A MESSAGE TO OUR CUSTOMERS REGARDING THE FORGIVENESS APPLICATION ASSOCIATED WITH YOUR PAYCHECK PROTECTION LOAN:
While further guidance and clarification from the SBA and Treasury is likely, the Paycheck Protection Program Flexibility Act of 2020 now accommodates the following changes:
- Extends the period borrowers have to spend loan proceeds from the earlier of: 24 weeks after the origination of the loan or December 31, 2020, rather than the current eight weeks.
- Reduces the minimum amount that a borrower must spend on payroll costs form 75% to 60%.
- Extends to Dec. 31 the period in which employers may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable loan amount. However, the forgivable amount will be determined without regard to a reduction in the number of employees (compared to February 15, 2020) if the borrower is (1) unable to rehire former employees and is unable to hire similarly qualified candidates by December 31, 2020 or (2) is unable by December 31, 2020 to return to the same level of business activity that existed before February 15, 2020 due to compliance with federal regulations or guidance related to COVID-19.
- Allows borrowers to defer principal and interest payments on PPP loans until the SBA remits the amount of determined forgiveness to the lender, instead of the current six-month deferral period. If borrowers do not apply for loan forgiveness within 10 months after the last day of the eligible forgiveness period, the borrower must begin to make full payments on the loan.
- Allows business with forgiven loans to defer payroll tax payments.
This law will be subject to additional guidance by SBA and Treasury. New Haven Bank will contact you to set up individual appointments to file your forgiveness applications. Please be mindful that the time period for filing these applications has been extended. New Haven Bank will manage the flow of applications to allow us ample time to process all applications with care.
Thank you for your cooperation.