On June 17th , the Small Business Administration released a three-page “EZ” Paycheck Protection Program loan forgiveness application (Opens in a new Window) requiring less documentation and fewer calculations than previously required. Form 3508EZ applies to borrowers who meet any one of these three criteria:
- Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
- Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.
Although the forgiveness application has been simplified for a substantial portion of PPP borrowers, guidance on how Banks should submit approved forgiveness applications is still unresolved. We encourage borrowers to review the SBA issued forgiveness application and continue to gather payroll and forgiveness expense documents. The Bank will issue detailed instructions on how to submit forgiveness applications as soon as guidelines are finalized. Please do not submit any forgiveness documentation until we issue detailed instructions. We appreciate your patience.
SBA also updated the regular Form 3508 (Opens in a new Window) to reflect recent changes made by Congress in the PPP Flexibility Act and issued a new interim final rule that implements changes made by the PPPFA.
The modified loan forgiveness application implements legislative amendments to the PPP which will:
- Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
- Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.
- Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID–19.
- Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.
- Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.
- Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).
PPP Loan Data ReleasedIn response to calls from Congress for greater transparency, the SBA posted data on all PPP loans, except those that were canceled. The data includes city, state, number of employees who benefited, lender name and congressional district. While Congress is expected to have access to the full data, including the names of all borrowers, today's public release excludes some specifics. Data for loans $150K or greater, for example, include the borrower name but not the precise loan amount; loans under $150K exclude the borrower name but indicate precise loan amount.
SBA PPP Extended
While the program technically expired June 30th, the Senate passed legislation extending the PPP to August 8, 2020. The House followed suit, and the president signed it into law this weekend. The extension gives borrowers and lenders an additional five weeks to spend down the approximately $130 billion in funds that remain. At this time, Marine Bank is not accepting additional PPP funding applications.
Marine Bank will continue to update this page so bookmark it and check regularly for updates.