Home / News and Resources / #1: An Overview of the SBA Paycheck Protection Program Loan Through Citizens Bank

#1: An Overview of the SBA Paycheck Protection Program Loan Through Citizens Bank

Congratulations on successfully taking advantage of the SBA Paycheck Protection Program loan through Citizens Bank.  We are pleased to have been able to assist you with this vital lifeline.

As you are likely aware, the details of this program have come out in bits and pieces over time, and many things are not clear even now that you have your loan proceeds.

Because Citizens Bank cares for our business partners, we plan to begin a periodic communication on this program to clarify what we know, and to communicate new rules as they are released.

This being the first communication, we would like to remind you of the broad strokes of the program.

Borrowers were able to obtain a maximum loan amount equal to their average monthly payroll times 2.5.

  • These funds must be used in the 8 weeks immediately following the origination of the loan.  Your note date is “Day 1” for your usage of the funds.
  • You must spend at least 75% of the funds on payroll costs – “Payroll Costs” are defined on page 3 of the PPP Interim Final Rule that is attached to this message.  You can spend as much as 25% on other very specific expenses:  1.) Rent under a leasing agreement in force before February 15, 2020;  2.) Any payment of interest on any mortgage obligation (not including any prepayment of or payment of principal on a mortgage obligation) that was incurred before February 15, 2020;  3.) Utility expenses for service that began before February 15, 2020;  4.) Refinancing of an SBA EIDL loan made between 1-31-20 and 4-3-20.
  • At the end of the 8 weeks you will turn in records of your usage of the funds to the bank, and we will submit your application to the SBA for loan forgiveness.
  • If you have used the funds in an appropriate way, 100% of the amount borrowed should be forgiven by the SBA.  If you have not, or if you can’t produce adequate records, all or a portion of your loan may not be forgiven.
  • We do not yet know what sort of records you will be required to submit as the SBA has not published guidelines as of this writing.  Please collect as much documentation as you can including payroll registers and other payroll reports, check stubs, check copies, utility bills, etc.  Documentation will be key – gather as much as you possibly can.

One important rule that was published just yesterday is copied below.  While the text mentions public companies, the rule makes clear that all borrowers must be able to certify that “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

A full copy of the PPP Interim Rule and the Treasury Department Q&A document is attached.  They are not light reading, but I suggest that you read both documents carefully.

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