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The PPP Forgiveness Process

Firestone Financial, with our SBA lending partner, 44 Business Capital, will automate the forgiveness process for all customers who we assisted in obtaining a PPP loan.

As you may be aware, Congress recently passed, and President Trump signed into law, a COVID Relief Bill that contains many provisions for more PPP lending and changes to forgiveness and CARES Act loan payments for existing SBA loans. To keep you informed, Firestone Financial, with our SBA lending partner - 44 Business Capital, will do our best to summarize without overwhelming you with ALL the Bill's detail.

WE'RE OPEN:

  1. Firestone Financial and our parent company, Berkshire Bank, continues to be open, and accepting PPP loan forgiveness applications. Our online portal automates the forgiveness process and guides you through the various forgiveness applications depending on your situation. 
  2. Should you be ready to apply, please contact your relationship manager or email sbppp@berkshirebank.com.

IMPORTANT CHANGES TO FORGIVENESS IN THE STIMULUS BILL (STILL BEING IMPLEMENTED BY SBA/TREASURY):

  1. Existing and future PPP loans under $150,000 will have a simplified forgiveness process with merely a 1-page certification and no support documentation to attain forgiveness. The borrower should maintain their support documentation for 6 years. Timeline: SBA needs to create this document, then lenders and their vendors need to reconfigure their software to accommodate it. So if you would like to choose this path, it will be a few weeks before we can begin accepting forgiveness applications under this new provision.
  2. EIDL advances will no longer be subtracted from the forgiveness of the PPP loan. If you had already received forgiveness and had the EIDL advance subtracted, this obligation will be extinguished. SBA will need to provide lenders guidance on the process to extinguish these obligations. We will keep you informed on the SBA’s progress.
  3. A borrower can now elect their own covered period and does not have to choose between 8 and 24 weeks.
  4. Borrowers should consult with their CPA/Accountant/Tax Professional. The Bill appears to clarify the following tax implications of PPP:
    1. The forgiven debt is not taxable.
    2. If you had an existing SBA loan upon which the SBA made payments on your behalf, those payments are not taxable.
    3. All expenses covered by the loan proceeds are tax-deductible.

PPP ROUND 3 (ALSO BEING CALLED PPP 2ND DRAW)

You must understand the program is not in effect at the moment. It will only be in effect once SBA/Treasury provide their guidance/program rules. Then, our technology vendors will need to reconfigure their software to accept applications under the new regulations. All of this is subject to change.

  1. A 2nd PPP loan is reserved for companies with 300 or fewer employees and is limited to a maximum loan amount of $2MM.
  2. The loan calculation is based on 2.5X the company’s average monthly payroll for 2019. If the business falls in the NAICS code beginning with 72, they may borrower 3.5X their average payroll for 2019.
  3. A business needs to demonstrate their sales were down 25% in any quarter of 2020 compared to the same quarter in 2019. 
  4. While the ratio of payroll to eligible expenses will remain the same (60% of the loan proceeds need to be used for payroll and 40% for other qualified expenses), there are additional “eligible” expenses like the acquisition of PPE, reconfiguration of venue to accommodate CDC guidelines, etc.
  5. The business has to have been established before 2/15/2020.
  6. A borrower does not need to have their first PPP loan forgiven to apply for a new PPP loan. A borrower has to certify that they used all the proceeds or will have used all the proceeds of their first PPP loan on eligible expenses.

CARES ACT LOAN PAYMENTS (SUBJECT TO ISSUANCE OF SBA GUIDANCE AND POLICY):

  1. Many existing SBA borrowers received 6 months of payments from SBA as a result of the first CARES Act Stimulus passed on March 27, 2020.
  2. Those payments have been extended with the following changes/provisions/caveats:
    1. Existing SBA loans that were in place before 3/27/2020 and received 6 months of payments previously, will be eligible for 3 more payments beginning in February of 2021. This assistance will be limited to a maximum of $9,000 per month.
    2. Borrowers in industries that have been hit hardest by COVID (i.e., those in the NAICS class of 72XXXX) will receive an additional 5 payments capped at $9,000 per month.
    3. All new loans approved by SBA beginning on 2/1/2021 through 9/30/2021 will receive 6 payments limited to up to $9,000 per month.
    4. If your SBA loan was funded between 3/27/2020 and 9/27/2020 and you received 6 payments, you will not be eligible for any more assistance/payments.
    5. If you are a borrower who had an SBA loan funded between 9/28/2020 and 1/31/2021, you will not qualify for any assistance.

Please be patient as we await final guidance from the SBA/Treasury. Nothing will happen until they issue their final recommendation, and 44 Business Capital can reconfigure its software to serve our PPP customers in a timely and efficient manner. We are grateful that we can help our customers during these very challenging times.

If you wish to submit your forgiveness application or have questions about the process, speak to your relationship manager or email sbppp@berkshirebank.com.

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