1. SBA Payroll Protection Program (PPP) Loan Forgiveness:
PPP loan program closed on August 8, 2020.
Now that the PPP loan is on the books and has been put to use in the business, it’s time to consider gathering information for the PPP Loan forgiveness process. Below are links to the TWO separate application forms and FAQ’s on the forgiveness process. Please don’t hesitate to reach out to your designated Innovative CPA Group accountant if you need assistance in applying for loan forgiveness or call the main office to be connected with one of our accountants.
Application process done online with the lender (i.e. your bank).
Two forms available and easier one of the two is the 3508-EZ form depending on if any of the three underlying conditions are met. If not, 3508 form must be used. Links for the forms as below.
Instructions for both forms are available on the SBA’s website. Refer to these for what backup documents need to be submitted along with the application form.
Also available are FAQ’s regarding forgiveness on the SBA website.
PPP — Loan Forgiveness FAQs (August 11, 2020)
Since the SBA announced that borrowers now have the option of choosing a 24-week covered period, (it originally was 8-week period for loans obtained before June 5), it’s more than likely that the entire loan will be eligible for forgiveness. Any part of the loan not forgiven will have to be repaid per the terms of the loan agreement:
Fixed Interest rate of 1%
Payment deferred until
(a) the date that the SBA remits the loan forgiveness amount to your lender, provided you submit your loan forgiveness application to your lender within 10 months following the last day of the applicable covered period, or
(b) that date that is 10 months following the last day of the applicable covered period if you do not timely submit a loan forgiveness application; interest accrual begins as of the date of disbursement.
Maturity for loans issued after June 5th is 5 years. Loans administered before June 5th, the original maturity date is 2 years but can be extended to 5 years if in mutual agreement with the lender.
No collateral or personal guarantees needed.
No prepayment penalty.
Interest accrues as of the date of loan disbursement.
2. SBA Economic Injury Disaster Loans (EIDL):
Available for all eligible small businesses until December 31, 2020. Apply online here: https://covid19relief.sba.gov/#/
For borrowers who have already received an EIDL loan, refer to the loan agreement for repayment terms. No forgiveness option on these loans.
EIDL Advance is no longer available.
3. SBA Express Bridge Loans – Up to $25,000:
For small businesses with an existing banking relationship with an SBA Express Lender.
$25,000 quick loan which will be repaid in full or in part by proceeds from the EIDL loan.
Additional information can be found here: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-express-bridge-loans
4. Main Street Lending Program
The Federal Reserve established this lending program to provide support to eligible small and medium-sized businesses and their employees during this period of financial strain. Available to all businesses that were unable to obtain funds via the PPP program or if they need additional funds.
Some things to note are:
a. As of now loans are available until December 31, 2020 and eligible borrowers can apply by contacting an eligible lender.
b. This program offers several loan options, with deferred principal and interest payments.
c. They are available to for profit and non-profit businesses.
d. Unlike the PPP, these are not forgivable loans and may require personal guarantees.
e. Eligible borrowers must certify that they are otherwise unable to secure adequate credit from other sources.
FAQ’s and details about all the various loan options and such are available via the following link: https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm