The Coronavirus Aid, Relief and Economic Security Act or CARES Act became law on March 27, 2020 and allocated $349 billion to the Small Business Administration (SBA) to help small businesses keep workers employed under the new Paycheck Protection Program. Congress recently approved an additional $310 billion in funding to restore the PPP, which had run out of money on April 16. The SBA resumed accepting applications on April 27, 2020.
State Nebraska Bank & Trust is an existing SBA Certified Lender and can assist you with these PPP Loans. As we continue to learn more from the SBA about how this new program will be administered, we will do our best to help you through the process. Know that we are committed to you and our community during these challenging times. Please call us with your questions at 402-375-1130.
On June 8, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) was signed into loan to enhance the flexibility of borrowers to use PPP funds as appropriate for their business and still be eligible for forgiveness. Two new Loan Forgiveness Applications are now available from the SBA. See below for links.
Guidance from the U.S. Treasury outlines Assistance for Small Businesses under the SBA’s Paycheck Protection Program (PPP). We encourage you to review these resources to help you apply for a PPP Loan:
Note, all loan terms will be the same for everyone under this new SBA program. The deadline to apply for funds under this program is June 30, 2020. We encourage you to contact your accounting and/or legal professionals for implications to your business.
On June 8, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) was signed into loan to enhance the flexibility of borrowers to use PPP funds as appropriate for their business and still be eligible for forgiveness. The SBA has released two versions of the PPP Loan Forgiveness Application:
Available to borrowers who:
- Are self-employed and have no employees, OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees, OR
- Experienced reductions in business activity because of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.
For all other borrowers who are ineligible for the EZ Form.
The U.S. Treasury and SBA issued a joint statement covering aspects of the new PPPFA. Here is an overview:
Allowing forgiveness for expenses beyond the 8-week covered period, up to 24 weeks.
The covered period used for forgiveness calculations may be extended at the option of the PPP borrower, up to 24 weeks.
Eliminating restrictions limiting non-payroll expenses to 25% of loan proceeds.
The prior regulatory requirement to spend at least 75% of forgiven funds on compensation is reduced to 60%. More of your PPP funds can now be spent on facilities costs and still be forgiven.
Extending the safe harbor date for forgiveness modifiers by 6 months.
For the two forgiveness modifiers, FTE reductions and wage cuts, the PPPFA extended the safe harbor dates to avoid a potential reduction in forgiveness from June 30, 2020, to December 31, 2020.
Changing the payment deferral date to start when the bank receives the funds instead of the loan funding date.
The payment deferral period was previously defined as six months from the original PPP loan funding date and this date is included in your Promissory Note. PPPFA modifies the payment deferral period to match the date when the bank receives SBA funds for the forgiven portion of your loan. We will follow up as to how the bank will implement this change in the law. Please recall that accrued interest on the forgiven PPP balance is also forgiven.
Ensuring full access to payroll tax deferment for businesses that take PPP loans.
The PPPFA removes a prior restriction preventing PPP participants with forgiven loans from participating in other Federal programs allowing deferral of payroll taxes.
Providing a rehiring safe harbor for businesses unable to rehire employees.
PPPFA expanded prior guidance about FTE reductions when employees refuse to return to work and the employer is unable to rehire similarly qualified employees. The Act also added a safe harbor for companies prevented from returning to prior levels of business activity by COVID-19 related requirements or guidance issued by certain federal agencies.
See below for frequently asked questions about the SBA’s Paycheck Protection Program.
What is the Paycheck Protection Program?
The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits, and to pay interest on mortgages, rent and utilities.
Is the loan fully forgiven?
Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 60% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
What is loan forgiveness based on?
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
When can I apply?
Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. On April 27, 2020, the SBA resumed accepting applications. We encourage you to apply as quickly as you can because there is a funding cap.
How do I apply?
You can apply through State Nebraska Bank & Trust, which is an existing SBA 7(a) lender. Call us at 402-375-1130 to speak with a loan officer. The deadline to apply for funds under this program is June 30, 2020. We thank you for your patience as we do our best to understand this new program and the SBA’s evolving guidance and procedures. Note, all loans will have the same terms regardless of lender or borrower.
How much can I borrow?
Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
What are the next steps?
As we continue to learn more about how this new program will be administered, we will do our best to assist you. We are committed to helping you determine if this program makes sense for your business Call us at 402-375-1130 to speak with a loan officer. We encourage you to contact your accounting and/or legal professionals for implications to your business.
The SBA’s Economic Injury Disaster Loan (EIDL) will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties as a result of the COVID-19 pandemic. This loan advance will not have to be repaid. These loans are processed directly through the SBA. To apply for a COVID-19 Economic Injury Disaster Loan, click here.
An applicant may receive EIDL funds and SBA loans under other programs (such as the Paycheck Protection Program) if the basis for the loans/costs being paid with each are different (that is, you cannot borrow for the same purpose). For more information about the EIDL, click here.
For more information, we recommend the following resources:
Nebraska Small Business Stabilization Grants
U.S. Small Business Administration
U.S. Chamber of Commerce
U.S. Government Coronavirus Hub
Contact our team of Loan Officers to get started today.
Executive Vice President & Chief Lending Officer
Vice President & Loan Officer
Vice President & Loan Officer
Assistant Vice President & Loan Officer