Jun 12, 2020 via ICBA
​The Small Business Administration issued new Paycheck Protection Program application forms and an interim final rule implementing ICBA-advocated reforms to the program.

• Updated borrower application form
• Updated lender application form
• New interim final rule

The new rule revises the original PPP interim final rule issued April 2 and implements reforms included in the Paycheck Protection Program Flexibility Act of 2020, which was signed into law June 5 by President Trump.
Among its policies, the law extends from eight to 24 weeks the amount of time borrowers have to spend PPP funds while remaining eligible for forgiveness and lowers the amount that must be spent on payroll costs from 75 percent to 60 percent.
The rule notes that:

• 60 percent of the loan forgiveness amount must be payroll, but borrowers will receive partial forgiveness to the extent they fall short of 60 percent.
• The new five-year maturity term applies to loans that receive an SBA approval/loan number on June 5 or later.
• SBA and Treasury will provide further guidance on forgiveness, loan reviews, and advance purchases of PPP loans by SBA.

ICBA offers a summary of the law that community banks can share with borrowers. Meanwhile, ICBA continues calling on community bankers and small-business owners to urge Treasury and SBA to enact additional reforms to simplify the PPP process.

The Independent Community Bankers of America® (ICBA) called on the Treasury Department and Small Business Administration to make the Paycheck Protection Program loan-forgiveness process less complex and onerous for borrowers and lenders.

In a letter to the agencies, ICBA said an unnecessarily complex forgiveness process compromises the PPP's potential to facilitate a strong economic and jobs recovery.
"Borrowers should not have to hire accountants at expensive fees to assist with loan forgiveness," ICBA President and CEO Rebeca Romero Rainey wrote. "What’s more, borrowers whose first language is not English are struggling with the complex forgiveness forms and procedures and would greatly benefit from simplification."
With lenders under $50 billion accounting for more than 65 percent of approved loans and more than 63 percent of the approved dollar amount through two rounds of the PPP, ICBA called for:

• A shorter and simpler application form akin to the IRS Form 1040EZ.
• An online PPP loan-forgiveness calculator for borrowers and lenders.
• A forgiveness presumption of compliance for borrower-certified loans of $1 million or less.
• SBA to purchase residual PPP loans at par to support additional lending.
• Preserving the tax deduction for business expenses for PPP borrowers.

ICBA is calling on community bankers to provide Congress with policy recommendations to make the Paycheck Protection Program more workable for lenders and borrowers.
With Congress considering needed changes to the program, ICBA's Be Heard grassroots action center offers a customizable letter to lawmakers on pro-community bank provisions.

Contact Congress.

​As the environment in response to Covid-19 continues to be challenging, the California Community Banking Network (CCBN) is asking for relief and clarity from policymakers in order for community banks to focus on their customers and communities and further the overarching goal of reviving the country.
 
CCBN applauds the recent executive order signed by President Trump directing agencies to use all emergency authorities to swiftly rescind or temporarily waive restrictive regulations and is hopeful more can be done to help ease burdens on community banks and small businesses.
 
CCBN also supports the Independent Community Bankers of America’s (ICBA) recent letter to Congress urging inclusions to the next legislative package, which include recommendations addressing the Paycheck Protection Program (PPP).
 
SBA data shows the tremendous role community banks have played, funding more than half of the loans in the first PPP round. Community banks have been working tirelessly to fund and ensure the survival of small businesses throughout the country and continue to navigate through the PPP.
 
Current PPP guidance and criteria remain unclear and as community banks service these loans it is crucial that relief from any red tape is lifted to allow community banks to provide essential funding to keep small businesses alive. More specifically relaxing the PPP criteria and simplifying the forgiveness documentation will greatly alleviate the daunting challenges of this already obscure process.
 
As community banks continue to track, report and fund these loans, more reprieve and guidance is necessary. Community banks are seeking the reasonable discretion and prudence of regulatory agencies as they support small businesses and aid in economic recovery. 

From ICBA: 
​
The Small Business Administration issued an interim final rule extending the repayment date for the Paycheck Protection Program certification safe harbor. Under the revised policy, any borrower that applied for a PPP loan prior to April 24 and repaid the loan in full by May 18 will be deemed by SBA to have made the required certification in good faith. The deadline was previously May 14.

The rule also codifies the deadline extension for submitting the initial SBA Form 1502, for which the agency has yet to provide detailed guidance. As the SBA announced in the latest update to its PPP frequently asked questions, that deadline is now the later of: (1) May 29, 2020, or (2) 10 calendar days after disbursement or cancellation of the PPP loan.

Lenders are required to submit the form to report on PPP loans and collect the processing fees on fully disbursed loans to which they are entitled, though SBA 7(a) Fiscal and Transfer Agent Colson Services Corp. says in an online advisory that lenders should not report their PPP loans on Form 1502 until the SBA has released additional guidance.
​
Additional PPP guidance and resources are available on Treasury’s PPP webpage and ICBA's COVID-19 resource center.

The Small Business Administration's guidance on authorized uses of Paycheck Protection Program loans does not align with the CARES Act, the agency's inspector general reported.
The IG report notes that while the law does not set any restrictions on the portion of loans that must be used for payroll, an SBA interim final rule sets a 75 percent threshold.
The report also notes that the SBA's maturity term of two years undershoots the law's maximum term of up to 10 years, which could result in an unintended burden to PPP borrowers.
Read the report

In a letter, ICBA urged the agencies to:

• Reconsider the SBA’s non-statutory requirement that 75 percent of PPP loan proceeds must be spent on retaining payroll. ICBA recommends lowering the payroll expense requirement to no more than 50 percent to help small businesses meet other overhead costs.
• Provide a straightforward, easy-to-apply approach to loan forgiveness, such as developing a PPP loan-forgiveness calculator that will allow borrowers and lenders to easily determine the forgiven amount.
• Establish a presumption of compliance for all loans with an original balance of $1 million or less based on the borrower’s certification that the funds were used in accordance with the terms of the program.
• Address the many questions that have arisen related to PPP loan forgiveness, such as the consequences if borrowers spend less than 75 percent of their PPP loans on payroll and what constitutes full-time staff and new hires.

From SBA: ​
​SBA and Treasury value all lenders and their small business customers.
To ensure access to the PPP loan program for the smallest lenders and their small business customers, starting at 4 p.m. today EDT through 11:59 p.m. EDT, SBA systems will only accept loans from lending institutions with asset sizes less than $1 billion dollars.
 
Please note, lending institutions with asset sizes less than $1 billion will still be able to submit PPP loans outside of this time frame. Please also note that lenders with asset sizes greater than $1 billion will be able to submit loans outside of today’s 4pm -11:59pm EDT reserved processing time.
 
This reserved processing time applies today April 29, 2020. SBA and Treasury will evaluate whether to create a similar reserved time again in the future.
 
SBA and Treasury continue to monitor loan system performance and will continue to provide frequent updates to the lending community.

From SBA: 
​SBA and Treasury value all lenders and their small business customers.

For the benefit of small business customers and their employees, SBA and Treasury are working on ways to optimize the loan processing system.

Starting today, Robotic Processing Automation (RPA), which are robotic systems used by some banks to mimic human data entry, may not be used to submit Paycheck Protection Program loans into SBA’s E-Tran loan system. 

RPAs burden the processing system and diminish its capabilities. Without RPAs, the loan processing system will be more reliable, accessible, and equitable for all small businesses.    
 
Application Programing Interface (APIs) will still be permitted. If you are a lender who needs assistance converting your submission process to a non-RPA API, contact Sheri McConville. (Sheri.Mcconville@sba.gov)

SBA and Treasury have updated the guidance for lenders who have received a significant amount of Paycheck Protection Program (PPP) loan applications.

The minimum amount of lender-approved and SBA-ready PPP loans that a lender must have ready for the XML file submission process is now 5,000 loans.

Please note these XML files of 5,000 or more approved PPP loans must be submitted to SBA by 9pm EDT on Monday, April 27, 2020. 
SBA and Treasury value all lenders and their small business customers and will continue to provide updates to the PPP lending community as loan processing resumes this week.

​updated_4-27-20_-_sba_xml_submission_guidance_memo_.pdf

From a CCBN bank: 

Forgiveness is discussed in the following sections on the PPP – IFRN FINAL:
                a.) Section O starting Page 13
Forgiveness is discussed in the following sections on the PPP – IFRN FINAL (Addtl) –  for self-employed and independent contractors:
                a.) Section F starting Page 11
 
The clause that has merited attention on our side is the following from the PPP –IFRN FINAL on Page 13-14:
 
That is, the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgivable purposes described below and employee and compensation levels are maintained.
 
Our interpretation is that the number of employees can’t be reduced and no reduction in their compensation at the time of funding thru the 8 week period.  They could hire more or give raises if they chose.  Hence the borrower need for a current employee list/with salaries to track against.

Below is guidance from ICBAs FAQ’s on agents 
The obligation of a lender to pay the appropriate agent fee does not commence unless the bank has agreed that the accounting firm/CPA is acting as an agent for the bank. Please see guidance provided below from the American Institute of Public Accountants (AICPA) to their members in support of best industry practices.
 
“The law is clear that agents cannot collect a fee from an applicant but must instead collect a fee from the lender. If you choose to be an agent, we suggest you (the Accounting Firm) contact the lender before embarking on the engagement and get a written agreement with them so you get paid. You should have a conflict waiver in the agreement with the lender, just like in your loan assistance engagement letter with the client. Disclose this arrangement with your client as well.”

​We are still awaiting SBA guidance

The forgiveness of a PPP loan is not taxable to the borrower unlike the usual treatment of debt forgiveness.