SBA and Treasury release PPP loan forgiveness application
 
The U.S. Small Business Administration, in consultation with the U.S Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application. 

The form and instructions inform borrowers how to apply for forgiveness of their PPP loans, consistent with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). SBA will also soon issue regulations and guidance to further assist borrowers as they complete their applications, and to provide lenders with guidance on their responsibilities.

The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:

  • Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
  • Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
  • Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
  • Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
  • Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined

The PPP was created by the CARES Act to provide forgivable loans to eligible small businesses to keep American workers on the payroll during the COVID-19 pandemic. The documents released today will help small businesses seek forgiveness at the conclusion of the eight-week covered period, which begins with the disbursement of their loans.
Click here to view the application and instructions.
Agencies announce temporary SLR change to help banks serve customers 

In an effort to enable banks to safely expand their balance sheets to meet the needs of customers during the coronavirus pandemic, federal banking regulators on Friday issued an interim final rule allowing depository institutions to temporarily exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the supplementary leverage ratio.

FDIC Chairman Jelena McWilliams noted that the since the coronavirus pandemic began, “the flight to liquid assets has resulted in dramatic deposit inflows since the beginning of March. This balance sheet expansion, in turn, has contributed to insured depository institutions making substantial deposits in their accounts at Federal Reserve Banks and acquiring significant amounts of U.S. Treasury securities. These trends may continue while ongoing financial market volatility persists.” She added that “absent these adjustments, the increase in IDIs’ balance sheets may cause sudden and significant spikes in the regulatory capital needed to meet the SLR requirement.”

The agencies noted that any institution making changes to its SLR calculation must request approval from its primary federal banking regulator before making capital distributions until the exclusion sunsets on March 31, 2021. The rule takes effect upon publication in the Federal Register and comments will be accepted for 45 days. Read more .

The Health and Economic Recovery Omnibus Emergency Solutions Act passed by the House last week extends the application date for the Paycheck Protection Program until Dec. 31, but does not add additional funding. The bill, which is not expected to receive Senate approval, will also expand the Federal Reserve's Main Street Lending program to include nonprofits.
DoJ reportedly issues subpoenas for banks' PPP loan details  

The Justice Department has issued subpoenas to US banks demanding details of loans they have made as part of a wider investigation into possible abuses of the Paycheck Protection Program, sources say. The sources emphasize that the banks themselves are not being probed, but one source noted, "There are concerns that there will be a boomerang effect six months down the road on banks that they didn't do enough." Read more.

The Federal Reserve has published the full details of the loans made up to May 6 under the Paycheck Protection Program. The data shows over 3,000 loans routed through almost 600 lenders nationwide, with banks in the states of Utah and California accounting for the most activity. Read more.
Small businesses that accessed PPP funds might see bigger tax bills

Small businesses have been pursuing the Small Business Administration's Paycheck Protection Program loans — but it may cost those recipients come tax time.
PPP loans are not designed to be taxable. But an IRS rule published April 30 is ensuring small businesses that received PPP funding can't “double dip,” according to experts. The rule states that small businesses that use PPP dollars toward their payroll and other covered expenses can't then deduct those amounts from their taxes, potentially offsetting some of the loan's benefits and resulting in a bigger tax bill for some. Read more.
Annual membership meeting goes virtual
CBA Membership Meeting - join us online
 
In light of the restrictions and safety measures in place amid the COVID-19 pandemic, the Colorado Bankers Association will be hosting its annual membership meeting virtually.
 
Join us May 21 at 10 a.m. to participate in leadership elections for the 2020-2021 year and to discuss pressing issues related to the effect of the pandemic on the banking industry. The meeting will be immediately followed by a board of directors meeting.  
 
Nominees for the 2020-21 year are: 
Chairman : Nathan Ewert, FNB Fort Collins 
Incoming chairman : Mike Brown, Alpine Bank 
Treasurer : Mark Hall, Vectra Bank 
 
When: May 21, 2020 - 10 a.m.
Colorado Bankers Association
303-825-1575 | 303-825-1585