On 12-27-20 President Trump signed the most recent stimulus bill into law. The new law clarifies and corrects several issues that existed in the PPP forgiveness process and authorizes a second round of PPP loans for certain borrowers.
The following are highlights of the changes to the existing PPP loan rules and what they mean for current borrowers.
- The EIDL advance issue has been resolved. The SBA will no longer net any EIDL advance from the forgiveness granted to a PPP borrower.
- The SBA has been directed to publish a one-page forgiveness application for all loans of $150,000 or less. You will be required to provide certain information about employment levels and the amount spent on payroll and make certain certifications to Citizens Bank and the SBA. It appears that you will not have to turn in supporting documentation such as payroll reports and utility bills, etc. though you will have to maintain those records and produce them for the SBA if your loan file is audited in the future.
- New categories of expenses are now eligible for forgiveness such as personal protective equipment and adaptive investments to help a borrower comply with Federal, State or Local safety guidelines.
- There are changes to the maximum loan calculation for the first round of PPP loans for farmers and ranchers who operate as a sole proprietor, independent contractor or a self-employed individual, who report income and expenses on Schedule F. These entities may utilize their gross income reported on 2019 Schedule F rather than net income. Borrowers may request that their lender recalculate their loan amount if such a recalculation would result in a larger loan advance.
- Borrowers with SBA 7a or 504 loans will receive an additional 3 months of principal and interest payments, capped at $9,000 per month. Certain borrower types like food service and accommodation will receive up to 5 months additional payments.
What does this mean for my existing PPP loan and the forgiveness process?
- Citizens Bank currently recommends that if your loan amount is $150,000 or less that you wait to apply for forgiveness until the new one-page application is available. If you have already turned your application in to Citizens Bank but not yet received forgiveness, we will hold your application until clarification is provided on the new process.
- If your loan is over $150,000 please proceed now with your forgiveness application but keep in mind that new expense categories are available for forgiveness. More information on these new categories will be forthcoming as soon as it is published.
As always, we stand ready to answer your questions about the PPP using the best available information.
Citizens Bank recommends however 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