I hope you are managing the summer months successfully as the COVID-19 pandemic persists longer than any of us would like. In Freedom Bank’s continued effort to communicate the evolving aspects of the SBA’s Paycheck Protection Program, I wanted to provide you with an update on the forgiveness process for your PPP loan.
Based on the most recent procedural notice, the SBA hopes to have its API (application programming interface) in place on August 10th. As a result, the bank will be able to begin processing your loan forgiveness requests starting on this date subject to any further changes in the SBA process. Pursuant to our last communication, the SBA could not accept any forgiveness applications until such time that their API was in place. To receive PPP loan forgiveness, you as borrower must complete and submit the Loan Forgiveness Application (SBA Form 3508, 3508EZ, or Lender equivalent) to the bank. You may submit the application provided that you have used all of the loan proceeds for which forgiveness is requested and that application accounts for any salary reductions in excess of 25% for the covered period.
In keeping with our bank values of innovation and service, we have partnered with Fiserv, a long-time vendor to Freedom Bank and premier financial technology company, to provide an electronic platform (“portal”) for submission of your application. The portal has been designed to be efficient, thorough, and supportive of your effort.
Due to the SBA requirements, direct submission to our portal will be the only means of submitting your forgiveness application to the bank.
Here is a diagram of the process:
You will find that it will accelerate this process and provide you with valuable insights as you complete the application. The application includes a knowledge center provided by Ernst & Young that will be a valuable resource as you complete the document.
Over the next week, you will receive an email from the bank with an invitation to access a secure portal. If you have not received your invitation by the close of business on August 10th, please contact your relationship manager. Your unique credentials will then be routed to you once validated as part of this registration. The portal will allow your submission of all supporting documentation without concern over file size or type. The application will identify documents that will be necessary to support the forgiveness request and, once completed, you can sign the application electronically.
Recall that forgiveness is a two-stage process. The bank must review the application and issue a decision to the SBA along with the required documentation. The decision may take the form of an approval (in whole or in part); denial; or (if directed by the SBA) a denial without prejudice due to a spending SBA review of the loan for which forgiveness is sought. This can take up to 60 days after receipt of a complete application.
The bank will keep you apprised at every stage via this private portal. Once approved by the bank, the SBA will have a further 90 days to review the loan and forgiveness application before it remits the appropriate forgiveness amount to the bank, plus any accrued interest through the date of payment. The bank will notify you of the forgiveness amount paid by the SBA.
In support of our relationship managers who are your first point of contact in this process, we have established a dedicated team of our credit professionals that will communicate directly with you during this entire process and keep your relationship manager apprised of progress. We believe that our commitment to provide you with experience and service will be aptly demonstrated during this process, but invite you to reach out to your relationship manager at any time. Please understand that the SBA continues to enhance its process and that we will incorporate those changes into the process as required. We will communicate honestly and rapidly as we have done throughout this program.
Here are a few important considerations and elements of the PPP process:
Remember that you have 24 weeks to use the PPP loan proceeds which may help qualify for maximum loan forgiveness.
Payroll costs are a significant component of PPP forgiveness and many of the payroll providers are developing custom reports that will specifically comply with PPP guidance. However, they are still waiting on final guidance from the SBA and Treasury so they can provide compliant reports that you can utilize as part of this process.
You are not required to make any loan payment before applying for forgiveness or up to 10 months after your covered period ends. You should be aware that the documentation requirements associated with the forgiveness application will receive greater scrutiny than the application process and are subject to audit. Please take your time to gather necessary and complete documentation before submitting your application. Remember that increased scrutiny is guaranteed for loans of $2,000,000 or more. Your records should be maintained for a minimum of six years.
We ask that you be patient in this process as nearly 4.8 million organizations in the United States received PPP loans and the SBA will need time to approve these applications even after the bank completes its review. Our dedicated team will be working intensively to manage this effectively on your behalf and thereby reducing the uncertainly of forgiveness at a time when we have so many other uncertainties created by the COVID-19 situation. We remain hopeful that new legislation will soon further ease the burden and expedite the process of forgiveness
We are excited to enroll you in this application process and hope that you will find this portal to be an efficient means of facilitating your forgiveness request. I think you will agree that the PPP process has clearly demonstrated the value of a close banking relationship. I hope we have lived up to that expectation and invite you to explore with your relationship manager all the ways we can add value to your organization across its borrowing and cash management needs. Thank you again for banking with Freedom.
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