Knowledge and Insights

PPP Loan Alert – SBA & Treasury Issue Guidance on PPP Flexibility & Updated Applications

On June 10, 2020, the Small Business Administration (SBA) and Treasury Department issued an interim final rule to address changes made by the Paycheck Protection Program Flexibility Act (PPPFA).  Streamlined PPP loan application forms for borrowers and lenders for loans made on or after June 5, 2020 were also updated and published.

The interim final rule:

  • Confirms that borrowers that use less than 60% of their PPP loan amount for payroll costs during the covered period will still be eligible for partial loan forgiveness.
  • Extends the end date of the covered period for a PPP loan from June 30, 2020 to Dec. 31, 2020.
  • Provides a five-year maturity term for loans made on or after June 5, 2020, and provides an option for loans made prior to that date to extend maturity from two years to five years at the mutual agreement of the borrower and lender.
  • Extends the loan forgiveness period from 8 weeks to 24 weeks.
    • Borrowers may opt to keep the forgiveness period at 8 weeks for loans made prior to June 5, 2020.
  • Clarifies that if a borrower submits its forgiveness application within 10 months of the end of the loan forgiveness period, the borrower will not have to make any payments on the loan before the date SBA remits the forgiven amount to the lender.
  • Confirms that June 30, 2020 is the last day a lender can obtain an SBA loan number for a PPP loan.

However, the SBA is likely to release additional updates to its interim final rules to reflect changes the PPPFA made to the PPP loan forgiveness requirements, as well as guidance on advance purchases of PPP loans.

See below for links to the interim final rule and streamlined application forms for borrowers and lenders noted above.

https://home.treasury.gov/system/files/136/PPP-IFR-Revisions-to-First-Interim-Final-Rule.pdf?utm_campaign=NEWSBYTES-20200611-Special&utm_medium=email&utm_source=Eloqua

https://home.treasury.gov/system/files/136/PPP-Borrower-Application-Form-Revised-June-2020.pdf?utm_campaign=NEWSBYTES-20200611-Special&utm_medium=email&utm_source=Eloqua

https://home.treasury.gov/system/files/136/PPP-Lenders-Application-Form-PPP-Loan-Guaranty-Revised-June-2020.pdf?utm_campaign=NEWSBYTES-20200611-Special&utm_medium=email&utm_source=Eloqua

Mercadien’s COVID-19 Task Force can help you prepare the required loan calculations, compile the necessary documentation, complete and submit the forgiveness application and answer your questions about the PPP, PPPFA and other relief options. We’re also available to assist you in evaluating your budget and cash flow needs, working as an advisor and sounding board to help you manage your way through the upcoming months. Complete the COVID-19 Assistance Request form on our website or contact Frank Pina, CPA at 609-689-2319 or fpina@mercadien.com to get started.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice, and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.