UPDATE 6/24: SVB Private awaits the publication of final rules from the SBA before processing any forgiveness applications. We are doing this because, based on prior experience, we found that the SBA guidelines continue to shift, adding complexity to the process if banks try to process the applications before the guidelines are finalized.
Under the latest SBA guidance, after spending the money, businesses have 10 months to submit their forgiveness application and supporting documents. This is a helpful development in that it takes the pressure off filing the application immediately.
To recap the latest guidance:
- Covered period – In the original PPP rule, your business was required to spend its PPP funds within 8 weeks. The covered period has been extended, at your option, to 24 weeks. This means that, if your business chooses to do so, you have 16 additional weeks in which to spend your PPP funds. Please note that this rule change did not increase maximum eligibility for loan funds—that remains the same.
- Deferment – Under the original PPP rule, loan payments were deferred for 6 months from the date of disbursement. The new rule has extended deferment to the end of the covered period (8 weeks or 24 weeks from disbursement, as discussed above) PLUS 10 months. This means that no payments would be due on your PPP loan for 10 months after the covered period ends.
- Application deadline – The extension of the deferment period explained above effectively means that the deadline for submitting your forgiveness application is extended for the same period—until 10 months after the end of the covered period (8 weeks or 24 weeks from disbursement). In addition, the SBA will pay accrued interest on the forgiven amount through the date on which forgiveness funds are applied to the loan.
- Payroll percentage requirement – The requirement that 75% of the loan proceeds be spent on payroll costs has been reduced to 60%. If less than 60% is used for payroll costs, a proportional reduction in loan forgiveness will occur.
We will continue to monitor developments related to your PPP loan, and will communicate further when we have additional information about the process and the portal for submitting your application. Please watch the Important Updates section of svbprivate.com for more information.
Thank you, again, for your patience as we work through this evolving process. Our goal is to facilitate the forgiveness process as efficiently as possible so you may maximize the amount of the loan that is forgivable while minimizing the amount of time spent submitting documentation.
UPDATE 6/10: As you may have seen, the SBA released additional guidance on the PPP loan and forgiveness process that has modified the rules in significant ways. These changes have provided relief to borrowers by extending the timeframes in which you need to take action.
Please note in particular:
- Covered period – In the original PPP rule, your business was required to spend its PPP funds within 8 weeks. The covered period has been extended, at your option, to 24 weeks. This means that, if your business chooses to do so, you have 16 additional weeks in which to spend your PPP funds. Please note that this rule change did not increase maximum eligibility for loan funds—that remains the same.
- Deferment – Under the original PPP rule, loan payments were deferred for 6 months from the date of disbursement. The new rule has extended deferment to the end of the covered period (8 weeks or 24 weeks from disbursement, as discussed above) PLUS 10 months. This means that no payments would be due on your PPP loan for 10 months after the covered period ends.
- Application deadline – The extension of the deferment period explained above effectively means that the deadline for submitting your forgiveness application is extended for the same period—until 10 months after the end of the covered period (8 weeks or 24 weeks from disbursement). In addition, the SBA will pay accrued interest on the forgiven amount through the date on which forgiveness funds are applied to the loan.
- Payroll percentage requirement – The requirement that 75% of the loan proceeds be spent on payroll costs has been reduced to 60%. If less than 60% is used for payroll costs, a proportional reduction in loan forgiveness will occur.
These changes have significant implications for your PPP forgiveness application.
- You have more time, both to spend your PPP funds and to submit your forgiveness application.
- Premature and/or incomplete applications will cause significant delays in the application process and inhibit our ability to process effectively. We understand that you may want to begin this process, but there is no penalty for using either the longer covered period for spending funds, or for using as much of the 10 months afterward as you need to submit a complete forgiveness application.
- All supporting documentation identifying all applicable expenses are needed before the application can be reviewed, approved, and submitted. You should not submit a forgiveness application until all of your PPP funds have been spent, and you have all of the documentation available to support your application.
- Once your application is approved and transmitted to the SBA, we do not believe we will have the ability to make adjustments to the requested forgiveness amount.
UPDATE 5/19: On May 15, 2020, the Treasury released the application for Paycheck Protection Program loan forgiveness. We are closely monitoring and awaiting SBA guidance and preparing our systems to support the loan forgiveness phase. A solution to submit the application and forms on-line will be available on our portal. SVB Private will not accept paper applications.
In the meantime, please consult your accountant to ensure you are gathering and storing the appropriate records needed for loan forgiveness.
Please check back for more information and updates.
UPDATE 4/22: We have received an overwhelming response to the Paycheck Protection Program and are proud to have been able to serve such a large portion of our commercial clients. We will be using the second round of SBA funding to allow us to process applications accepted prior to 11:59 pm ET on April 9th that were complete, but not yet submitted when the funding closed on April 16th, plus a second group of applications that were in process but incomplete. We will not be re-opening our portal for new applications as we are very focused on two priorities; submitting 100% of completed applications to the SBA, and meeting the 10 day window between SBA Authorization and funding of the approximate 1,100 PPP loans our clients are in need of.
UPDATE 4/9: We have received an overwhelming response to the Paycheck Protection Program and are pleased to be able to help so many of our clients in need of this program. In order to manage capacity and serve the needs of as many clients as possible, we are accepting applications until 11:59pm ET Thursday April 9, 2020 from those organizations which previously sent us a completed paper application to the SBA@bostonprivate.com inbox, or who have begun an application in the online portal but not completed it. Our priority is to process 100% of these organizations.
UPDATE 4/5: We have received an overwhelming response to the Paycheck Protection Program and are pleased to be able to help so many of our clients in need of this program. In order to manage capacity and serve the needs of as many clients as possible, we have paused accepting applications at 11:59pm ET Sunday April 5, 2020. Our priority is to process 100% of the qualifying organizations who have applied thus far. Please contact sba@bostonprivate.com with any questions you may have.
UPDATE 4/4: Supporting your business through this challenging time continues to be our top priority. The following is an update on the current status of applying to the Small Business Administration’s Paycheck Protection Program through SVB Private.
To expedite the application process, please begin compiling all of the information required by the SBA, including the following:
- Company certified information demonstrating that a borrower had employees for whom the borrower paid salaries and payroll taxes on or around February 15, 2020
- Company certified schedule of average monthly payroll costs for the preceding calendar year supported by documents such as payroll processor records, payroll tax filings, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount.
If you have already submitted information to us, you will need to resubmit it via this online portal. We apologize for the inconvenience.
Per SBA guidelines, independent contractors and self-employed individuals should submit their application on or after April 10, 2020.
We cannot guarantee loan approval or funds availability.
Please note: If your business and the qualified applicant for the loan did not have an existing deposit account with SVB Private as of March 31, 2020 you will need to work with your current banking partner to apply to the SBA Paycheck Protection Program, and you may not hear back from us. Due to overwhelming demand, we are only accepting applications from existing business clients at this time.
We appreciate your patience as we navigate the SBA’s guidance as quickly as possible to get you the funds you critically need. For more information on the Paycheck Protection Program, we encourage you to visit www.sba.gov. Please be safe and we wish you continued health.