What You Need To Know
The Small Business Administration (SBA), in consultation with the Department of the Treasury provided guidance to address borrower questions concerning Forgiveness of Paycheck Protection Program (PPP) loans, as provided for under section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as amended by the Paycheck Protection Program Flexibility Act (Flexibility Act).
Important New Updates
- Loan Forgiveness Deferral On October 7th, 2020, the Small Business Administration (SBA) published guidance on Loan Forgiveness Deferral for the Paycheck Protection Program (PPP). The Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) extended the deferral period for borrower payments of principal, interest, and fees on all 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). Previously, the deferral period could end after 6 months. The extension of the deferral period under the Flexibility Act automatically applies to all PPP loans. SBA does not require a formal modification to the promissory note. A modification of a promissory note to reflect the required statutory deferral period under the Flexibility Act will have no effect on the SBA’s guarantee of a PPP loan.
- Preparing for your Loan Forgiveness Application For more information on the application, the types of costs eligible for forgiveness, and the documentation you will need to submit in connection with your application, please review the Paycheck Protection Program Loan Forgiveness Application on the SBA website. Seacoast Bank strongly recommends that, prior to applying through our online portal for loan forgiveness, you review and fill out the SBA Forgiveness Application, including the PPP Loan Forgiveness Calculation Form, PPP Schedule A and PPP Schedule A worksheet and gather the supporting documentation required to be submitted. The required documentation is defined on the SBA website.
- Changes of Ownership On October 2nd, 2020, the SBA published a Procedural Notice to provide information concerning the required procedures for changes of ownership of an entity that has received PPP funds (a PPP borrower). If you are planning a Change of Ownership, it is crucial to contact your Seacoast SBA expert or Commercial Banker as soon as possible for guidance. You may find the SBA Procedural Notice here SBA Notice on Change of Ownership.