History Of The Paycheck Protection Program
The PPP was created in March 2020 by the CARES act and originally provisioned $349 billion in funding for business relief. This funding lasted only two weeks, expiring on April 16, 2020.
This program was highly popular and additional funding for the PPP was in high demand. As a result, H.R. 266 provisioned $310 billion in funding, was signed into law on April 24, 2020, and expired on August 8 of that year.
Round 3, which provisioned $284 billion in additional funding for the PPP, was signed into law on Dec 27 and is set to expire on March 31, 2021.
In Case Of An Audit Keep Copies Of Your Backup Documentation
While some of the loan forgiveness forms may not require backup documentation to show how you calculated forgiveness amounts, you will want to ensure that you have gathered this information and that you have it readily available. The SBA has the right to conduct loan reviews and/or fully audit your loan. Audits can be conducted up to six years after your loan is forgiven.
NOTE: If an audit reveals that there was any malfeasance on the part of the applicant, it may result in the requirement to immediately repay the loan, pay civil penalties and face possible prosecution under the False Claims Act.
Why An Extension Was Needed
The extension garnered support from banking and other groups involved in the PPP loan process. Proponents said the 60-day extension would provide necessary additional time for both applicants and lenders to review and submit the applications.
We can see where stuck in the process. Our point has been that theres enough money in this program, theres just not enough time, says Toby Scammell, founder and CEO of Womply, a technology company that has partnered with lenders to help small businesses with the PPP application process.
Pushing back the PPP application deadline is also helpful to those businesses that are still in the process of applying, giving them a better chance of securing a loan.
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How Do I Apply For Forgiveness
- If your loan is under $50,000, please fill out the Form 3508S
- If your loan is over $50,000, please check your eligibility to use Form 3508EZ, if not, use Form 3508
Contact your lender at ANB, or call our main number at or . We will then generate a link for you to begin your forgiveness application with supporting documentation. **
How Long Does The Borrower Have To Request An Sba Loan Review
The borrower will have 30 days to request the loan review, through PNC, from the date they receive notification from PNC. PNC has an additional 5 days to submit the request to the SBA via the SBA Portal. The operational process on how the borrower will submit their loan review request is still being finalized by the SBA. Once we, PNC, have received guidance on how the SBA will accept partial approval loan review requests it will be added to PNC.COM
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Paycheck Protection Program Receives Last
On July 4, President Donald Trump signed an extension to the Paycheck Protection Program that was previously approved by Congress. With this extension, the SBA loan program is available through Aug. 8, allowing the agency and its lending partners to disburse the remaining $130 billion in funds approved for the program, said Chris Hurn, founder and CEO of SBA lender Fountainhead.
Originally, the program was set to close at midnight on July 1. However, the extension means business owners with outstanding applications and new applicants still have time to try and secure a forgivable loan through the program.
In addition to the extension, legislators are debating additional changes that could streamline the loan forgiveness certification process for borrowers with a loan of $150,000 or less, and establish an additional loan program which would be called the Prioritized Paycheck Protection Program, or P4 modeled after the PPP, Hurn said.
However, neither of those measures have been enacted. According to Hurn, those bills could be considered when the Senate returns from recess July 20.
Ppp Second Round Eligibility
The second round of PPP loans narrowed the amount of businesses eligible for relief. Eligibility requirements include:
- Businesses who got the first PPP loan and used the full amount within the scope of the law
- Businesses with less than 300 employees
- Businesses with at least a 25% reduction in gross receipts between 2019 and 2020
Like the first round of loans, all second PPP loans had the same terms regardless of who the lender and borrower were.
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How To Apply For Loan Forgiveness
Small business owners can apply for PPP loan forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used.
These borrowers can register for forgiveness any time up to the maturity date of the loan.
However, if a borrower does not apply for the loan forgiveness within 10 months after the last day of the covered period, then the PPP loan payment cannot be deferred, and the borrowers will have to start making loan payments to their PPP lender.
If I Submit A Loan Review Request Will The Sba Review My Request For Review
Submitting a request for a loan review to the SBA does not guaranty the SBA will review the decision. If the SBA does choose to review the request, PNC will be notified. A loan review by the SBA could result in a borrower being eligible for less or more than or the same amount as what PNC determined was eligible.
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Covered Period For Third
Round one and Round two PPP loans stipulated that the period during which a business had to use its loan proceeds was an eight-week period beginning on the date the business received its loan proceeds. That was later expanded to 24 weeks.
Round three allowed a business to choose any length period between eight weeks and 24 weeks, giving it more control over how to handle any needed reductions in a workforce, once PPP funds were depleted.
Improvements Led To Slowdowns
Since its inception in March 2020, more than 7.8 million PPP loans have been approved totaling nearly $704 billion in aid. As of March 17, there is about $103 billion left in unclaimed PPP funds. Although the program was initially criticized for allowing bigger banks and bigger companies to grab most of the initial funds, the program has allotted more money and continued to adapt the rules and guidance in an effort to make funds more available to both the smallest businesses and underrepresented groups.
Were thrilled that legislators were able to come to an agreement on extending PPP. There are plenty of borrowers still queued up for PPP loans, and the majority are sole props and independent contractors, says Alex Cohen, CEO of Liberty SBF, a lender that has been participating in the PPP loan program. The extension also gives us more time to work out holds and error codes weve experienced due to the recent influx of applications.
President Biden announced on Feb. 22 that the SBA, which manages the PPP, would implement a revised formula to calculate maximum loan size for sole proprietors, independent contractors and self-employed individuals who filed Schedule C tax forms. Calculations for Schedule C filers after that date are based on gross income instead of net profit, a meaningful change for those whose tax forms show little net profit.
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What Is The Cares Act
The CARES Act is the historic $2 trillion stimulus package that was passed by Congress and signed by President Donald Trump in March. The spending package is intended to mitigate the worst economic impacts associated with the coronavirus pandemic. The measure includes:
- $500 billion in loans for distressed industries
- $350 billion in forgivable SBA loans under the Paycheck Protection Program
- $260 billion expansion of unemployment insurance benefits
- $290 billion for direct payments to individuals making up to $99,000 per year
- $17 billion in relief for SBA loan programs
- $10 billion in emergency funding for small businesses
Heres a closer look at the Paycheck Protection Program, which comprises about $350 billion of the spending provided for under the CARES Act.
Ppp Loan Deadline Extended To May 31
The PPP Extension Act of 2021 was overwhelmingly approved by the Senate on March 25, 2021 only a few days before this round of the Paycheck Protection Program was originally scheduled to expire. An identical bill was passed by the House earlier in March. The Act which extends the PPP application deadline from March 31 to May 31, was signed into law by President Biden on March 30, 2021. In addition to extending the PPP application filing window by 60 days, the Extension Act provides an extra 30 days for the SBA to finish processing applications received by the May 31, 2021 deadline.
The Extension Act also provides additional time for the SBA to address significant loan application process challenges and provides more opportunities for loans to be approved. Under prior versions of the PPP, the deadline to apply for a loan was also the last day to receive a loan, meaning that applications submitted in the final few days of the program had little to no chance of being approved before the funding was shut down.
However, the Act does not provide any additional funding for the current round of the PPP, which was allocated $290 billion by the Consolidated Appropriations Act of 2021, enacted in December 2020. Since the second round of the program opened on January 11, 2021, nearly $196 billion in PPP loans have been approved . At the current lending rate, the original PPP funds are only expect to last through mid-April.
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What Is The Ppp Extension Act Of 2021
The PPP Extension Act of 2021 is a new piece of legislation passed by Congress and signed into law by President Biden that extended the deadline for PPP loan applications from March 31, 2021, to May 31, 2021. The program now officially runs through June 30, 2021.
Likewise, the bill notes that for the final 30 days of the program , the SBA is only permitted to process PPP loan applications submitted prior to June 1. It wont accept any new loan applications during this period. .
I Have Not Applied For Forgiveness Or Made Any Payments How Can I Estimate The Amount Of My First Payment
You can expect your first payment to include all interest that has accrued on your unforgiven principal since youve received your funds plus a portion of the unforgiven principal.
For example, Company A received a PPP loan with a 2 year term of $10,000 in May 2020. The term began when Company A received funding. No payments have been made and the deferral period ends in August 2021. Company As first payment will be due in September 2021.
The first payment will include both a portion of outstanding principal and all accrued interest. The principal amount due is based on the outstanding principal balance divided by the remaining months of the term . The accrued interest would be $135.56, and therefore the total first payment would be $1,246.67.
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How Will Extending The Ppp Loan Application Deadline Impact Small Businesses
This extension gives small businesses more time and flexibility to apply for the funding that many so desperately need. According to reporting from CNBC, the SBA noted that at the end of March 2021, approximately $79 billion in funding remained in the program.
Additionally, the two-month extension gives smaller employers extra time to apply for second-draw PPP loans if needed. Organizations can only qualify for second-draw PPP loans if theyve already used the full amount allotted in the first-draw PPP loan .
For example, an employer may have received a first-draw PPP loan at the end of January 2021 and exhausted the funds sometime in March 2021. If the organization still needs additional loan dollars, the extension makes it more likely that it can qualify for another round of funding.
Paycheck Protection Program Is Still A Viable Option
The Paycheck Protection Program hasnt entirely re-invented the wheel. What it has done is to expand the scope and terms of regular SBA loans government-backed loans offered by private lenders to incentivize small businesses to keep employees on the payroll during Covid-19. The program is open to businesses with fewer than 300 employees including sole proprietors, independent contractors, and self-employed individuals.
Here are the up-to-date rules governing all new PPP SBA loans:
- Funds may be spent on payroll costs, employee salaries, interest payments on any mortgage, rent and utility payments, costs related to the continuation of group health care benefits, and interest payments on other debt obligations
- Loan amount is for up to 2.5 times your average monthly payroll costs, up to a $2 million limitation
- Interest rate is 1%
- Maturity is five years for loans
- Loan payments are automatically deferred for six months
- No collateral or personal guarantee required
- No fees or prepayment penalties involved
- The covered period for loan forgiveness is 24 weeks . To qualify for full or partial forgiveness, the borrower must prove that at least 60% of the proceeds and 60% of the loan forgiveness amount were spent on payroll costs during the forgiveness period .
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Immediate Assistance Through Online Means
Today, PPP Lenders have reached people across sectors and provided immediate financial assistance by filling out an online form.
We recommend checking with your local bank or current lender before reaching out to the PPP Online Lenders. But for those who have problems with a local bank or who want nothing to do with a commercial bank, you can apply for a PP loan at PPP Online Lenders, which can effectively handle your application.
How Much Money Can You Get
First-time loans continue to be capped at 2.5 times average monthly payroll costs, with a maximum of $10 million.
Second PPP loans have a $2 million maximum and generally use the 2.5 times average monthly payroll guideline. But the hard-hit accommodation and food service industries can borrow up to 3.5 times average monthly payroll costs.
On Feb. 22, 2021, the Biden administration announced changes to the loan calculation formula for self-employed professionals, many of whom only qualified for a small amount or were excluded entirely from previous rounds. The new formula uses gross income instead of net profit.
But the SBA didnt start accepting applications using the new formula until March 5. Since there was no directive to make the changes retroactive, borrowers who received a PPP loan before that date are stuck with a much lower loan amount and no recourse to change it.
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The Program Deadline Is Now May 31 Not March 31
Small businesses have an additional two months to apply.
The extension will aid lenders and businesses that have encountered errors in the application process. In addition, in the current round of PPP, the SBA increased security to address fraud. That meant application times were much longer for some.
“I’ve noticed over the last week to 10 days there’s definitely been a tone of panic coming back again,” said Chris Hurn, chief executive of Fountainhead Commercial Capital, a non-bank lender. Now that the bill has passed, everyone will be able to breathe a big sigh of relief, he said.
The SBA has said that there is about $79 billion in funding left, which restarted in January with $284 billion.
Ppp Loan Forgiveness Application Deadlines Are Looming
If you were one of the nearly 12 million employers who benefitted from a PPP loan during the height of economic uncertainty brought on by the COVID-19 pandemic, there is a very important upcoming deadline you will want to keep on your radar. If you havent already done so, you should be preparing to apply for PPP loan forgiveness for the 1st draw PPP loan that you received in 2020. It is important to start the process prior to the actual deadline so that you can plan for any unanticipated repayment requirements in case you determine some or all of your loan is not eligible for forgiveness.
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There May Be More Time To Apply For Second Draw Loans
The additional two months may also open the door for small businesses that got a first PPP loan this year to apply for a second one.
Some small businesses that recently got a first draw previously didn’t have enough time to apply for a second one, as generally eight weeks must pass between the loans so there’s time to spend the money on payroll.
This mostly impacted sole proprietors that didn’t know they qualified for assistance through the program or weren’t able to get funding in the previous round.
“They’re certainly going to be a big beneficiary of this added time on the application process,” said Patrick Ryan, president and CEO of First Bank.
Of course, there are extra qualifications for a second draw loan beyond the eight-week time period. Small businesses must have no more than 300 employees and be able to show at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020, according to the SBA.
I Thought I Applied For Forgiveness But I Am Now Receiving A Bill What Do I Do
Your loan forgiveness application was never submitted for forgiveness on the BBVA portal. Please login to the PNC portal to finish your forgiveness application.
Once your forgiveness application is complete and PNC and the SBA make a decision, then you will be notified of the SBA’s decision. Because your deferral period expired before you submitted a complete forgiveness application you must make the required monthly payments on the loan, even if you submit your forgiveness application now or in the future. These monthly payment amounts may be refunded to you at the time of SBA forgiveness .
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