On Friday, June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act (PPPFA), giving PPP borrowers more “flexibility” and a longer time to use the Program’s funding and still qualify for loan-forgiveness from the CARES Act’s Paycheck Protection Program.
While the Act has addressed many of the concerns that PPP borrowers had, and should ease the loan forgiveness requirements, the Treasury has recently issued guidelines on how borrowers can apply for loan forgiveness.
On June 1, 2020, the Treasury issued 85 FR 33004. Within the document, the Treasury states how the loan forgiveness process works:
To receive loan forgiveness, a borrower must complete and submit the Loan Forgiveness Application (SBA Form 3508 or lender equivalent) to its lender (or the lender servicing its loan). As a general matter, the lender will review the application and decide regarding loan forgiveness. The lender has 60 days from receipt of a complete application to issue a decision to SBA. If the lender determines that the borrower is entitled to forgiveness of some or all of the amount applied for under the statute and applicable regulations, the lender must request payment from SBA at the time the lender issues its decision to SBA. SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, not later than 90 days after the lender issues its decision to SBA.
The lender is responsible for notifying the borrower of the forgiveness amount. If only a portion of the loan is forgiven, or if the forgiveness request is denied, any remaining balance due on the loan must be repaid by the borrower on or before the two year (PPPFA has changed this to five years) maturity of the loan.
We have been closely monitoring the Paycheck Protection Program and its guidance as it is modified and will continue to keep you updated. If you have questions concerning the Program, one of our attorneys can assist you. Please do not hesitate to contact the Wladis Law Firm. We will do our best to provide you with updates and will be available to answer questions as circumstances change. We may be reached at (315) 445-1700 or by e-mailing your everyday firm contacts.