As you are certainly aware, the SBA and Treasury department have implemented numerous rule changes to the PPP since its inception. Many of those rule changes have been positive, but it has seemed like a roller coaster ride for everyone involved.
One of the changes implemented was the opportunity to change your Covered Period from 8-weeks to 24-weeks. This should allow most small business owners to maximize their forgiveness potential.
Another related change has to do with the Deferred Period on loans. You may recall initially all PPP loans had a six-month Deferral Period, generally making first payment due dates begin to arrive in mid-November 2020.
A subsequent rule change made the Deferral Period ten-months. If a borrower does not apply for forgiveness within 10 months after the end of their Covered Period, the loan will automatically go into principal and interest payments. As long as you apply for forgiveness prior to the end of the 10-month Deferral Period, your payments will continue to be deferred until the SBA remits your forgiven amount to Citizens Bank.
All this means that as a borrower, you have at minimum 8 weeks plus 10 months in which to apply for forgiveness, making the earliest possible first payment dates arrive in April 2021.
Citizens Bank has adjusted all first payment due dates to reflect this change. You can see your new first due date by logging on to our online banking portal. If you have never done so, now is the perfect time get set up. You can do that by contacting us at (317) 831-0110 and one of our Customer Care Representatives will be happy to assist you.
You are likely also aware that the SBA Forgiveness Portal opened on August 10th. Few banks have begun to accept forgiveness applications as we continue to hope for additional program clarity. There is also a possibility that all loans below a certain dollar amount ($150,000 has been commonly discussed) may receive blanket forgiveness.
Citizens Bank is currently designing our Forgiveness Application process and will communicate our requirements in the near term. It is our hope to begin accepting forgiveness applications by the middle of October. We continue to recommend however that if your loan is under $150,000 you consider waiting until later in the year or early next year to see if blanket forgiveness is made available by Congress and the President.
As always, we stand ready to answer your questions about the PPP using the best available information.
Citizens Bank recommends that you consult your outside advisors and experts in all matters relating to the PPP and loan forgiveness. We will work to provide you timely and accurate information, but the burden for obtaining forgiveness rests on the borrower. All information provided in this format or any other communication regarding the program is believed to be accurate, but no guarantee is or can be made by any Citizens Bank representative.
Please submit your questions to pppquestions@citizens-banking.com. Include the name of your business in your e-mail. We will endeavor to answer in a timely way with the best information currently available.