Tuesday, December 6, 2022

What Banks Are Doing Ppp Loans

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If I Have Already Submitted A Loan Forgiveness Application Do I Need To Reapply Using Sba Form 3508s

Did the bank mess up? Is your PPP loan for the wrong amount?

If you have an application in process that has not yet been submitted to the SBA, we will continue to process your application unless you inform us that you would like to withdraw your application and reapply using Form 3508S. We have sent an email to those customers impacted with instructions on how to notify us.

Why Am I Unable To Apply For Forgiveness Directly To The Sba

PNC is not participating in the SBAs forgiveness portal. PNCs decision not to participate in the SBA forgiveness portal will not impact the decisioning of your forgiveness application. The SBA still requires all lenders to make a decision on forgiveness applications, even those lenders participating in the new SBA forgiveness portal

Union Bank & Trust Company

Headquartered in Lincoln, Nebraska, Union Bank & Trust Company is a state-chartered commercial bank. It is currently taking PPP loan applications from current customers whose loan, deposit, trust or investment account pre-dates March 1, 2020, and from applicants referred by affiliates. For more information, go here. Consolidated assets: $4.8 billion.

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What Are The New Ppp Rules

Highlights. A new Interim Final Rule from the U.S. Small Business Administration provides that certain owner-employees with less than a 5 percent ownership stake are not subject to the owner-employee compensation rule of the Paycheck Protection Program limiting loan forgiveness for owner compensation.

What Is A Ppp Loan

Do

With a massive spike in unemployment unfolding during the pandemic, PPP loans helped protect employees while U.S. businesses sales recovered.

Moreover, with mobility restrictions and lockdowns imposed by the U.S. government, supporting the private sector was necessary.

To that point, the SBA allowed beneficiaries to receive funding for these eligible expenses:

  • Rent
  • Personal protective equipment
  • Uninsured property damage that resulted from the pandemic

Moreover, all loans included a 1% interest rate, and borrowers did not pledge collateral. Also, PPP loans issued before Jun. 5, 2020 have a two-year payback period, while PPP loans issued after Jun. 5, 2020, have a five-year payback period.

Qualifying applicants included:

  • Sole proprietors, independent contractors and, self-employed persons with 500 employees or less.
  • Some exceptions were made for larger businesses as long as they met other requirements.

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Are Amounts Attributable To The Business Operation Of A Tenant Or Sub

No. In an Interim Final Rule on Treatment of Owners and Forgiveness of Certain Nonpayroll Costs originally posted on August 24, 2020, the SBA has stated that the amount of loan forgiveness requested for nonpayroll costs may not include any amount attributable to the business operation of a tenant or sub-tenant of the PPP borrower or, for home-based businesses, household expenses. The IFR provides four examples:

  • If a borrower rents a building for $10,000/month and subleases a portion of the building for $2,500/month, only $7,500 of the rent is an eligible non-payroll expense.
  • If a borrower has a mortgage on a building and leases 25% of the fair market value of the building to other businesses, only 75% of the mortgage expense is eligible.
  • If a borrower operates out of a shared rental, it must prorate rent and utilities as it did on its 2019 tax filings .
  • If a borrower works out of their home, only the share of covered expenses that were deductible on their 2019 tax filings are eligible for forgiveness .
  • Support For Small Business Owners Directly Through The Sba

    There are several other financial assistance options, outside of our normal 7 and 504 loan programs, available for small businesses which you may choose to explore. The American Rescue Plan Act has created two separate grants which are being offered directly through the U.S. Small Business Administration , with additional funding allocated for COVID-19 Economic Injury Disaster Loans.

    SBA Disaster Assistance Loans

    The U.S. Small Business Administration may be able to provide you low-interest federal disaster loans for working capital.

    COVID-19 Economic Injury Disaster Loan

    The U.S. Small Business Administration may be able to provide economic relief to small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue. Unlike the SBA Paycheck Protection Program , the EIDL is administered and funded directly through the U.S. Small Business Administration.

    Learn more

    SBA Shuttered Venue Operators Grant Application

    The U.S. Small Business Administration may be able to provide economic relief to Hard-Hit Small Businesses, Nonprofits and Venues affected by COVID-19 pandemic. Unlike the SBA Paycheck Protection Program , the SVOG is administered and funded directly through the U.S. Small Business Administration

    Learn more

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    How Is The Amount Of Owner Compensation That Is Eligible For Loan Forgiveness Determined What If I Am An Owner Of Multiple Businesses With Multiple Ppp Loans

    The applicable IFRs and FAQs provide that the amount of compensation of owners who work at their business that is eligible for forgiveness depends on the business type and whether the borrower is using an eight-week or 24-week Covered Period. The amount of loan forgiveness requested for owner-employees and self-employed individuals payroll compensation is capped at the lesser of $20,833 per individual or the 2.5-month equivalent of their applicable compensation in 2019 in total across all businesses in which he or she has an ownership stake. For borrowers that received a PPP loan before June 5, 2020 and elect to use an eight-week Covered Period, this cap is $15,385 per individual or the 8-week equivalent of their applicable compensation in 2019 in total across all businesses in which he or she has an ownership stake. If their total compensation across businesses that receive a PPP loan exceeds the cap, owners can choose how to allocate the capped amount across different businesses.

    When Is The Latest I Can Apply For Forgiveness

    New bank says they will fund PPP loan “in days maybe hours” Payroll Protection Program Update 4/7/20

    If you have a Second Draw loan, you must submit your forgiveness application for your First Draw loan either before or simultaneously with your Second Draw loan forgiveness application.

    The latest date you can apply for loan forgiveness is the maturity date of the loan. If you have not submitted a complete loan forgiveness application within 10 months after the end of the maximum 24-week covered period, payments will be due.

    If you complete your application after you start making payments and receive a forgiveness determination that exceeds your outstanding principal balance, a settlement process will occur for any overpayment.

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    More Guidance & Sources On Ppp

    Correction : The previous version of this piece linked to the Senate version of the CARES Act which did not include a reference to independent contractors being included in the payroll costs calculations. Weve updated our link to the final version of the bill, H.R. 748, which was signed by President Trump and includes the section on including independent contractors in your payroll costs calculations. Second Correction : Now that the Treasury guidance is out on this bill it appears as though independent contractors will NOT be included in payroll cost calculations unless they have a 1099.

    Paycheck Protection Program Details

    Eligibility. To be eligible for the PPP you must be a small business, sole proprietor, side hustler, or non-profit that has fewer than 500 employees. You must have been in business prior to February 15, 2020. And you generally need to experience negative effects from COVID-19 on your business . Specifically,

    An eligible recipient receiving loan forgiveness under this section shall make a good faith certification that the uncertainty of current economic conditions justifies the loan request to support the ongoing operations of the borrower, and acknowledges that funds will be used to retain workers and maintain payroll.

    From my understanding so far, this program has a very wide application.

    If you have employees or contractors you use regularly and youve been affected by Covid-19 please look into the Paycheck Protection Program through your bank and keep everyone on board.

    Philip Taylor, CPA

    Loan Amount. You can borrow up to the lesser of 2.5 times your average monthly payroll for the last 12 months, or $10 million dollars. Payroll generally includes salaries and benefits minus the payroll taxes paid and is capped at $100,000 per employee.

    You dont need to put up collateral and you dont need to pay any fees to initiate this loan.

    Loan forgiveness. Now heres the exciting part. Any qualifying expenses you incur in an eight week period during the program window , are eligible for loan forgiveness.

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    Are Rent Payments Made To Related Parties Eligible For Forgiveness

    In an Interim Final Rule on Treatment of Owners and Forgiveness of Certain Nonpayroll Costs originally posted on August 24, 2020, the SBA has stated rent payments to related parties are eligible for forgiveness so long as 1) the amount of loan forgiveness requested for rent or lease payments to a related party is no more than the amount of mortgage interest owed on the property during the Covered Period that is attributable to the space being rented by the business and 2) the lease and mortgage were entered into prior to February 15, 2020. Borrowers must provide mortgage interest documentation to substantiate these payments. And where the payor requests forgiveness for amounts paid to a related party, the related party cannot also request forgiveness for that same amount. Additionally, hile rent or lease payments to a related party may be eligible for forgiveness, mortgage interest payments to a related party are not eligible for forgiveness.

    Is There Any Ppp Money Left

    Small Business PPP Loan Update

    Theres about $130 billion left in the PPP pot.It took less than two weeks for the Paycheck Protection Program to run out of funds when it first opened to small businesses on April 3.Since the pot was replenished on April 27 with $310 billion, firms have been slow to take the cash.Theres still plenty of money left..

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    Please See Below For The Evolving Common Documents Lenders May Request According To The Paycheck Protection Program

    • 2019 IRS Quarterly 940, 941 or 944 payroll tax report
    • Payroll reports for the 12 months that show:Gross wages for each employee Paid time off for each employeeVacation pay for each employeeFamily medical leave pay for each employeeState and local taxes assessed on an employees compensation
    • 1099s for independent contractors for 2019
    • Documentation showing a total of all health insurance premiums paid by the company owners under a group health planInclude all employees and the company owners
    • Document the sum of all retirement plan funding that was paid by the company ownersInclude all employees and the company ownersInclude 401K plans, Simple IRA, SEP IRAs

    Please check back as we will be updating the information as we receive it. Do not hesitate to contact us or read the information we have made available to assist you through this crisis.

    How Do You Apply For A Ppp Loan

    Business owners need to fill out a PPP loan application SBA Form 2483 for first-draw loans and SBA Form 2483-SD for second-draw loans and gather all supporting documents.

    You can apply for a new PPP loan through any participating lender. Keep in mind: Some banks prioritize current account holders, so if you have a relationship with a bank offering PPP loans, apply there first. The deadline to apply is March 31, 2021

    A few fintech companies and online lenders, such as BlueVine, are approved to accept PPP loan applications. These companies typically offer a streamlined loan application process and may be able to approve loans and deliver funding more quickly than traditional banks.

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    How Long Will It Take Before I Know If My Ppp Loan Has Been Forgiven

    After submission of a complete and signed application, including required documentation, we will begin our review process. The U.S. Bank review process can take up to 60 days. We will contact you if there are any issues with your application.

    Following the completion of our review, we will submit a decision on your loan forgiveness application to the SBA for their final review we will also notify you of that decision. From our submission date, the SBA has up to 90 days to provide us with the final forgiveness amount. When the SBA renders their final review results, we will let you know. Additionally, if the SBA requests more information one of our verification specialists will be in touch. Please note, in some cases we have not received the SBAâs final payment decision within the 90 days. The SBA has notified us that they are doing everything they can to review loan files in a timely manner. We will notify customers when we receive the SBAâs rendered decision.

    Where Should I Go If I Have Questions

    Virginia banks prepare for 2nd round of PPP loans

    For detailed information on the application, Covered Periods, the type of costs that are eligible for forgiveness and what documentation you will need to submit in connection with your application, please visit the U.S. Treasury and SBA websites.

    For additional assistance with PPP loan forgiveness documentation, view our documentation guide.

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    Ppp Loan Investigations: Whats On The Horizon For Banks

    When the federal government flooded the economy with liquidity to avoid a complete economic collapse in response to government-mandated pandemic shutdowns, Congress asked financial institutions to expediate the delivery of these funds. Speed, not compliance, was the watchword.

    That was then.

    Banks will likely be targeted in the coming months for their roles with the Paycheck Protection Program and other lending during the pandemic. This will take the form of government and whistleblower investigations, including False Claims Act claims related to loans that went to companies that should not have received these loans. It may also include class actions from frustrated companies that did not receive timely loans, as well as actions from creative plaintiffs attorneys who are using federal and state laws to create new hooks for litigation.

    Banks can take steps right now to prepare for these types of governmental and private inquiries, including auditing not only the PPP applications they received but also the process they used to administer them. Banks should also consider certain proactive communications with prosecutors and regulators if potential issues are identified.

    What banks are likely to face

    How banks can prepare and defend themselves

    Steve Carey, Brian Cromwell, and Todd Sprinkle are partners in Parker Poes Financial Services industry team. They can be reached at , and .

    Federal Authorities Are Targeting Banks That Issued Fraudulent Ppp Loans

    One of these sources could be the bank that issued your companys PPP loan. As recently reported by Reuters, the DOJ, has sent grand jury subpoenas to big banks seeking records as part of a broader investigation into potential abuse of a $660 billion emergency loan program to help small businesses hurt by the novel coronavirus.

    The article continues:

    Policymakers worry that the huge pot of cash has been a magnet for fraudsters, and U.S. Treasury Secretary Steven Mnuchin has warned that companies found to have lied to secure loans could face prosecution. The Justice Department opened a probe into the program last month and has already brought criminal charges against borrowers it alleges lied about the state of their businesses and numbers of employees.

    In regards to the banks themselves, the concern appears to be that some of financial institutions that lent funds under the PPP did not take steps to prevent federal program fraud by borrowers. While the banks were granted protection as long as they could demonstrate that they relied on borrowers documentation and certifications when issuing PPP loans, this protection would not extend to circumstances in which any banks facilitated or knowingly ignored fraudulent loan applications. At this point, no allegations against any banks have been made, and it is not clear when, or if, they will face scrutiny in relation to their lending practices under the PPP.

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    Why Should You Apply To A Nonbank Lender

    CO spoke to Alexander Cohen, CEO of Liberty SBF, a nonbank lender thats currently processing applications for PPP loans. He noted that there are a few advantages to applying for funding at a nonbank lender compared to a traditional financial institution.

    First, theres speed. A number of nonbank lenders, including Liberty, have dedicated resources specifically to PPP loans. Were using a combination of our technology platform and our people to qualify loans and get applications in the queue for the SBA as quickly as possible, said Cohen.

    Banks are subject to a number of regulations, including Know Your Customer and the Banking Secrecy Act that strictly govern the way a financial institution can collect and process your application. Each bank has its own set of fraud protection measures, user authentication steps, and underwriting requirements. Nonbank lenders are also subject to anti-fraud regulation, but they more often use technology to meet those regulatory requirements.

    Cohen says that some banks may not even be accepting PPP applications from new applicants.

    Were hearing that banks are either not participating in PPP at all, or that theyre only processing requests from existing depository customers. There are some banks that processed loans for non-customers last time, and they wont be doing that again. Other banks are only processing loans for customers who were approved in a previous round of PPP funding, he said.

    Alexander Cohen, CEO of Liberty SBF

    When Can I Apply For Forgiveness

    Do banks take risks on PPP Loans?

    You must have reached the end of your covered period before applying for loan forgiveness. Your covered period must be a minimum of 8 weeks long .

    For application types that require supporting documentation, that documentation is required to be submitted with the forgiveness application. You may need to wait for statements to be issued in order to submit your application.

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