Paycheck Protection Program Loan & Forgiveness Guidance
Updated as of January 20, 2021
To begin the process of applying for a PPP Loan, visit ppp.thatsmybank.com
SBA Interim Final Rule Version 1: Paycheck Protection Program (PPP) as Amended by the Economic Aid Act (01/06/2021)
SBA Interim Final Rule Version 2: Paycheck Protection Program (PPP) Second Draw Loans (01/06/2021).
SBA Form 2483 – First Draw Borrower Application
SBA Updates Rules, Forms for PPP Loan Forgiveness
First Northern Bank will notify its PPP loan clients when the Bank's PPP Portal has been updated with the new loan forgiveness forms. Until then, hold off on applying for forgiveness. This will not impact your ability to apply for a 2nd draw under PPP Round 2.
Late last night, the Small Business Administration released revised loan forgiveness forms for the Paycheck Protection Program. SBA also released an updated interim final rule on PPP forgiveness and a new conflict of interest disclosure.
The revised forms include Form 3508S, which provides a streamlined forgiveness application for all PPP loans of $150,000 or less. In reviewing Form 3508S, “the lender does not need to independently verify the borrower’s reported information” if the borrower submits documentation (if required) and attests to its accuracy, SBA said, but should the lender identify an error, it “should work with the borrower to remedy the issue.”
The interim final rule issued last night consolidates previous guidance with new requirements under the Economic Aid Act, the COVID-19 relief package passed in December reauthorizing the PPP. For example, the rule incorporates the hold-harmless provision from the law for lenders that rely in good faith on borrowers’ certification and documentation, updates what payroll costs are eligible for forgiveness and reflects the process for both first-draw and second-draw PPP loans. The rule also covers non-payroll costs eligible for forgiveness, reductions in forgiveness, documentation requirements, SBA review and lender fees.
SBA specified that it will revise pre-existing FAQ documents to conform to the Economic Aid Act “as quickly as feasible.” Also mandated by the Economic Aid Act, the new disclosure form is required for PPP applicants for which at least 20% of their equity is held by certain executive branch officials, members of Congress and their spouses.
Read the interim final rule.
Download the revised Forms 3508, 3508EZ and 3508S.
Download the borrower disclosure.
FNB is Now Accepting Round 2 Paycheck Protection Program Loan Applications
First Northern Bank is excited to announce the launch of its new automated application system for your Paycheck Protection Program loan. This easy and intuitive application system will allow you to submit your application within minutes and provide you with convenient features, like:
• Pre-fills your information for returning PPP borrowers
• Provides status of your application
• Saves your progress along the way
• Uploads documents directly from your computer
The process is streamlined and guides you through the steps for the submission, processing, and funding phases. So, let's get started.
To assist you in gathering the documentation needed, please visit our Paycheck Protection Program page at thatsmybank.com/ppp for helpful resources, including a Quick Reference Guide and answers to commonly asked questions.
All of us at First Northern Bank look forward to serving you. Should you need any assistance with the Paycheck Protection Program, please contact our PPP Support Team by emailing non-account related information to [email protected] or calling (707) 678-3041.
How to Calculate Maximum Loan Amounts for First Draw PPP Loans and What Documentation to Provide - By Business Type
The Small Business Administration (SBA), in consultation with the Department of the Treasury, is providing this updated guidance to assist businesses in calculating their payroll costs (and the relevant documentation that is required to support each set of calculations) for purposes of determining the maximum amount of a First Draw Paycheck Protection Program (PPP) loan for each type of business.
Borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation of the CARES Act, the Economic Aid Act, and of the Paycheck Protection Program Interim Final Rules [How to Calculate Max Loan Amounts for First Draw PPP Loans by Business Type].
SBA Issues FAQs on Revenue Reduction, Max Loan Amount Calculations for Second-Draw PPP Loans
With the Paycheck Protection Program portal reopening for all lenders this morning, the Small Business Administration today issued a set of frequently asked questions that address how to calculate revenue reduction and maximum loan amounts for second-draw PPP loans, as well as the documents borrowers must provide to back up these calculations. Second-draw loans are available for borrowers with 300 or fewer employees that experienced a 25% or greater revenue drop in 2020 compared to 2019 and that have used or intend to use the full amount of their first-draw PPP loan by the time they receive their second draw loan.
SBA also issued a reminder regarding borrowers who have applied for second-draw loans and who currently have loans under review by SBA, or SBA has determined that the borrower may not have been eligible for a first-draw loan. In these cases, SBA said that the lender will not receive an SBA loan number for a borrower’s second-draw loan until the issue related to the first-draw loan is resolved. SBA said it will “resolve issues related to unresolved borrowers expeditiously.”
The Small Business Administration (SBA) has stated that there will be a time lapse between when a lender submits a PPP application to the SBA and when the SBA provides an SBA loan number to the lender. The delay is due to additional checks the SBA intends to conduct on borrowers to ensure the integrity of the PPP program. While there is no guarantee of adequate program funding, the SBA has expressed confidence that the amount of funding provided for first draw and second draw PPP loans will meet all borrower demand, and expects all loan applications will be processed in an orderly manner.
First Northern Bank is here to help your business with Round 2 of PPP. To learn more about a first or second PPP loan, visit our website at thatsmybank.com/ppp. In most cases, the application process takes just 15 minutes with our easy automated system.
FNB to Open PPP Round 2 Application System at 9:00am on Friday, 1/15/21
First Northern Bank will be opening its digital PPP Application system at 9:00 am on Friday, January 15 to allow its business clients to get started on their PPP loan applications, whether it be for a first or second draw. IMPORTANT TO NOTE: The SBA will open its PPP Portal for lenders who have greater than $1 billion in assets on Tuesday, January 19. So, January 19 is the soonest FNB can submit your completed application to the SBA.
To assist you in gathering the documentation that will be needed for submission with your PPP loan application, please refer to First Northern Bank’s PPP Round 2 Reference Guide.
To access FNB’s fully automated application system, go to https://ppp.thatsmybank.com. We believe you will find our automated PPP system to be easy and intuitive to use. It will guide you through the process (pre-filling information on file from our first draw borrowers) and give you a status of where you are throughout the process. You will be able to complete the process over time, allowing you to save what you’ve already input and exit, then come back into the system with a password. The system also lets you upload your documentation directly from your computer.
Applications received outside of the Bank’s automated system will not be accepted.
IMPORTANT: You must have an open First Northern Bank checking account to be eligible to apply for a PPP loan with the Bank.
Should you have any questions about PPP Round 2, please see our
Frequently Asked Questions, visit thatsmybank.com/ppp, or contact FNB’s PPP Support Team at 707.678.3041. It is truly our pleasure to serve you!
The SBA has posted its Interim Final Rules for the Paycheck Protection Program (PPP) as Amended by the Economic Aid Act. Please note there are two versions:
Version 2: Paycheck Protection Program (PPP) Second Draw Loans (01/06/2021).
The SBA has announced that on January 11, it will only begin accepting what its calling “first-draw” loans from small businesses that have yet to receive financing through the program, and it will only be accepting those applications from “community financial institutions”. These lenders are defined as Community Development Financial Institutions, minority deposit institutions, certified development companies, and microloan intermediaries, which means those lenders will be able to process applications and submit them to the SBA first.
SBA Form 2483 – First Draw Borrower Application
On January 13, small businesses applying for a second PPP loan will be able to do so, but once again only with “community financial institutions”.
SBA Form 2483-SD – Second Draw Borrower Application
Financing through the program will be made available to all participating lenders “shortly thereafter”. This is the lender group that First Northern Bank is a part of.
The SBA announced that the Forgiveness Platform for Round 1 has been updated and, effective immediately, the SBA will no longer deduct Economic Injury Disaster Loan (EIDL) Advances from forgiveness payments remitted to PPP lenders. This change will be applied to SBA forgiveness payment with a status of “Payment Confirmed” dated December 29, 2020 or later. For those loans where SBA remitted a forgiveness payment to a PPP lender that was reduced by an EIDL Advance, SBA will automatically remit a reconciliation payment to the PPP lender for the previously-deducted EIDL Advance amount, plus interest through the remittance date. The PPP lender is responsible for notifying the borrow of the reconciliation payment. The PPP lender is also responsible for re-amortizing the loan and notifying the borrower of the amount of the next payment due, or advising the borrower that the loan has been paid in full, whichever is applicable. If the amount remitted by SBA to the PPP lender exceeds the remaining principal balance of the PPP loan (because the borrower made a payment on the loan), the PPP lender must remit the excess amount, including accrued interest paid by the borrower, to the borrower.
First Northern Bank is looking forward to once again playing a major role in its communities by helping local businesses that have been financially impacted by the ongoing Coronavirus pandemic get access to the assistance made available under the Economic Aid Act, signed into law on December 27, 2020.
We are also pleased to share that we will be rolling out a very intuitive online PPP Loan application system this time around. The system will allow our customers to check on the status of their loan from the application phase and loan processing phase to the funding phase. Plus, if you participated in PPP Round 1 with us, your Round 2 online application will be pre-populated with all the pertinent information we already have on file.
You can rest assured that we will let you know as soon as our PPP application system is ready to accept applications.
As communicated on December 23, 2020:
On December 21, 2020, the House and Senate passed legislation to supply the latest round of COVID-19 relief, authorizing more than $900 billion in economic aid to small businesses and consumers – the second largest stimulus in history, behind only the CARES (Coronavirus Aid Relief and Economic Security) Act that Congress enacted in March 2020. The bill also includes appropriations provisions to keep the government funded through September 30, 2021, as well as a host of miscellaneous items.
Extension of Paycheck Protection Program (PPP)
- The deal approved by Congress includes $325 billion for small businesses still struggling from the economic dislocations caused by COVID-19. Most of it ($284.5 billion) will go to PPP funding for loans to small businesses.
- The SBA is required to issue rules within 10 days of enactment.
- Small businesses with less than 300 employees will be able to get a second loan if they can demonstrate they have had a revenue reduction of 25 percent in any quarter in 2020 compared to the same quarter in 2019
- This bill includes streamlined forgiveness for loans of $150,000 or less.
PPP First Draw Changes
- Re-opens the PPP for first time recipients, with an expansion of eligible entities including 501(c)(6)s, destination marketing organizations (DMOs), housing cooperatives, newspapers, broadcasters, and radio stations. Prohibits publicly traded companies from receiving PPP funds as well as those entities receiving a Shuttered Venue Operator Grant. Clarifies that a business must have been in operation on February 15, 2020.
- $35 billion for first-time borrowers of which $15 billion for borrowers with 10 employees or fewer or loans less than $250,000 for low-income areas.
- Expands list of eligible expenses to include covered operations (software, cloud computing, and other human resources and accounting needs); property damage costs due to public disturbances that occurred during 2020 that are not covered by insurance; covered supplier costs; and covered worker protection expenditures (PPE).
- The covered period for all first draw loans is extended to March 31, 2021 and is retroactive to the start of CARES. Borrowers my choose the end of their forgiveness covered period between 8 and 24 weeks after the loan origination.
Creation of a Second Draw
- Includes a Second Draw of PPP funds for small businesses with 300 or fewer employees that have sustained a 25 percent drop in revenue in any quarter of 2020 when compared to the same quarter in 2019. A business must use or have used the full amount of their first PPP loan. The maximum loan amount is $2 million.
- The SBA has 10 days to issue guidance on how the second draw program will operate. Additionally, they must supply guidance addressing access to capital issues for underserved communities.
- $25 billion set aside for borrowers with 10 or fewer employees or loans less than $250,000 in low-income areas.
- Maximum loan amount is 2.5 times the average monthly payroll based on the 2019 calendar year or a one year look back, capped at $2 million. NAICS 72 Businesses (Accommodations and Food Services) can receive 3.5 times average monthly payroll, capped at $2 million.
- Eligible entities must be businesses, certain non-profit organization, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives.
EIDL (Economic Injury Disaster Loan) Advance Program
- Provides $20 billion dollars to restart and extend the SBA’s EIDL Advance Grant for small businesses in low-income communities.
- Creates a process for existing EIDL Advance grantees that received less than $10,000 dollars to reapply for the difference between what they received and the maximum EIDL Advance Grant of $10,000 dollars.
- Repeals section 1110(e)(6) of the CARES Act, which requires PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount. Clarifies this change is retroactive to the start of CARES. Requires SBA to make borrowers whole if they have already received forgiveness and the EIDL Advance was deducted from that amount.
- The SBA has 15 days from date of enactment to issue rules related to how the repeal works and how they will make borrowers whole.
- Creates a simplified PPP loan forgiveness application for loans under $150,000 whereby the borrower signs and submits a one-page certification to the lender. The form requires the borrower to list the loan amount, the number of employees retained, and the estimated total amount of the loan spent on payroll costs.
- The SBA must create this form within 24 days of enactment. The SBA must create an audit plan within 45 days of enactment.
- The borrower must attest they have accurately supplied the required certification and followed relevant requirements in the program. Borrowers must keep employment records for four years and other records for three years. Borrowers may submit voluntary demographic information.
- Supplies tax relief for borrowers who received forgiveness or subsidy payments under the CARES Act. Taxpayers will receive non-taxable treatment without any restrictions on deductibility for expenses paid with program proceeds.
- Expands employee retention credit eligibility by decreasing required revenue loss to 20% and increasing the amount of the credit. In addition, employers with 500 or less employees may qualify for an increased credit compared to the CARES Act. Applies for periods January 1 – June 30, 2021.
Bankruptcy and PPP
- A business in bankruptcy is entitled to receive a PPP loan.
Section 1112 Debt Relief
- Provides $3.5 billion to resume the principal and interest (P&I) payments of new and existing small business loans guaranteed by the SBA under the 7(a), 504 and Microloan programs. SBA is granted the authority to continue to make principal and interest payments on existing SBA loan products (not PPP), through March 31, 2021.
Enhancement of Existing SBA Loan Programs
- Supplies $2 billion to enhance the SBA’s existing government guarantee loan programs, including the 7(a) Loan Program, the 504 Loan Program and the Microloan Program.
- Waives borrower and lender fees within the 7(a) and 504 loan programs.
- Increases the 7(a)-loan guarantee to 90 percent through October 1, 2021 after which the guarantee drops to 85% for loans with a balance under $150,000 and 75% for loans with a balance above $150,000.
- Extends the $1 million loan limit for SBA Express Loans until October 1, 2021 after which it drops to $500,000. For loans under $350,000 the guarantee is increased to 75% until October 1, 2021 after which the guarantee reverts to 50%.
- Establishes a 504 Express Loan Program.
- Enhances the Microloan program to supply financial and technical aid to businesses affected by the COVID-19 pandemic.
Main Street Lending Program/Federal Reserve 13(3) Emergency Lending Authority
- The legislation terminates Federal Reserve authority for emergency lending facilities established by the CARES Act as of December 31, 2020.
PPP Loan Assistance by the Numbers: We've been working hard for the good of our communities. Here's what 63 days of responding to local businesses looks like.
PPP Funding & Forgiveness
The Small Business Administration today released a three-page “EZ” Paycheck Protection Program loan forgiveness application requiring less documentation and fewer calculations than previously required. Form 3508EZ applies to borrowers who meet any one of these three criteria:
- Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
- Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.
The streamlined forgiveness form is expected to smooth the forgiveness application process for a substantial portion of PPP borrowers. SBA also updated the regular Form 3508 to reflect recent changes made by Congress in the PPP Flexibility Act and issued a new interim final rule that implements changes made by the PPPFA.
First Northern Bank would like to guide you through the next stages of the Paycheck Protection Program loan process.
Next Steps: Funding & Forgiveness
IMPORTANT DISCLAIMER: First Northern Bank is not affiliated with Moss Adams, LLP and is not responsible for the advice provided in this Webinar.
SBA, in consultation with the Treasury Department, has recently released additional PPP forms and guidance:
Economic Injury Disaster Loan (EIDL)
As of June 16, 2020, the SBA is now accepting new applications for COVID-19 Economic Injury Disaster Loans and Advance
COVID-19 Customer Support
As the coronavirus (COVID-19) pandemic remains prominent in the region, First Northern Bank’s number one priority is the safety and well-being of our customers, employees and communities. We are very fortunate that everyone is pulling together to make this difficult time run as smoothly as possible at First Northern Bank. We are especially grateful for our amazing team of employees -they are taking the situation in stride and taking good care of our customers. As the circumstances evolve, the Bank will continue to monitor the information provided by the Center for Disease Control, California Department of Public Health and local County Public Health.
The Bank has taken prudent steps to ensure its branches and loan offices can remain open during this unprecedented health crisis. Enhanced cleaning procedures published by national health officials have been adopted and employees are practicing social distancing. Customers have also been reminded of the available alternatives to branch banking: Mobile Banking, Online Banking, ATMs, Night Depository, and TeleBank.
In addition, First Northern Bank has proactively engaged a COVID-19 Customer Support Plan designed to provide relief to those business and consumer customers financially impacted by the current crisis. The Plan includes:
- Communications regarding the safety and soundness of America’s banks. With FDIC Insurance on deposit accounts up to $250,000, banks are the safest place for your money.
- Loan Assistance for those impacted by COVID-19
- Waiver of all Late Fees for qualifying consumer, small business, commercial and agricultural loan customers for a period of 60 days (may be extended if economic circumstances dictate). To qualify for this waiver, the borrower must not be past due more than 30 days on any loan as of March 1, 2020. This waiver is automatic for qualifying customers; you will not need to request the waiver.
- Payment relief options, please contact your branch or FNB’s Central Loan Department at (707) 678-0226 for details.
- Delinquencies resulting from impacts of COVID-19 will not be reported to the credit reporting agencies.
- Access to loan programs through FNB’s strong partnership with I-Bank and Small Business Loan Administration (SBA). More information on the SBA's Economic Injury Disaster Loans found here.
- Deposit Account Assistance
- Waiver of all Overdraft/Non-Sufficient Funds fees for all business and consumer customers for a period of 60 days (may be extended if economic circumstances dictate). This waiver is automatic for qualifying customers; you will not need to request the waiver.
- Increased Debit Card Limits for most consumer clients.
- As a member of the MoneyPass ATM Network, First Northern Bank deposit customers have access to surcharge-free ATMs at over 50 locations within the Bank’s local footprint and hundreds more throughout the state.
- Waiver of Early Withdrawal Charges for customers wishing to withdraw funds from their Certificates of Deposit.
First Northern Bank is committed to continuously monitoring the rapidly evolving impacts of COVID-19, and stands ready to assist its customers, employees and communities as we all navigate this challenging time together.
All First Northern Bank branches will remain open to serve its customers during this unprecedented national health emergency. We are focused on keeping our branches clean, promoting good health among our employees, and we are practicing ‘social distancing’.
Should you prefer not to come into a branch to make a deposit, please use a First Northern Bank ATM (no envelope or deposit slip needed). The business night depository located outside our branches may also be used for deposits that do not exceed the height of the deposit slot; just be sure to place your check, cash and deposit slip into a sealed envelope. We will process deposits in our night depositories multiple times throughout the day, up until 4pm.
For information about COVID-19 (Coronavirus), please visit the sites of the following organizations.
ABA Offers Suite of Communications Resources on Economic Impact Payments
Since the CARES Act was passed, ABA has urged the IRS and Treasury to maximize the use of electronic disbursement methods when issuing economic impact payments rather than issuing paper checks in order to get payments to consumers faster and reduce the risk of fraud.
The association has also created several new resources for banks to help educate their customers about their economic impact payments. These resources include a series of commonly asked questions—which will be continually updated with the latest information from the Treasury Department—as well as consumer tips for avoiding fraud scams related to the economic impact payments.
Consumer Financial Protection Bureau Releases Video on How Mortgage Forbearance Works under CARES Act
The Consumer Financial Protection Bureau (Bureau) has released a video on how struggling homeowners can obtain mortgage forbearance if their finances are impacted due to the COVID-19 pandemic.
The Bureau has also issued additional information for consumers on mortgage and student loan payment relief and how to avoid scams.
Below are the resources for consumers:
The Small Business Owner’s Guide to the CARES Act
Beware of Potential Scams Using FDIC Name
In light of recent developments related to the coronavirus, the Federal Deposit Insurance Corporation (FDIC) is reminding Americans that FDIC-insured banks remain the safest place to keep their money. The FDIC is also warning consumers of recent scams where imposters are pretending to be agency representatives to perpetrate fraudulent schemes. For more information, visit the FDIC website here to read more.