Paycheck Protection Program
Thursday evening (April 2, 2020) the Small Business Administration issued 13 CFR 120, its Interim Final Rule (“IFR”) regarding the PayCheck Protection Program (“PPP”). The 31-page document comes just hours before the new loan program was set to open on April 3. Bankers have been scrambling to get ready to implement this $349 billion program, designed to provide forgivable loans to small businesses to cover costs including payroll and rent. Here are just a few of the indicators from today’s news about the problems bankers are facing:
Washington Post – Thousands flood banks as federal small-business loan program begins with bankers expressing worries
American Banker – Emergency loan program plagued by chaos on eve of launch
Fox Business News – 7:30am April 3, 2020 – Frank Sorrentino, CEO ConnectOne Bank (video)
We at The Kafafian Group have analyzed the IFR and are providing a summary of the provisions of the program. The attached “SBA PPP Loan Program Interim Final Rule” document:
a. outlines eligibility requirements for borrowers,
b. provides a guide to determine a borrower’s maximum borrowing limit,
c. details the provisions of the forgiveness amount and how to determine it,
d. gives instructions on how banks can qualify for the program,
e. sets out the underwriting requirements, and,
f. indicates the rates and fees allowed under the program.
We also have a “PPP Borrower Template – Loan and Forgiveness Amount” which can be sent out to potential borrowers to assist them in filling out their application. The template aids the borrower in calculating their payroll costs and maximum loan amount. Additionally, this can streamline the process for your bank to receive a consistent template of calculated costs. Call us and we’ll email the working Excel template to you.
We hope you find these resources helpful as your bank prepares to provide funding for your borrowers. Providing these loans this to your customers will help many of them survive through this extraordinary time.
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