Small Business or Commercial Loan Payment Assistance

Paycheck protection program 

On March 27, 2020, Congress passed and the President signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act). Part of the relief includes loans for qualifying businesses affected by the pandemic. The loan program, which is offered by the Small Business Administration (SBA) is referred to as the “Paycheck Protection Program”.

It is your obligation to stay informed of the latest guidance related to the Paycheck Protection Program at the SBA, U.S. Treasury Assistance for Small Business and U.S. Treasury FAQ websites.

All borrowers should review carefully the required certification that "current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.

If you are interested in applying for the Paycheck Protection Program or requesting commercial loan payment assistance, please contact commlenders@capfed.com. Include your business name, contact name, and contact information.


On June 5, President Donald Trump signed new legislation, Paycheck Protection Program Flexibility Act (PPPFA), to address restrictions on the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).

While further guidance and clarification from the SBA and Treasury is likely, here is a summary of the provisions that appear in the Paycheck Protection Program Flexibility Act.

Specifically, the law:

Extends the covered period during which the loan may be used for forgivable expenses from eight weeks following disbursement of the loan to 24 weeks from loan disbursement or Dec. 31, 2020, whichever is earlier. Borrowers who received loans before June 5 may elect to continue using the eight-week covered period.  

Lowers the amount that must be spent on payroll costs from 75 percent to 60 percent. SBA and Treasury issued a statement that the new 60 percent threshold is not a cliff, meaning that if a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.

Extends the period in which employers may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount of a PPP loan to Dec. 31, 2020. However, the forgivable amount will be determined without regard to a reduction in the number of employees (compared to Feb. 15, 2020) if the recipient is (1) unable to rehire former employees and is unable to hire similarly qualified employees by Dec. 31, or (2) unable by Dec. 31 to return to the same level of business activity that existed before Feb. 15, 2020, due to compliance with federal requirements or guidance related to COVID-19.

Replaces the six-month deferral of payments due under PPP loans with deferral until the date SBA pays the lender the amount of loan forgiveness. If a borrower fails to apply for loan forgiveness within 10 months after the last day of the covered period for forgiveness, the borrower must begin to make payments of principal, interest, and fees on its PPP loan.

Establishes a minimum maturity of five years for new PPP loans as opposed to the current two-year maturity date. The five-year maturity takes effect on the date of enactment and will apply to any PPP loan made on or after June 5. Lenders and borrowers, however, may mutually agree to modify the maturity terms of prior-disbursed PPP loans.

Eliminates a provision that makes PPP loan recipients who have PPP debt forgiven ineligible to defer payroll tax payments.

The final date to obtain a PPP loan remains August 8, 2020.

On June 16th the SBA Released New Borrower Applications and Instructions for PPP Loan Forgiveness

The Small Business Administration released a three-page “EZ” Paycheck Protection Program loan forgiveness application requiring less documentation and fewer calculations than previously required.

Form 3508EZ applies to borrowers who meet any one of these three criteria:

·         Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
·         Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
·         Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.

The streamlined forgiveness form is expected to smooth the forgiveness application process for a substantial portion of PPP borrowers.
SBA also updated the regular Form 3508 to reflect recent changes made by Congress in the PPP Flexibility Act and issued a new interim final rule that implements changes made by the PPPFA.

Again, this law will likely be subject to additional guidance by SBA and Treasury. Small-business borrowers should have a firm understanding of the provisions above and any related guidance to ensure they meet the criteria for loan forgiveness.
 
For more information on SBA Coronavirus relief options go to:   https://www.sba.gov/funding-programs/loans/coronavirus-relief-options


Again, this law will likely be subject to additional guidance by SBA and Treasury. Small-business borrowers should have a firm understanding of the provisions above and any related guidance to ensure they meet the criteria for loan forgiveness.

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