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Coronavirus 06 Oct 2020

PPP Forgiveness Series, Part 4: Final advice

In the last part of the BBVA USA Paycheck Protection Program (PPP) Forgiveness Series, final tips and advice are given, based on the frequently asked questions submitted from actual small business owners who received a PPP loan. Questions were submitted as part of the BBVA USA Forgiveness Webinar, developed to walk small businesses through the forgiveness process.

Parts 1 and 2 of the BBVA USA Forgiveness Webinar detailed two key pieces of the entire process: The lender’s responsibilities and the borrower’s responsibilities. Part 3, meanwhile, gave a visual timeline that displays key milestones relating to a business owner’s PPP loan.

The details of all three parts can be found in the main source of the Forgiveness Series: the BBVA USA Forgiveness Webinar, a comprehensive look into the PPP that untangles frequent questions. All three parts can be found here:

Launched in April, the PPP was the small business relief component of the CARES Act that was crafted in response to the COVID pandemic. The PPP allowed businesses with 500 or fewer employees to borrow money from lenders guaranteed by US Small Business Administration (“SBA”) to fund up to 2.5 times their average monthly payroll and other expenses, including mortgage interest payments, rent payments and utility payments.

If the full time equivalent number of employees were retained throughout the covered period and certain other conditions are also met, businesses may be eligible to have their PPP loan balances forgiven.

In May, BBVA USA announced it had funded approximately $3.3 billion small business loans in less than 60 days, processing more than 22,000 applications and impacting approximately 360,000 jobs through its efforts in the PPP.  For context on the size of the bank’s commitment to the PPP, the bank’s total SBA 7(a) loan originations for the fiscal year ending Sept. 30, 2019 were 259 loans totaling nearly $270.7 million, an outcome that garnered the bank the no. 14 rank nationally in dollar volume for SBA loans originated.

For a brief list of FAQ’s submitted to the webinar, see below. For a full list of FAQs, click here

Q: I was told I need to use the funds by a certain date. Is this true?

A: Yes. Either within the 8-week covered period or the 24-week alternative covered period from the PPP loan disbursement date.

Q: An employee quit during the covered period. How do I account for that?

A: Please refer to the SBA’s 6 full time equivalent (FTE) Reduction Exceptions (Page 12), which include instances in which Employees voluntarily resigned. FTE reductions due to one of those 6 Exceptions will not reduce borrower’s loan forgiveness eligibility.

Q: I understand there is a simplified forgiveness process for smaller loans. Is that true?

A: As of now, no. However, legislation has been introduced that may simplify the forgiveness process for loans up to $150,000. While we cannot speculate on if or when that may happen. If new legislation or guidance is provided, we will update our portal and communicate the new process as soon as possible thereafter.

Q. Will the loan term be adjusted for loans submitted after the CARES Act?

A. All PPP loans originated June 5, 2020 and later have a 5-year term. Loans originated prior to June 5, 2020 have a 2-year term, unless the customer and lender mutually agree to adjust the term to five years.

Q: I have been unable to reopen my business. Is the loan dependent on reopening?

A. Please refer to SBA’s FTE Reduction Safe Harbor 1 (Page 10), which addresses businesses unable to operate during the Covered Period at the same level as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

Click here for the entire webinar.

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