UPDATE: June 10, 2020
The Paycheck Protection Plan Flexibility Act of 2020 makes a few well needed changes to the PPP. Among them are:
- The period to use the funds has been extended for 24 weeks from the time you received the PPP
- The deadline to rehire staff or hire new employees to recover your staff number is now December 31, 2020
- If because of restrictions on occupancy you do not need the number of employees you had on February 15, 2020. Document the steps that were taken for reopening and restrictions imposed by the State of Michigan in order to still qualify for the loan forgiveness.
- The time to repay any portion that is not forgiven was 2 years. That repayment time is now extended to 5 years.
CLICK HERE to view the entire legislative act
UPDATE: APRIL 25, 2020
UPDATE April 17,2020
As of this date the SBA is currently unable to accept new applications for the PPP based on available appropriations funding.
The federal government is expected to allocate additional funds. Information will be posted when funding becomes available.Click here for the SBA website on PPP.
UPDATE April 7, 2020
There has been some difficulty with some small businesses obtaining the applications from lending institutions for the Paycheck Protection Program (PPP) loan. To ease the confusion and assure lenders about their liability with the loans, the Federal Reserve issued a press release last night and intend to provide lenders further information this week. This should ease the restrictions some lenders are placing on the program.
Press Release from the Federal Reserve for lenders:
To facilitate lending to small businesses via the Small Business Administration’s Paycheck Protection Program (PPP), the Federal Reserve will establish a facility to provide term financing backed by PPP loans. Additional details will be announced this week.
April 6, 2020
The federal government passed the CARES Act last week with many provisions to help small businesses – the PPP loan among the benefits, (see post on this page for full details). As with any new program, let alone one so quickly enacted, there has been confusion with some lending institutions.
The U.S.Treasury issued the following information sheet for lenders:
PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION SHEET LENDERS
Who is eligible to lend? All existing SBA-certified lenders will be given delegated authority to speedily process PPP loans.
All federally insured depository institutions, federally insured credit unions, and Farm Credit System institutions are eligible to participate in this program.
A broad set of additional lenders can begin making loans as soon as they are approved and enrolled in the program. New lenders will need to submit their application to DelegatedAuthority@sba.gov to apply with the SBA.
Are these loans guaranteed by the SBA? Yes, the SBA guarantees 100% of the outstanding balance, and that guarantee is backed by the full faith and credit of the United States.
Are there guarantee fees? The SBA waives all SBA guaranty fees, including the upfront and annual servicing fees.
What underwriting is required? You will need to verify that a borrower was in operation on February 15, 2020. You will need to verify that a borrower had employees for whom the borrower paid salaries and payroll taxes. You will need to verify the dollar amount of average monthly payroll costs. You will need to follow applicable Bank Secrecy Act requirements.
How will lenders be compensated? Processing fees will be based on the balance of the financing outstanding at the time of final disbursement. SBA will pay lenders fees for processing PPP loans in the following amounts:
- Five (5) percent for loans of not more than $350,000;
- Three (3) percent for loans of more than $350,000 and less than $2,000,000; and
- One (1) percent for loans of at least $2,000,000.Lenders may not collect any fees from the applicant.
Who can be an agent? An agent is an authorized representative and can be:
- An attorney;
- An accountant;
- A consultant;
- Someone who prepares an applicant’s application for financial assistance and isemployed and compensated by the applicant;
- Someone who assists a lender with originating, disbursing, servicing, liquidating, orlitigating SBA loans;
- A loan broker; or
- Any other individual or entity representing an applicant by conducting business with theSBA.
How will agents be compensated? Agent fees will be paid out of lender fees. The lender will pay the agent. Agents may not collect any fees from the applicant. The total amount that an agent may collect from the lender for assistance in preparing an application for a PPP loan (including referral to the lender) may not exceed:
- One (1) percent for loans of not more than $350,000;
- 0.50 percent for loans of more than $350,000 and less than $2 million; and
- 0.25 percent for loans of at least $2 million.Can these loans be sold in the secondary market? PPP loans can be sold in the secondary market. The SBA will not collect any fee for any guarantee sold into the secondary market.