June 5, 2020
As you may know, the Paycheck Protection Program (PPP) Flexibility Act was signed into law, which makes it easier for many businesses to spend PPP funds in a way that is forgivable.
The following is based on federal legislation that was enacted into law today. We anticipate additional guidance from the SBA incorporating these legislative developments, but in the interim we provide information here about how we expect this new legislation to affect the forgiveness requirements.
Updates to PPP loan forgiveness
- Extended time period to 24 weeks to use PPP funds in a forgivable way
- If your loan is 100% forgivable, you may want to consider applying early for loan forgiveness, once you’re eligible to do so
- Aligned loan payment deferral to the date the Small Business Administration (SBA) sends forgiveness payment, if you apply for forgiveness within 10 months after your covered period.
- Reduced payroll cost requirements to 60% of the forgiveness amount
- The forgiveness amount continues to be reduced if, as compared to prior periods, you’ve reduced the number of full-time employees, or compensation across employees earning $100,000 or less was reduced by more than 25%
- If you’ve already reduced workforce or salaries, updated requirements provide that your forgiveness amount will not be reduced if you:
- Rehire and restore salaries by December 31,2020 (previously the date was June 30, 2020);
- Document that you are unable to rehire your previous employees or to hire similarly qualified individuals by December 31, 2020;
- Document an inability to return to your standard level of business activity due to compliance with COVID-19 requirements or guidance issued by the Centers for Disease Control (CDC) or other specific federal entities.
Preparing to apply for forgiveness
- Familiarize yourself with the updated SBA PPP forgiveness application form, once available
- There is no need to complete it; Citizens is developing an easy and intuitive online application, and we will not accept paper or PDF forgiveness applications
- Organize required documentation
- Verify the number of employees on your payroll and their pay rates
- Collect cancelled checks, payment receipts, transcripts of accounts, and documents verifying payments for mortgage, lease and utilities
- Evaluate your options to determine when it is best for your business to apply for forgiveness
- Review the latest guidelines at sba.gov and treasury.gov; for additional information, visit Citizens Bank PPP Forgiveness
When your loan is eligible to apply for forgiveness, you will receive an email from us about how to access our online application. We are committed to keeping you informed, and look forward to continuing to support and guide you through the PPP process.
Visit our PPP forgiveness page for more PPP loan forgiveness resources.