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Paycheck Protection Program (PPP) Loans

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Updates About Existing PPP Loans

April 9, 2020

First Bank has proudly helped 552 small business owners through the Paycheck Protection loan program in this second round of funding. We aren’t done yet, with several more applications currently being processed! However, funding allocated to the PPP will soon be exhausted. We now feel it is our obligation to give our full attention to those who have, or soon will have, applications in place with us. Towards that goal, First Bank will accept applications through midnight on Sunday, April 11. Any applications received after Sunday, April 11 will not be processed.

If you have already sent your application to us, we will contact you soon to obtain any final information needed to complete and submit your application.

December 30, 2020

PPP Round Two Should Begin Soon

The Paycheck Protection Program will soon see more than $284 billion in new funding with the approval of The Economic Aid to Hard Hit Small Businesses, Nonprofits, and Venues Act – commonly known as the COVID-19 Relief Bill.

These funds can be used for a first or second PPP forgivable small business loan. First Bank will be participating in this round of funding.

Here’s what we know at this time:

Timing

The SBA is currently drafting the Interim Final Rules which will govern this round of funding. At this time, banks are not yet able to submit requests to the SBA.

PPP Round 2

  • Participation is limited to companies with 300 employees or less, who were in business as of February 20, 2020.
  • If you received a first round PPP, all funds must be used prior to disbursement of a second round PPP loan.
  • Businesses will need to show evidence that they had a reduction of 25% or more in gross receipts in any quarter of 2020, when compared with the same quarter in 2019.
  • The loan calculation for round 2 is the same as in the first round: the average total monthly payment for payroll costs incurred or paid during 2019 or the 1-year period before the date on which the loan is made, multiplied by 2.5 up, to a maximum of $2 million.
  • There is good news if your business is identified as Accommodation and Food Services (NAICS codes starting with a 72.) This includes hotels, RV parks and campgrounds, caterers, drinking places, restaurants and other eating places, etc. These businesses will qualify for a loan of 3.5 times their average monthly payroll cost.

The list of eligible expenses was also expanded. These now include:

  • Payments for any business software or cloud computing service that facilitates business operations
  • Uninsured property damages due to vandalism or looting during public disturbances
  • Certain expenditures made for the supply of goods that are essential to the operations of the business, and
  • Certain expenditures made to facilitate and adapt the business activities to comply with health requirements.

We expect these allowed expenses to be better defined in future SBA publications.

Forgiveness

The legislation also included favorable changes to the forgiveness process, including:

  • A new, super simplified forgiveness form will soon be available for all loans under $150 thousand.
  • Advances made under the Economic Injury Disaster Loans (EIDL) were made fully forgivable. If you have already repaid the EIDL advance, the bank will soon be able to refund the amount paid.

As we become aware of timing, applications and required documentation, we will let you know through email and on this page of our website.

November 10, 2020

Exisiting loan holders: Please see the SBA's Paycheck Protection Program Loan Forgiveness Factsheet for current information on how to apply for loan forgiveness. Contact your First Bank lender to determine which form you should use in your forgiveness application. Below are links to each form:

SBA Form 3508
SBA Form 3508EZ
SBA Form 3508S

September 30, 2020

For customers who received an SBA Paycheck Protection Program Loan through First Bank prior to the passage of H.R. 7010 – The Paycheck Protection Program Flexibility Act:

Your PPP Loan Deferral Period Has Been Extended

We are reaching out to you because you received an SBA Paycheck Protection Program Loan through First Bank prior to the passage of H.R. 7010 – The Paycheck Protection Program Flexibility Act - which was signed into law on 6/5/2020.

The Paycheck Protection Program Flexibility Act defers all loan payments until the SBA issues its decision on loan forgiveness.

First Bank has extended your deferral period to remain compliant with this act, while Congress continues to debate potential amendments to the PPP program.

No action is required on your part to enact this deferral period.

Please read below for additional information regarding payment terms, forgiveness, and payment schedule.

PPP Loan Repayment Disclosure

“You” and “your” means borrower.

Payment Terms. In accordance with the Paycheck Protection Program Flexibility Act, you will not be required to make any payments of principal or interest on this note before the date on which the SBA either remits the loan forgiveness amount on your loan to Bank or notifies Bank that no loan forgiveness is allowed. Interest will continue to accrue during the deferment period.

Forgiveness. Your “loan forgiveness covered period” is the 24-week period beginning on the date your loan is disbursed. (alternate language for loans made prior to June 5, 2020: You may elect to have your loan forgiveness covered period be the 8-week period beginning on the date your PPP loan was disbursed.)

Bank will notify you of remittance by SBA of the loan forgiveness amount (or notify you that SBA determined that no loan forgiveness is allowed) and the date your first payment is due. In the event you do not submit a loan forgiveness application to Bank within 10 months after the end of your loan forgiveness covered period, you must begin paying principal and interest after that period, which in any event must be no later than October 10, 2021.

Payment Schedule. At the end of the deferment period, your note will be repayable as follows:

In equal amortizing monthly/quarterly payments, beginning on the first day of the month following the end of the deferment period and continuing until paid in full.

When the loan forgiveness is determined and the deferral period ends, Bank will send you a payment schedule with the amount of payments and due dates, if applicable.

ACKNOWLEDGEMENT

You acknowledge that the foregoing document is an addition and modification to the terms and conditions of your Paycheck Protection note. To the extent it conflicts with prior terms, you understand that this provision controls.

August 7, 2020

First Bank is committed to helping you through the PPP Loan Forgiveness process in any way we can. This is an important update to the information we sent you last week.

A streamlined PPP Loan Forgiveness process could be approved this week! The Paycheck Protection Small Business Forgiveness Act is being debated on the Senate floor with a similar bill being discussed in the House. Both bills enable PPP loans of $150,000 or less to be forgiven with a one-page form.

We, along with bankers across the nation, are optimistic that one of these bills will pass. We just have to wait patiently for Congress' vote, and we ask you to do the same.

If you received a PPP loan ABOVE $150,000 that was originated on or before June 11, 2020, and you have used all of those funds, we encourage you to begin working on your PPP Loan Forgiveness application.

  • Use Form 3508EZ if you have NOT had a reduction in the number of full-time equivalent employees (FTEs) during the time between your initial PPP application and your PPP forgiveness application.
  • Use the standard Form 3508 If you HAVE had a reduction in your FTEs and/or your payroll costs.

In the coming weeks, we will be reaching out to you directly to discuss the specific requirements and documentation for your individual loan. Until that time, we appreciate your patience and understanding as we work diligently to ensure that every First Bank PPP loan customer receives the maximum forgiveness possible.

As you wait, we again encourage you to reach out to your elected officials this week and ask them to vote in favor of the Paycheck Protection Small Business Forgiveness Act. Information on how to do this is below.

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Sample email:

Dear < insert representative name >,

I am a small business owner and the recipient of a PPP loan. I am writing to ask for your support of H.R. 7777, the Paycheck Protection Small Business Forgiveness Act by Representatives Houlahan and Upton. Clearly defined and truly simple PPP forgiveness as outlined in H.R. 7777 is vital to myself and the many other small business customers you have helped through PPP. Please urge party leaders to include this bill in the final COVID IV legislative package. Thank you for your support of this important piece of legislation.

Sincerely, < insert your name >

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How to contact your elected officials:

www.house.gov/representatives/find-your-representative and enter your zip code.

Thank Senator Cornyn at www.cornyn.senate.gov/contact

Thank Senator Cruz at www.cruz.senate.gov/?p=form&id=16

July 27, 2020

Thank you for choosing First Bank as your Paycheck Protection Program (PPP) lender. Our goal in funding PPP loans is to boost our local economy by helping local businesses survive the pandemic. We sincerely hope your loan has helped you and your employees during this difficult time.

We know you are waiting for information regarding the loan forgiveness process. The Small Business Administration has made a lengthy application available for you to pursue loan forgiveness, and only recently provided instructions to lenders on how to process those applications. We are as eager as you are to get this process started and could use your help!

U.S. Senators John Cornyn and Ted Cruz from Texas recently co-sponsored Senate Bill 4117, the Paycheck Protection Small Business Forgiveness Act. This bill provides for automatic forgiveness of PPP loans of $150,000 or less, with a one-page form instead of the current 11-page application. Passage of this bill would both streamline and expedite the forgiveness of your loan.

Please contact Senators Cornyn and Cruz in support of this bill. Please also contact your U.S. Congressman and ask him or her to pass this bill quickly. Information on how to contact your elected officials is below.

Thank you for your patience and your help as we try to expedite the forgiveness process together.

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Locate and contact your Congressman/woman at www.house.gov/representatives/find-your-representative and enter your zip code.

Thank Senator Cornyn at www.cornyn.senate.gov/contact

Thank Senator Cruz at www.cruz.senate.gov/?p=form&id=16

Sample note:

Dear < insert representative name >,

I am a small business owner and the recipient of a PPP loan. I am writing to ask you to vote in favor of the Paycheck Protection Program Forgiveness Act, which will streamline my forgiveness application and expedite the forgiveness process. Thank you for your support of this important piece of legislation.

June 5, 2020

On June 5, President Donald Trump signed legislation to address restrictions on the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).

While further guidance and clarification from the SBA and Treasury is likely, here is a summary of the provisions that appear in the Paycheck Protection Program Flexibility Act.

Specifically, the law:

  • Extends the covered period during which the loan may be used for forgivable expenses from eight weeks following disbursement of the loan to 24 weeks from loan disbursementor Dec. 31, 2020, whichever is earlier. Borrowers who received loans before June 5 may elect to continue using the eight-week covered period.
  • Lowers the amount that must be spent on payroll costs from 75 percent to 60 percent. SBA and Treasury issued a statement that the new 60 percent threshold is not a cliff, meaning that 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.
  • Extends the period in which employers may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount of a PPP loan to Dec. 31, 2020. However, the forgivable amount will be determined without regard to a reduction in the number of employees (compared to Feb. 15, 2020) if the recipient is (1) unable to rehire former employees and is unable to hire similarly qualified employees by Dec. 31, or (2) unable by Dec. 31 to return to the same level of business activity that existed before Feb. 15, 2020, due to compliance with federal requirements or guidance related to COVID-19.
  • Replaces the six-month deferral of payments due under PPP loans with deferral until the date SBA pays the lender the amount of loan forgiveness. If a borrower fails to apply for loan forgiveness within 10 months after the last day of the covered period for forgiveness, the borrower must begin to make payments of principal, interest, and fees on its PPP loan.
  • Establishes a minimum maturity of five years for new PPP loans as opposed to the current two-year maturity date. The five-year maturity takes effect on the date of enactment and will apply to any PPP loan made on or after June 5. Lenders and borrowers, however, may mutually agree to modify the maturity terms of prior-disbursed PPP loans.
  • Eliminates a provision that makes PPP loan recipients who have PPP debt forgiven ineligible to defer payroll tax payments.
  • The final date to obtain a PPP loan remains June 30, 2020.

This law will likely be subject to additional guidance by SBA and Treasury. Small-business borrowers should have a firm understanding of the provisions above and any related guidance to ensure they meet the criteria for loan forgiveness.

May 27, 2020

Dear Customer,

Thank you for choosing First Bank for your Paycheck Protection Program (PPP) loan. It has been our pleasure to serve you during these unprecedented times and we will continue to be here for you in the next phase of this loan process. Although there are still questions on the forgiveness process, our goal is to keep you informed the best we can on the loan forgiveness process.

On Friday May 15, the SBA published the PPP Loan Forgiveness Application and related instructions. A copy of the application is enclosed, and can be also found here. The application provides a step by step calculation methodology to help you arrive at the forgivable portion of your loan.

As you prepare for the loan forgiveness benefit of the PPP loan, keep these things in mind to maximize your loan forgiveness:

  • Funds must be expensed during the 8-week (56-day) period option you choose. The two options include 1) the Covered Period, which begins on the date the loan proceeds were disbursed to you, or 2) the Alternative Payroll Covered Period which can begin on the first day of your first payroll period following the loan dispersal.
  • At least 75% of the PPP loan funds must be used for payroll costs. No more than 25% can be used for non-payroll expenses

FORGIVEABLE USES

Payroll

(Includes salary, wages, vacation, parental, family medical or sick leave, health benefits)

Best Practices:

  • Set up a full payroll register for the 8 weeks the funds are expensed
  • Keep separate records of employees hired back, as well as their position and pay.
  • Document these expenses with 1) Bank account statements or third-party payroll service provider reports; 2) Tax forms for the periods that overlap the Covered Period or Alternative Payroll Covered Period, such as Form 941 and State quarterly business and individual employee wage reporting and unemployment insurance tax filings; and 3) Payment receipts, cancelled checks or account statements documenting retirement and health insurance contributions.
  • Document all attempts to rehire employees. If an employee decides not to return to work, the pay attributable to that employee may still be forgivable. Documentation is key.

Non-Payroll Uses

(February 15, 2020 is the key date. The business mortgage loan and or lease agreement must have been signed and services for utilities must have been in place, prior to this date)

Best Practices:

  • For business mortgage interest payments, retain a copy of your lender account statements from February 2020 and the months of the Covered Period PLUS one month after the end of the Covered Period.
  • For business rent or lease payments, retain a copy of your current lease agreement and receipts or cancelled checks during the Covered Period.
  • For business utility payments, you will need copies of invoices, cancelled checks and receipts or account statements from February 2020 and those paid during the Covered Period.
  • Keep a spreadsheet or log of every expenditure and date, amount, paid to, and description.

If you are self-employed, an independent contractor, or a sole proprietor:

  • Eight weeks of the 2 ½ months net profit is automatically forgivable.
  • To qualify for the additional loan forgiveness, business mortgage interest, rent, and utilities must have been claimed as a deduction on your 2019 Schedule C to qualify.

ADDITIONAL THINGS TO CONSIDER:

  • If you have already set up a separate bank account, only move the funds to the payment account in the exact amount being paid.
  • If no separate account set up, thorough documentation of every expenditure made over the 8-week period.

Remember, these payroll costs are not eligible for forgiveness:

  • Payments to independent contractors
  • Annual cash compensation over $100,000
  • The employer’s share of federal payroll taxes

Please know that there are many unanswered questions on which we are waiting on the SBA to provide guidance. As these become known, we will post updates to our website on this page. Our staff is committed to helping you in this process and is here to help answer any questions you might have. Again, thank you for allowing First Bank to assist you in your PPP loan.

Sincerely,
Jim Johnson
Executive VP – Chief Credit/Senior Lending Officer