On June 3, the US Senate unanimously passed the House Bill H.R. 7010 without changes, and on June 5, President Trump signed the bill into law. The bill retroactively makes changes to the Paycheck Protection Program. Accordingly, we will be updating our free PPP Loan Forgiveness Application Guide and Calculator once the SBA provides revised interpretation on Form 3508 (the “PPP Loan Forgiveness Application”). In our ongoing effort to help SBA PPP lenders and their customers get as much of their PPP loans forgiven as possible, FINSYNC is announcing several new partnerships and transparent pricing for lenders to process forgiveness applications directly with the SBA.
NOTE: The funding for the second round of PPP loans has not yet run out, surprisingly. The SBA has announced that they will continue to offer PPP loans until December 31, 2020, or the funds run out, whichever comes first. As of this writing, approximately $100 billion in PPP funds were still available for loan applications.
H.R. 7010, Paycheck Protection Program Flexibility Act of 2020
The Paycheck Protection Program Flexibility Act which makes some significant changes to the PPP program. These changes are retroactive to the original date of the law. Below are the key changes and how each will affect your outlook on forgiveness and repayment of your PPP loan.
- The business now has 24 weeks to spend the PPP money instead of 8 weeks; however, that does not mean you must take 24 weeks. You can spend your loan proceeds in 8 weeks, and then apply for forgiveness after that period.
- Only 60% of the funds now have to be spent on payroll instead of 75%. The remaining part of the loan can still only be spent on rent, mortgage interest, utilities, and other qualifying expenses. Although the new law technically indicates that a minimum of 60% of the loan must be spent on payroll to qualify for any forgiveness, the SBA and Treasury have publicly stated this minimum cliff will be revised in further guidance to still allow for partial forgiveness instead of no forgiveness if less than 60% is spent on payroll.
- Businesses now have 10 months after the 24-week period to apply for forgiveness. If you don’t apply for forgiveness, then you must begin making payments after that 10 month period has passed.
- The SBA has created what it’s calling the “FTE Safe Harbor.” This FTE safe harbor allows for circumstances in which a business is unable to rehire employees that were laid off or furloughed, or hire a replacement, or cannot to return to the same level of business at which they were operating before the pandemic because of COVID-19-related circumstances. If the business can document such circumstances, then the business can qualify for the FTE “safe harbor.”
- The lender has 60 days to review a forgiveness application before submitting it to the SBA.
- The SBA has 90 days to review and consider all applications for forgiveness before approving, approving partial or denying forgiveness.
- All new PPP loans made after this latest “Flexibility” legislation will have a five-year maturity. Lenders are able to extend maturity for loans prior to the latest ‘Flexibility’ legislation at their discretion, but are not required to do so. The interest rate on the loan remains at 1%.
- Borrowers now can defer the 6.2% OASDI (employer payroll) taxes even if the business receives PPP loan forgiveness. The 6.2% OASDI taxes can be deferred for some time even after a loan has been forgiven. That exact time frame is not yet clear.
- Payments of principal and interest can be delayed until either the lender receives payment of the forgiveness amount from the SBA or 10 months after the end of the 24-week period, whichever is earlier.
The timeline allows lenders and the SBA more time to process the millions of forgiveness applications. Keep in mind that neither the lenders nor the SBA were ever set up or prepared for such a program. The volume of loans that have been processed through the PPP alone is staggering, and processing forgiveness of each of these loans will take time.
Point #5 is the most vague of the changes, but it also gives PPP loan recipients the most flexibility in providing documentation that they did in fact attempt to keep as many people on payroll as possible.
Transparent Pricing for PPP Forgiveness Application Processing
Most lenders have been waiting to make a final decision on adopting a PPP Forgiveness solution. FINSYNC has created a turnkey solution, including fully electronic application submission by the business into a digital portal for processing by the lender. Lenders can then submit forgiveness applications electronically to the SBA (when available).
We’re so confident in our solution that we’re one of, if not the only solution provider to offer completely transparent pricing.
- $350 per lender user per month
- No implementation fee
- No long-term contract
- No core integration required
We are proud to announce that, among others, Horizon Bank, First Reliance Bank, Lamar National Bank, and Texas Brand Bank have adopted the FINSYNC PPP Forgiveness Solution with many others actively looking to adopt the solution.
Qualified Help for the PPP Forgiveness Application
The SBA PPP Loan Forgiveness Application will be updated once again after this latest legislation is signed into law. The application is already as complex as a business tax return. Unfortunately, these (we hope final) changes will not decrease that complexity. With that in mind, FINSYNC has partnered with several regional accounting firms across the country to put highly qualified accounting resources at the fingertips of businesses who need PPP forgiveness help. Through the FINSYNC Services Portal, any business can get matched with a highly qualified and vetted accountant who knows their industry. Find an accountant for your business today.
A Plug-and-Play PPP Loan Forgiveness Experience
We’re committed to providing the most clear, up to date PPP forgiveness guide and calculator to help you prepare to apply for forgiveness. When the time comes for your business to complete the forgiveness application and provide the required documentation, we’ve partnered with the best accountants in the country to walk you through the process. And, for the banks and credit unions who have to process thousands upon thousands of loan forgiveness applications, our solution and pricing are straightforward and completely transparent.