Below you will find updates on the latest SBA guidance related to the loan forgiveness and loan payment requirements of the PPP Program. These changes are very beneficial to PPP borrowers. The SBA and Treasury recently published an updated FAQ in which they clarified that the extension of the loan payment deferral period under the PPP Program automatically applies to all PPP loans. As described in the FAQ, the extended deferral period for borrower payments of principal, interest, and fees on all PPP loans is now the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period). Previously, the deferral period could end after 6 months. The SBA does not require formal modification to the promissory note. Another recent FAQ clarified that “as long as a borrower submits its loan forgiveness application within ten months of the completion of the Covered Period…the borrower is not required to make any payments until the forgiveness amount is remitted to the lender by SBA. If the loan is fully forgiven, the borrower is not responsible for any payments.” Please see the SBA’s PPP Forgiveness FAQs webpage for additional points of clarification.
What this means to you:
At the time your PPP loan was approved, your loan documentation may have included a deferral period of six months before your first payment would be due (for balances not forgiven). This would have resulted in a first payment due date as early as November 2020 (for loans funded in April 2020). In light of the guidance described above, we are updating our system to reflect that this deferral period has been extended as described above. This means that you have until 10 months after the completion of the Covered Period (either 8 or 24 weeks after your loan funded) to submit your loan forgiveness application with all required documentation to First Utah Bank. Your first payment will be due only after the SBA remits the loan forgiveness amount to the Bank and there is still a balance due, or, if you do not apply for loan forgiveness, 10 months after the end of your loan forgiveness covered period.
In recent weeks, First Utah Bank has launched a web-based program for processing PPP loan forgiveness applications. Using this portal we have been processing a limited number of forgiveness applications while we continue to monitor additional updates and clarifications that may be released by the SBA. Proposals to simplify and clarify various aspects of the PPP loan forgiveness program continue to be discussed in Congress, and there appears to be broad bipartisan support for a variety of proposed changes that would greatly benefit PPP borrowers seeking loan forgiveness, including simplifying forgiveness requirements on PPP loans in the amount of $150,000 or less, and modifying the current requirement that loan forgiveness be reduced by an EIDL Loan Advance, if applicable.
In light of the current evolving guidelines and proposed revisions to PPP forgiveness, and considering the new extended loan payment deferral period and PPP loan forgiveness application deadline, First Utah Bank anticipates proceeding with a more comprehensive launch of our PPP forgiveness portal after additional guidance becomes available. In the meantime, we will continue to update this page as new information is made available to us. Additional information can also be found on the SBA’s PPP Forgiveness FAQs page.