Business Owners: What You Need to Know about the PPP

Update from Sturgis Bank

The Paycheck Protection Program (PPP) that provided relief to small businesses affected by COVID-19 has undergone recent changes to help borrowers with loan forgiveness. Here are notable highlights and action steps you can take if your company participated in the PPP.

New Paycheck Protection Program Flexibility Act (PPPFA)

On June 5, the PPPFA became law and relaxed many of the restrictions of the original Paycheck Protection Act. Changes that benefit you as a small business owner include the following:

• Loan repayment extends from 2 to 5 years.
• Repayments start after the Small Business Administration pays your bank the forgiveness amount.
• The loan forgiveness distribution window broadens from 8 weeks to 24 weeks or December 31, 2020, whichever occurs earlier.
• The time to staff back up to February 2020 levels extends to December 31, 2020.
• Reductions in staff are forgiven if team members won't return, you can't find comparable talent, or you must reduce staff to comply with safety requirements.
• Up to 40% of the PPP loan can pay for non-payroll expenses.
• Recipients can now participate in the CARES Act Payroll Tax Deferral Program.

The Paycheck Protection Program Loan Forgiveness Application

June 17 marked the release of a revised PPP Loan Forgiveness Application from the US Treasury and US Small Business Administration (SBA). Here are the instructions for completing the form.

If you received funds from the PPP, you must spend at least 60% on payroll expenses to qualify for complete loan forgiveness. Importantly, companies unable to meet the 60% threshold are still eligible for forgiveness but at a lower rate.

A new loan forgiveness application EZ form is also available for borrowers who meet at least one of these 3 criteria:

• They are self-employed, independent contractors, or sole proprietors who had no employees when they received the PPP loan.
• They didn’t reduce salaries or hourly wages by more than 25 percent and didn’t reduce headcount or average paid hours.
• They didn't reduce salaries or hourly wages by more than 25 percent, and the company couldn't operate because they were complying with health and safety guidelines.

The streamlined EZ form and instructions should make it easier to apply without paying professionals to help you.

How Sturgis Bank is Helping Businesses with PPP Loans

As your community bank, Sturgis focuses on the financial health of those around us, which includes supporting our business partners. We quickly marshaled resources to secure PPP loans and are delighted to report the following results:

• 458 businesses in our communities received loans
• More than $35 million went to companies, protecting more than 4500 local jobs

"I'm proud of our staff and the way they proactively worked to ensure our businesses got the relief needed through the CARES Act. Their efforts have been appreciated and gratitude expressed by the many business owners that have secured loans. I express my gratitude for the other financial institutions that stepped up and helped businesses secure loans. Banks were not mandated to participate, but as a Community Bank, we knew it was the right thing to do," said Eric Eishen, President and CEO.

Matt Scheske, Senior Vice President, added, “We opened the door to both existing customers and non-customers in our region with 100% of qualifying applicants receiving approval. This success rate is a testament to our energetic staff who worked countless hours, nights, and weekends pouring over PPP applications, and to our existing customers who completed applications patiently and efficiently so that together, we could do our part for the entire community.”

If you need additional support completing your Loan Forgiveness Application, contact us at (888) 255-7372 or visit one of our local branch offices. We’re here to help your business remain viable and successful.