SBA Paycheck Protection PROGRAM

PPP Status & Recommendations

The Paycheck Protection Program (PPP) has been extended.  The new application deadline is August 8, 2020.  This section includes information on:

o    Changes to the PPP implemented by the Paycheck Protection Program Flexibility Act (PPPFA) approved in early June. 

o    PPP Loan and Forgiveness Applications and additional information  

The Treasury Department updated Paycheck Protection Program (PPP) Loans Frequently Asked Questions (FAQ) as of June 25, 2020. It is reported these FAQ’s are being updated often so check back regularly. Links to additional PPP loan information and forms are provided below.

PPP Status & Recommendations

Guidance on the SBA website indicates a loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities.  At least 60% of the forgiven amount must have been used for payroll.  

June 5, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act (PPPFA) in an attempt to address many concerns expressed by the small business community around the Paycheck Protection Program (PPP).  The FAQ provides additional information on the following points of the Act:

o    For any portions of the loan not forgiven, payments will be deferred for six months.  

o    Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years. All loans have an interest rate of 1%.  

o    The “covered period” for businesses to spend the loan proceeds was extended from eight weeks to 24 weeks, or until December 31, 2020.

o    The amount of forgivable loan proceeds that borrowers may use on non-payroll, eligible expenses was increased from 25% to 40%. 

o    More time is provided under the Safe Harbor provision and there are additional provisions related to the need for small businesses to rehire employees to obtain forgiveness for the loan.

o    Small businesses will be allowed to take a PPP loan and also defer payroll taxes.

o    The period for a business to apply for loan forgiveness has been increased from within six months to within 10 months of the last day of the covered period.

PPP Loan and Forgiveness Applications & Information

A new version of Paycheck Protection Program Borrower Application Form was released on June 12, 2020.  Businesses that wish to apply for a PPP loan should use this form.  PPP loans are approved and funded through local banks and other financial institutions. Contact the Colorado Small Business Development Center HOTLINE at 303-860-5881 if you need help identifying a PPP lender. The staff maintains a daily updated list of financial institutions that are taking on clients for the PPP.

The SBA has released loan forgiveness applications and instructions, including the EZ application that applies to borrowers that are self-employed and have no employees.  

The applications and instructions reflect changes adopted in early June.  The changes provided more flexibility and relief for small businesses including extending the covered period for loan forgiveness from 8 weeks after the date of loan disbursement to 24 weeks, and lowering the requirements that 75% of a borrower’s loan proceeds must be used for payroll costs to 60%.  

Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.  If the loan is not fully forgiven, loans issued prior to June 5 have a maturity of 2 years, while loans issued after June 5 have a maturity of 5 years.  All loans have an interest rate of 1%.  Additional PPP loan information, including information and instructions for the loan forgiveness applications can be found on the SBA website.

Links to PPP Loan Forgiveness applications and information follow:

Paycheck Protection Program Loans (PPP) Frequently Asked Questions (FAQ)

Paycheck Protection Program EZ Loan Forgiveness Application Instructions for Borrowers 

Paycheck Protection Program EZ Loan Forgiveness Application Form 3508EZ 

Paycheck Protection Program Loan Forgiveness Application Instructions for Borrowers 

Paycheck Protection Program Loan Forgiveness Application 

Businesses that obtained both a PPP and an EIDL can use PPP loan proceeds to effectively refinance the EIDL for a lower interest rate:

Guidance on Refinance of EIDL Loans with PPP Loan Proceeds