PPP Messages to Borrowers

December 30, 2020

January 13, 2021

To our Paycheck Protection Program (PPP) Borrowers:

You are receiving this as “First Draw” PPP borrowers, many of whom may qualify for a Second Draw and/or those of whom have not yet applied for loan forgiveness on your first PPP loan. For those considering a 2nd draw, you’ll see a few tips below. We had good success with our process for 1st draw loans so we are planning a similar process for your applications for Draw #2. Please plan to work with the same loan officer who assisted you. Also, we will be adding the 1st Draw and 2nd Draw application forms along with other information to our website.

Here’s what you’ll need for the 2nd Draw application:

  • Contact your loan officer to discuss the qualifications or to obtain a PDF-fillable version of the Second Draw loan application.
  • For businesses NOT in the hospitality business (NAICS codes beginning with 72), the loan amount formula is generally same as before: 2.5 times your average 2019 monthly payroll.  You should reference your first draw paperwork and request the same amount. For most customers, using 2019 payroll will allow for the highest PPP loan. If your 2020 payroll is higher, please talk to your lender for additional paperwork requirements.
  • For lodging and dining businesses, you may apply for up to 3.5 times. We have all your records from your 1stdraw, so no need to send those to us again. There are a few nuances to the formula for certain businesses, so be sure to review the 2nd Draw application instructions.
  • We ask that regardless of loan size, please provide a comparative report (or two separate reports) that demonstrates that you experienced a 25% or greater reduction in gross revenues in any one calendar quarter of 2020 vs. the same calendar quarter in 2019. Alternatively, you may show an overall reduction in revenue of 25% for the full year, again compared to 2019. Although smaller loans under $150,000 may skip this step, you’ll have to “own-up” when you apply for forgiveness, so we’re hoping you’ll provide it up front. This will assist in allaying concerns regarding mistakes or qualifying criteria.
  • Please include your SBA Loan Number from your 1stDraw loan. SBA will compare your 2nd Draw application with information from your 1st This number is listed on your 1st Draw loan approval documentation and it is also indicated in our loan Forgiveness Portal. If you cannot find it, ask us.
  • You must note your NAICS code on the application. This code is usually noted on your business tax return. We can also assist you with this if necessary.
  • Please be sure to initial all certificationsand electronically sign your application.
  • We recommend that you use our secure links to upload all documents. All loan officers have a direct link in their email signature, just like the one you see in mine, below.

For those still waiting to apply for forgiveness or for those with trailing EIDL advance balances:

  • You do NOT have to submit your application for forgiveness prior to applying for a 2ndThat said, if your loan was forgiven then your certification in the 2nd Draw application regarding use of 1st draw funds is validated.
  • For borrowers with loans <$150,000, the new one-page certification-only form should be available in our portal by the end of January. Stay tuned. I’ll send out another note when we have that. Meanwhile, you can use the other application forms but they all require supporting documentation to be submitted.
  • If you did receive forgiveness but your EIDL advance was not included in the payment, it’s coming! SBA has confirmed that all EIDL advances will be forgiven and for those borrowers who were approved prior to the Relief Bill, they will send the advance amount plus interestto the bank. We will credit your loan, if it is not paid in full and remit the remainder to you by direct deposit to your business account.

Enough for now? Reach out with questions. We’re here, hunkered down in the PPP hangar!

~Sarah

To share documents with me through secure e-mail please Click Here to upload files.


December 30, 2020

To our Paycheck Protection Program (PPP) Borrowers:

We are getting many inquiries regarding whether there will be a new round of Paycheck Protection Program loans, whether there are other changes to the existing PPP program and when to apply for loan forgiveness. Thank you for all your questions and we will continue to try to answer them for you as they arise.

Although we have had more than 100 PPP borrowers apply for and receive forgiveness of their loans, there are relevant parts of the Relief Bill for all of you, based on what we know today. Yes, the PPP Plane continues to be built, even if you think you have had a safe landing! The Bill includes many provisions beyond PPP, but I will only focus on PPP here. Please be mindful that there are still many details that we do not have yet, so this is intended to only give you the highlights.

Yes, a new round of PPP loans will be available to many businesses and non-profit organizations. Loans will be available for both first-time borrowers (“First Draw”) and for existing borrowers (“Second Draw”). It is important that you understand the new eligibility requirements and you should consult your financial advisor before applying. Maximum loan amounts are capped at $2 Million, based on 2.5 times 2019 average monthly payroll for most businesses. Businesses in the North American Industry Classification System (NAICS) code group beginning with 72, which includes accommodation and food services, are eligible for up to 3.5 times 2019 monthly payroll. The use of the PPP funds has been expanded beyond payroll, utilities and rent or mortgage interest. More details to follow on that.

For PPP borrowers who had Economic Injury Disaster Loan (EIDL) advances up to $10,000, these will no longer be deducted from your PPP forgiveness amount. For those borrowers who have already had their loans forgiven but did not receive the full amount of their loan because they had an EIDL advance, you will be made whole. We do not yet have details on how this will happen, but we assume that payments will come to the bank and we will then forward to you, in the event that you paid this amount off; or use the funds to pay down the remaining balance of your PPP loan. Also, for those that received less than the full $10,000 advance (grant), the Bill allows for you to reapply for the difference between what you received and the maximum grant of $10,000. Remember, EIDL advances are made directly by SBA and must be applied for through SBA, not the bank.

Regarding loan forgiveness for those who have not yet applied, the long-awaited-for one-page application for loans under $150,000 was included in the Bill. For these borrowers, you will submit to us through our Forgiveness Portal, listing the loan amount, the number of employees retained and the estimated total amount of the loan spent on payroll costs. SBA must create this application form within 24 days of the Bill’s enactment, so we anticipate that it will be available in our portal in late January. Please keep in mind that SBA is also required to create an audit plan, so you will still be required to retain all records that support the “true and accurate” certifications you will make by initialing and signing the application.

Regarding tax treatment of PPP loans and expenditures made from them, the Relief Bill provides tax relief by overriding Treasury/IRS guidance that had disallowed the deductibility of qualified expenses related to the forgiven amounts. PLEASE be sure to consult your tax advisor as we are providing this as information only. Do NOT rely on us for any tax advice.

There are many other provisions of the Relief Bill that I am not covering in this note, such as new debt relief provisions for existing (non-PPP) SBA loans. If you have questions on these other provisions, we will attempt to answer them for you or direct you to resources that can assist.

So… in summary, there is more to follow. Please watch our website at www.nbmvt.com for updates on when (and how) we will accept applications for this new round, as well as updates on the new forgiveness application for loans under $150,000. The NBM PPP plane is currently in a holding pattern but we’re still flying for you!

Best Wishes for a Safe and Happy New Year to All,

~Sarah


November 19, 2020

Happy Holidays to you all! I thought this would be a good time to send another message to our PPP borrowers, some of whom are now “former” borrowers! Yes, we have begun accepting PPP Forgiveness applications and several of you have now had your loans paid down or paid off in full by the SBA. I would like to share some experiences and extend another “Thank You” to all of you for supporting your employees and your businesses as this program was intended.

We are heading into winter and needless to say, we are in a new phase of the pandemic. Although we are still hoping Congress will act, I will no longer predict whether there will be any additional changes to the forgiveness process. We have found that the 3508S and 3508EZ applications have created minimal issues and our experience with SBA’s review of those applications has so far been positive. For our borrowers using the longer 3508 form, we feel confident that we can assist you in navigating through this more detailed form. Regardless of the size of your business, talk with your accountant or tax preparer before applying and keep copies of all your documentation and the forgiveness application for your records. The SBA requires that you retain all records related to your PPP loan for six (6) years after the date your loan is forgiven or paid in full.

We continue to have many questions about logging in to the portal. The business name input must be exact. The best way to get this right is to copy & paste your business name from the email we send to you through the portal. If you continue to have problems, please reach out to your loan officer or to me directly. We can assist you over the phone or schedule a Zoom meeting with you.

Once in the portal, if you wish to add a second email address in the “Additional OTP Email” box for your accountant or other person assisting you with the application, you must also select one of the application forms before you can save the address. You can change your form selection later if need be. If you do add a second email address both addressees will receive notification and the one-time passcode (OTP) for logging in. This is a security feature to alert the primary user when the other person is accessing the account.

Supporting documentation is still required in all cases, regardless of the application form you chose. For payroll, you must support both your employee count as well as the payroll/compensation expenses. Your loan officer can offer examples of what documentation you should provide depending on your situation. For the non-payroll expenses, utilities, rent and mortgage interest, we need documentation to support that the expense existed prior to February 15, 2020 as well the cancelled checks and copies of invoices or documents related to the expense. All documentation must be uploaded into the portal. Please be specific when selecting the type of documentation you are uploading, such as “payroll expense”.

As a final note, given the 10-month window you have to submit your forgiveness application, do not rush to get your application in before year-end 2020. Will there be additional changes to the process, more PPP funds available to certain borrowers? Your crystal ball probably has fewer cracks in it than mine does. We will continue to apprise you of changes as we learn of them. Including changes that could occur in 2021.

Although this holiday season will be difficult for us all, being distanced from many of our loved ones, I hope you take time to celebrate with family, even if virtually. We are all trying to create new ways to be close to loved ones. I hope you are able to see and acknowledge the gift of having family. It is a time to be thankful for what we have.

~Sarah


October 13, 2020

To our Paycheck Protection Program (PPP) Borrowers:

We have just received notice from SBA that there is another, simpler application for borrowers with loans of $50,000 or less, form 3508S. For these borrowers, meaning you, there is now an application option which requires fewer calculations and less documentation. In some cases, the new application replaces form 3508EZ, including for those self-employed borrowers who have no additional employees. You will still be required to certify use of the funds as eligible under the CARES Act and you will still be required to retain and provide to the bank certain back-up documentation to support your certifications. There are other certifications to which you must also attest.

If you can attest to all certifications, you will be exempt from loan forgiveness reduction “arising from a proportional reduction in FTE employees during the covered period if the borrower is able to document in good faith the following: (1) an inability to rehire individuals who were employees of the borrower on February 15, 2020; and (2) an inability to hire similarly qualified individuals for unfilled positions on or before December 31, 2020.

[This group of] borrowers are also exempted from the loan forgiveness reduction arising from a reduction in the number of FTE employees during the covered period if the borrower is able to document in good faith an inability to return to the same level of business activity as the borrower was operating at before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.”

This new form creates another delay in the readiness of our portal. SBA and our software provider are incorporating the new application into their processes. If you are a borrower with a loan of $50,000 or less, we ask once more for your patience. We will be in touch as soon as the modifications are in place. Meanwhile, I hope you all enjoy the little gift you are about to receive. Air mail by snail mail? There is child in each of us and this is our way to help you keep your sense of humor. Thanks for flying with us.

~Sarah


September 28, 2020

To our Paycheck Protection Program (PPP) Borrowers:

Over the past few weeks, we have been testing our loan forgiveness application portal with a few bold borrowers. Although the portal is not without its quirks, as all software programs tend to have, we are now confident that if you are ready to begin the PPP Forgiveness application process, we are ready to assist you. Our lenders will be sending emails to each borrower with a link to the portal. The email will include some specific instructions to get to your loan record where certain information is prefilled and where you can select the proper application to complete (form # 3508EZ or 3508) and upload your supporting documents. I strongly encourage you to wait for your loan officer to reach out to you but if you need to get the process started sooner, contact them (or me) directly and we’ll get you going.

In a few days, you will receive a small thank-you gift from us through “snail mail” and it will include a card with the URL link to the portal. We will also be adding the PPP Forgiveness Portal link on our website. You will find it in the “Login Now” drop-down menu on the left-hand side of our homepage at www.nbmvt.com. This is a separate link from your general online banking site.

I know many of you want to get this behind you. That said, there is still a chance that the process will be further simplified. We are still holding out for Congressional action under bills such as the Senate’s S. 4417, the Paycheck Protection Small Business Act or its House companion bill, H.R. 7777, both of which provide for a streamlined application and one-page certification for loans up to $150,000. Fifty-one state banking associations across the country have signed a letter asking the Treasury Department and SBA to consider this action. Could this happen before the general election in November? It would be a nice gesture but I had hoped we would have seen action by now. Still, and I repeat, there is NO RUSH for you to apply even if you expended all funds in the 8-week period after receipt. I will continue to encourage you to wait until after the election given the chance that this will pass. If you are utilizing the longer 24-week period to expend funds, than you must wait until that time is over before applying.

As a reminder, no payments will be due on your PPP loan until SBA has approved your forgiveness amount provided you apply within 10 months of the date your loan was originally approved and disbursed. If you have a trailing balance, we will work with you on the repayment terms (within the restrictions outlined in the program guidelines) so that you have the time and flexibility you need to repay.

It’s hard to believe it’s fall already, but isn’t it lovely? Reach out with questions; we’re here to make sure you have a safe landing.

~Sarah


August 26, 2020

To our Paycheck Protection Program (PPP) Borrowers:

PPP Forgiveness Applications and Our Application Portal

SBA has finally issued guidance on applying for PPP loan forgiveness and they have opened their site for banks to submit borrower applications to them for final review. Now that this is in place, we have been testing our application portal and technically, it is ready for you to submit your application.  That said, we are hoping that you will continue to be patient as we train our team so that we can provide the best possible service to you.  Our target date to invite you to apply is September 16th.

A few things to consider about the forgiveness application process and our application portal:

  • Don’t Rush! You have up to 10 months from the end of your “covered” use period to submit your application to us.
  • You will not owe any payments on your PPP loan until the final determination on the amount forgiven is made by SBA and then, only if less than 100% is forgiven.
  • We will invite you to apply by sending you an email with the link to our portal.  If for some reason you cannot wait for our invitation to apply, please contact your lender (or me) so that we can provide the link to you sooner. We’re hoping you will wait so that we can be more prepared to service your application.
  • The email invitation will provide login instructions which will link directly to your PPP loan with us.  Many of the borrower and loan details will then pre-fill on your application.
  • We STRONGY advise that you consult with your accountant or other financial advisor to assist you in determining which of the two applications you must use, either the SBA Form 3506EZ or Form 3506.
  • Our portal will guide you through the application details but either form is about as “EZ” as your business tax return! Trust me, you’ll want support for this.
  • You will be able to add a second email address, enabling you to share your application with the accountant or bookkeeper assisting you.
  • You will NOT have to complete the application in one sitting.  All information will be saved and you will be able to return to your application by logging back in.
  • In preparation for submitting your application, you may want to start organizing your supporting documentation in an electronic folder.  As part of the application process you will upload this documentation for our review.  We prefer “pdf” formatting, if possible.
  • The portal provides a Knowledge Center which includes many FAQs and explanations that you may refer to while completing your application. This information is taken directly from SBA guidelines so you don’t have to search for them elsewhere.

In the ongoing saga of our “PPP Plane still being built”, VT Congressman Peter Welch has co-sponsored a bill (H.R. 7777) that would further simplify the forgiveness process for borrowers with loans <$150,000. This bill will not be taken up before Congress reconvenes in September. If the bill passes in its current form, it will greatly reduce the application burden for those borrowers.  It will also reduce the burden on the banks and on the SBA and it should expedite the forgiveness process so that the loans will be paid sooner.  Approximately 90% of our loans fall in this category so you can imagine the happy dance I will be doing down the aisle of our PPP Plane if it passes! And, not forgetting our other 10%, it will allow us more time to work with you in order for you to have a smooth landing. – so we should all hope this passes…

The next message you will receive from us will be your invitation to begin your application process.  Meanwhile, we hope you are enjoying the final weeks of this beautiful summer weather.  As always, reach out to us with additional questions.

~Sarah


July 17, 2020

To our Paycheck Protection Program (PPP) Borrowers:

We have had numerous inquiries from our PPP borrowers regarding the process and timing of applying for PPP loan forgiveness.  It is easy for me to say, “Sit back, relax and enjoy the flight,” but I know many of you are anxious about the status of your loan.  The SBA still has not issued the guidance banks need to submit your applications to them and therefore we are in a holding pattern.

Here’s some good news: As I described in my last message to you, the Flexibility Act has extended the time in which to apply for forgiveness, giving you up 10 months after the end of the loan use “covered period.”  This means that even if you have expended your PPP funds within the original 8-weeks allowed (which may be extended to 24 weeks under the Flexibility Act), your forgiveness application does not have to be submitted to us until sometime in early 2021.  Provided you meet this 10-month deadline, you will be eligible for forgiveness and, importantly, you will not be required to make any payments on your PPP loan.

In my last message I also described the forgiveness application portal through which you will apply to us and submit the requisite supporting documents. Once uploaded by you, we will review your application and then pass it on to SBA for their final approval. The portal, although technically ready on the “front end,” is also being held up on the “back end” as we cannot do the submission to SBA without those guidelines.  For those of you who are ready to begin your application, maybe early August?  I hope.

Meanwhile, there is ongoing discussion in Washington that could bring additional changes to aspects of the program.  No, the PPP plane is still not completely built!

As always, we will do our best to answer your questions or to assist as needs arise.

I have enjoyed connecting with many of you.  We’re on this journey together and we all look forward to a safe landing!

Stay well.

Sarah


June 26, 2020

To our Paycheck Protection Program (PPP) Borrowers:

In my last email, I described the changes we anticipated under the CARES Act regarding extensions of time for use of the PPP funds as well as repayment for loan amounts ultimately not forgiven.  This has now passed and been signed into law – called the “Flexibility Act.” The most recent “Interim Final Rule” describing the Act may be found at www.treasury.gov.  The changes are numerous and I will attempt to summarize them below.  These are only the highlights and you should consult with your financial advisor on all of the Act’s details.

  • The Use of Proceeds:  The Act reduced from 75 percent to 60 percent the portion of the PPP loan proceeds that must be used for payroll costs in order for the full amount of the PPP loan to be eligible for forgiveness.
  • Covered Period:  The Act extended the length of the covered period from eight weeks to 24 weeks during which borrowers may expend funds, unless the borrower elects to use the original eight-week covered period.
  • Note Maturity:  The Act provides a maturity of five years for all PPP loans made after June 5, 2020 and permits borrowers to extend the maturity date of earlier PPP loans to 5 years.
  • Payment Deferral Period & Forgiveness:  Borrowers must apply for forgiveness of their loan within 10 months after the last day of the “covered period” or the borrower must begin making payments.  That said, once your application for forgiveness is submitted, we have 60 days to review it and forward to SBA for their final approval.  The SBA then has up to 90 days to finalize and fund the forgiven amount.  Loan payments will be deferred during this time.
    To summarize, you now have a longer time within which to expend your PPP loan funds, your loan repayment on amounts not forgiven may be extended over 5 years (not 2 years), and you now have increased flexibility to expend more of the PPP funds (up to 40 percent) on eligible non-payroll expenses.

The other big change that has been made is to the forgiveness application.  There are now two applications, an EZ version intended for use by self-employed, independent contractors and single-employee businesses and the longer, more detailed SBA form 3508, also revised (and hopefully simpler!) than the originally-issued version.  These newer versions were just issued within the past week and we are incorporating them into the loan forgiveness application portal we are building.  We believe, barring any additional changes by SBA, that our portal will be ready in early July.  As a reminder, this will be a secure portal linking you to your loan.  We will provide additional instructions on how to access and submit your application as soon as we have tested and hopefully worked out any bugs.

On a final note, I mentioned in my last email that we feel like the PPP is like flying a plane that is not yet built.  One borrower suggested I was the captain of the plane.  I described to the borrower that I and our team are the “baggage handlers.”  We’ve placed your baggage on the PPP plane and we will assist you in getting it off. We’ll be back in touch as soon as our portal is ready so that those of you who are ready to begin filing your application for loan forgiveness will be able to do so.  Meanwhile, please have a safe and very Happy 4th of July!

Sincerely,

Sarah


June 3, 2020

To our Paycheck Protection Program (PPP) Borrowers:

Many of our early PPP borrowers are reaching the end of the 8-week period during which your PPP funds were to be expended.  I have heard from many of you, wondering what the next steps are and how you should go about submitting your application for forgiveness.  There is an analogy being used regarding the PPP process that seems quite fitting, “We’re flying a plane that has not yet been built.” This continues to be the case. For those who may not be aware, the U.S House of Representatives passed a bill last week, H.R. 7010, which would extend the 8-week period during which you could expend your PPP funds to 24 weeks and to change the formula for eligible expenditures from 75% compensation and 25% utilities, rent, and mortgage interest to 60/40. There are other provisions in this bill, including extending the time in which employers are required to bring back employees.  This bill has now gone to the Senate for consideration.  And this is not the only bill under consideration.  This “plane” may have wings and an engine, but I’m not sure it has landing gear!

Meanwhile, what is National Bank of Middlebury doing?  First and foremost we are still making PPP loans.  The round 2 funding has not been depleted and provided it does not run out sooner, the window for applications runs until June 30th.  As of this date, the bank has funded 374 loans to businesses, totaling $25.5 million.

The bank has elected to implement a secure portal that all of our PPP borrowers will be able to access in order to submit their application for forgiveness.  We are in the process of implementing this now and anticipate that it will be ready by the end of June.  This portal will populate the online application with your specific loan details and it will walk you step by step through the application itself.  It will also provide a link for you to upload the supporting documentation that we must review with your application details.  Our lending team, specifically the lender you worked with when you submitted your loan application, will review your application and ultimately make the approval decision in accordance with the SBA guidelines.

Please be assured that we take your privacy and information security very seriously.  This portal is incorporated into our online banking system and carries all the protections of that system.

For now, we ask for your patience as both Congress and we finalize the forgiveness process.  We will reach out to you via email when we are ready with our portal.  Your lender will be available by phone or email and please feel free to contact me at any time. You are not required to make payments on this loan for 6 months. This may also be extended under Congressional action.  Once submitted we will have 60 days to review and submit the approved amount to SBA for forgiveness.

As always, please reach out if you have questions.  I have enjoyed talking with many of you and our whole team is here if you need us.

Sincerely,

Sarah


May 13, 2020

To our Paycheck Protection Program (PPP) Borrowers:

As the second round of processing PPP applications winds down, we still await final guidance from the U.S. Small Business Association regarding loan forgiveness.  We are providing this Fact Sheet for reference purposes.  Some of you have already received this Fact Sheet, but many of the Round 2 borrowers are receiving it for the first time. It is our intention to provide information as it becomes available and to provide an updated worksheet once the guidelines are made available to us.

We continue to receive a number of questions regarding the forgiveness process and most recently we have had a number of questions from borrowers who have received both the PPP and the Economic Injury Disaster Loan or Advance (EIDL).  In a recent email from our local SBA office, they stated the following, “Borrowers may have both PPP and EIDL loans.  They should be careful to not use the EIDL for payroll as that would impact the forgiveness.  The EIDL advance (up to $10,000) will be deducted from the PPP loan forgiveness when it is submitted.  EIDL loan can be used for other working capital needs.” Again please keep in mind that this information is being forwarded as we receive it but may not be the same in its final form.

Our lending team will guide you through the forgiveness application at the end of the 8-week PPP program, beginning on or around June 30, 2020.  In the meantime, please reach out to us if you have questions.  Rest assured, we want to support you, answer your questions and offer guidance on the PPP and any other banking services you may need.

It is an honor and privilege to work with all of you.  You represent a vital part of the Vermont economy and in continuing to employ your staff by utilizing this program you contribute to the well-being of our communities in many ways.  We are committed to serve you and look forward to our continued relationship.

Sincerely,

Sarah

Click here to download PPP Borrower Fact Sheet


May 6, 2020

To our Payroll Protection Program (PPP) Borrowers:

Although we still await final guidance from the U.S. Small Business Association regarding loan forgiveness, we are providing this Fact Sheet for reference purposes.  It is our intent to send out a worksheet that will assist with your forgiveness calculation.  We will do this as soon as we receive the guidance SBA and The U.S. Treasury issues.

Our lending team will guide you through the forgiveness application at the end of the 8-week PPP program, beginning on or around June 30, 2020.  In the meantime, please reach out to us if you have questions.  Rest assured, we want to support you, answer your questions and offer guidance on the PPP and any other banking services you may need.

Many of you are long-time customers of National Bank of Middlebury. Some of you we have met through this process for the first time.  You are all part of our family and our community.  It is an honor and privilege to work with you.  You represent a vital part of the Vermont economy and in continuing to employ your staff by utilizing this program you contribute to the well-being of our communities in many ways.  We are committed to serve you and look forward to our continued relationship.

Sincerely,

Sarah

Click here to download PPP Borrower Fact Sheet