The Bank of Pontiac is very proud to announce that to date we have funded 441 SBA PPP Loans. These loans have helped small businesses in our local communities. We have received numerous questions about the forgiveness portion of this program. We have been reluctant to push out information due to the ever changing rules and guidance but it appears we are getting much closer to a clearly defined forgiveness process and simplified application. The Paycheck Protection Program Flexibility Act (PPPFA) was signed into law on Friday, June 5 by President Trump. This act made several changes to the original PPP rules. The changes are listed below. The SBA, in consultation with the Treasury, announced this morning that they will promptly issue rules and guidance, a modified borrower application form, and a modified loan forgiveness application implementing these legislative amendments to the PPP.

The extended covered period will make it much easier for complete forgiveness of the loan. The timeline for applying for forgiveness is 60 days from the end of your covered period. So we have plenty of time to work through the details of this process.  Once we receive the modified application and new rules, we will get that out to each of you. It is our goal to work with each one of you to obtain complete forgiveness of your loan.

Important Changes included in PPPFA:

  • 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).

If anyone has any additional questions, please contact Mark Donovan, Senior Vice President & Chief Lending Officer at Bank of Pontiac (NMLS# 770747): mdonovan@bankofpontiac.com.