properly supported with documentation. Therefore, for almost everyone, opting for the 24-week Covered Period vs. the 8-week Covered Period can generate greater allowable forgivable expenses.

 

If you have furloughed staff or reduced wages by more than 25%. Do not forget about the Safe Harbor provision which allows you until December 31, 2020 to rehire or bring back the wages of the affected employees without a penalty. What is important to note here is that bringing back these employees or bringing their salaries back must be done within a payroll cycle prior to December 31, 2020 and they are to be maintained.

 

If you have commercial credit with financial covenants that may be impacted by the PPP debt. Remember that the Paycheck Protection Program is indeed a loan. That means that on your financial statements you will show this debt and if your lender has placed financial covenants on your lines or term loans having this additional indebtedness may adversely affect your financial ratios and place you in technical non-compliance. Our recommendation is that you discuss this with your lender as soon as possible. They may encourage you to apply for forgiveness earlier or simply allow you a waiver of the financial covenant due to the extenuating circumstances.

 

My PPP Note says that payments begin 6 months from the Note Date and that is coming up soon. Don’t I have to start making payments?

 

No. We are in the process of sending our PPP borrowers an official notice that may require you to sign and return to modify the existing terms. Since the SBA has changed some of the rules from when the program was first rolled out, we now find that the earliest that we will require any payments will be either:

 

  1. Beginning 10 months following the end of your Covered Period -or-
  2. If 100% forgiveness is NOT approved, payments will begin once you have been notified. This would follow your submittal of the application, the bank’s decision on forgiveness and the SBA’s review.

 

I am ready NOW!

  

Terrific! So are we!  We recommend that you download the appropriate application below and complete it offline and gather all documentation you will need to support the application. Once you feel comfortable that you have completed the application properly you will then apply directly on-line.

The official PPP Forgiveness application is an electronic application, this is because the SBA process for forgiveness is a digital process. This ensures that all your information is accurately submitted, and the process is streamlined.

 

 


Download and fill out the forgiveness application 

 
As we have communicated, applying for PPP Forgiveness through FNBSM is through a secure Web Portal, the link of which is below. We have learned that many clients improve their Online application process by downloading the full application (as appropriate; Form 3508 or Form 3508EZ) together with the accompanying instructions. We have provided a link to the “paper” application below so that you may use it as your guide to completing the actual Online application.
 
 
PPP Application 3508EZ
 
PPP Loan Forgiveness Application
 
PPP Application 3508S (Simplified)
 
 
 
 
 

When you're ready to apply, click below 

 
 




Click to view previous PPP posted information 

 
 
 
 
 

Download one of our helpful PPP Guides

 
 
 
Forgiveness, Now or Later?
 
PPP Presentation Guide
 
Tracking Expenses
 
Loan Forgiveness
These are the presentation slides that were used in our webinar explanation on when to take forgiveness. 
 
Tracking your expenses and applying for forgiveness is the next steps in the PPP program, this guide will help.
 
Here's  helpful guide on how to track your expenses and maximize your forgiveness for the business.
 
Learn the answers to this question, what has happened since you received your PPP monies?
 
 
 
 

Pre-Recorded Webinars

 
Topic: PPP Forgiveness, now or later?
Date Recorded: Aug 25, 2020 
Meeting Recording: Click here to view Webinar
 
Topic: PPP Forgiveness, now or later?
Date Recorded: Aug 20, 2020 
Meeting Recording: Click here to view Webinar
 
Topic: PPP Loan Forgiveness Guidelines
Date Recorded: Jun 3, 2020 
Meeting Recording: Click here to view Webinar

 

Program in participation with the SBA.

1 While we continue to read and disseminate the latest guidance in order to keep our clients informed, we do not present ourselves as experts.  Clients are urged to discuss their specific situation with their professional advisors, such as accountants and attorneys.