PPP extension update

The American Banking Association’s Banker’s Journal has released its assessment of new guidelines surrounding business loans secured under the Paycheck Program enacted this spring.

You can read details on the agencies’ interim final rule as well as updated, streamlined application forms for borrowers and lenders that the SBA now has for loans made on or after June 5, 2020.

According to the Journal, the interim final rule codifies several changes to the program:

Borrowers using less than 60 percent of their PPP loan amount for payroll costs during the forgiveness covered period will still be eligible for partial loan forgiveness.

The end date of the “covered period” for a PPP loan has been extended from June 30 to Dec. 31, 2020.

Loans made on or after June 5 now have five-year maturity. Businesses that secured loans before that date have the option to extend maturity from two years to five years at the mutual agreement of the borrower and lender.

The loan forgiveness period has been extended from eight weeks to 24 weeks. Borrowers may opt to keep the forgiveness period at eight weeks for loans made before June 5. 

If a borrower submits its forgiveness application within 10 months of the end of the loan forgiveness period, the borrower will not have to make any payments on the loan before the date SBA remits the forgiven amount to the lender.

The last day a lender can obtain an SBA loan number for a PPP loan is June 30, 2020.

That, however, isn’t the end of program changes that business owners can expect. The SBA said additional guidelines would be issued soon.