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Keeping you informed on the Paycheck Protection Program
We have been humbled to partner with nearly 101,000 businesses with the potential to impact more than 910,000 workers across all 50 states and the District of Columbia who are feeling the effects of the economic impact of the COVID-19 pandemic.
The PPP is a federal loan program that is part of the stimulus package known as the CARES Act that helps small- and medium-sized businesses affected by the COVID-19 pandemic to assist with covering costs related to payroll and certain other expenses. PPP loans are to be used for payroll costs (excluding amounts above a prorated annual salary of $100,000 for employees who make more than that amount), mortgage interest, rent and utilities and refinancing an SBA Economic Injury Disaster Loan (EIDL) made between January 31, 2020 - April 3, 2020.
For customers with an existing PPP loan, the Paycheck Protection Program Flexibility Act, enacted on June 5, 2020, affords significant changes to the forgiveness rules, most importantly:
The Act extended the repayment period for all loans not yet funded to five years. This gives potential borrowers more time to repay and a lower monthly payment.
The Act extended the covered period to 24 weeks. The covered period is the time in which businesses must incur or pay expenses to be considered for forgiveness, beginning on the date of loan origination.
Under the Act, 60 percent of the forgiveness amount must be for eligible payroll costs, including cash compensation, employer contributions to health plans and retirement and owner compensation. The effect of this change is that a greater amount of non-payroll costs, such as utilities, rent and mortgage interest, will be eligible for forgiveness.
The Act delayed when borrowers must make repayments on their loans. Loan deferrals are extended to the point U.S. Bank receives the SBA’s decision on a borrower’s application for loan forgiveness, which could be as long as 150 days under the current guidelines. Businesses that do not submit an application for loan forgiveness within 10 months of the last day of the covered period must begin making payments at that time.
Under the Act, businesses have until December 31, 2020 to restore full-time equivalent (FTE) employee levels to pre-COVID-19 levels to qualify for full forgiveness. Businesses that are not able to rehire the same or similarly qualified employees, with good faith documentation, may not face reductions in their forgiveness amount.
Businesses that were unable to return to pre-COVID-19 levels of activity due to compliance with certain COVID-19 related orders will also not be subject to reductions in their forgiveness amount, as long as they can provide supporting documentation.
Recipients of PPP loans may defer payment of federal payroll taxes.
As of August 8, the SBA is no longer accepting new loan applications for the Paycheck Protection Program (PPP). If Congress passes an additional extension of the program, we may reopen our application in the future.
Based on direction that has been provided relating to the CARES Act, your loan may be eligible for forgiveness. You, the borrower, may not be responsible for repayment of the loan if you use all the funds for forgivable expenses. Lenders will follow SBA guidance to determine the amount that is forgivable and will require an application with supporting documentation.
For additional answers to questions you may have about loan forgiveness, visit our PPP customer assistance page.
We take your business seriously and treat our relationship with you as confidential. We will never publicly disclose the names of our clients, nor the nature of their business, unless required by law. Since the SBA released the business names, locations and loan amounts for all PPP loans in excess of $150,000, we have heard reports of scammers reaching out claiming to be from U.S. Bank. Here are a few additional things to help you avoid fraud or scams:
If you suspect fraud, contact us immediately at 877-595-6256. We are available 24 hours a day, 7 days a week to help protect you.
Subject to credit approval and program guidelines. SBA loans are subject to SBA eligibility guidelines. Certain restrictions apply to refinancing options and are subject to program terms. Refinances of existing SBA loans are excluded.
Financing maximums and terms are determined by borrower qualifications and use of funds. U.S. Bank and its representatives do not provide tax advice. Consult an advisor regarding a particular financial situation. Credit products are offered by U.S. Bank National Association.
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