The House and Senate approved changes to the Paycheck Protection Program that is now headed to the President for signature.  The changes are more favorable for PPP Borrowers. 

It is important to note, once the President signs the new legislation, the final rules still need to be written by the Small Business Administration.  This means that complete clarity on the forgiveness process may not be known for several days.  Once those rules are written and a new Forgiveness Application is published the SBA, Platinum Bank will communicate with all PPP Borrowers to ensure a smooth forgiveness process.

Full details may be found here: https://www.congress.gov/bill/116th-congress/house-bill/7010?overview=closed.

Following are a few highlights:

  • The “covered period” is extended from 8 weeks to 24 weeks.  This allows business more time to spend the loan proceeds for eligible costs.
  • Increases cap on non-payroll expenses to 40%, which lowers the payroll expense requirement to 60%.
  • Extends the period to when a business can apply for forgiveness to 16 months, which is 10 months after the covered period ends.  There will be no payment of principal or interest due during this period.

Your Relationship Managers and the entire Platinum Team are here to assist you as needed.

Dear Platinum Bank Family,

We are entering the fourth month of the COVID-19 pandemic, which has had profound effects on our businesses, our employees, and our families. At Platinum, we have worked hard over the last few months to help our clients submit PPP applications and plan for a future that none of us could have anticipated.

If the pandemic has taught us one thing, it is that proactively working together is the way through our current collective challenge. Sticking our heads in the sand won’t address the obstacles the pandemic has placed before us. At Platinum Bank, it has always been our mission to be a strategic business partner for our clients, helping them plan for the future and find solutions to their business challenges. These last few months have undeniably given us the opportunity to refine this part of our mission.

No one planned to be closed or operate at a reduced capacity this year. If your current plan does not account for this new reality, it is time to create a new plan. There are seven months left in 2020… what is your plan to maximize them?

The good news is you do not have to formulate a plan on your own. Your Platinum advisors are ready to help you devise a plan that is tailored to your unique business. Whether you need to strategize how to keep your business alive through the next year, secure working capital, or grow your business through acquisition, our bankers are prepared to help you. And, if you need expertise outside of commercial banking, we can recommend professionals to add to your trusted advisor team.

Now more than ever, it is important to have a strong relationship with your banker.  If your current bank or banker is not a partner and an advisor for you and your business, please reach out to us.  We would love to start a conversation with you and to learn how we can be of service to you and your business.   

Be Well and Stay Safe,

Pete Odell

Senior Vice President, Commercial Relationship Manager

Many business owners who applied directly with the SBA for an Economic Injury Disaster Loan Emergency Advance are now receiving notification that they have been approved for an Economic Injury Disaster Loan. Before accepting the Loan, Borrowers should carefully read and understand the restrictions and requirements within the Loan Documents. Not adhering to the provisions as written means the Loan would be in default, granting rights by the SBA to “…declare all or any part of the indebtedness immediately due and payable.” 

We have reviewed the Loan Documents for the Economic Injury Advance Loan and want to highlight specific requirements of which Borrowers should be aware. It is the Borrower’s sole responsibility to review and understand all the requirements of the borrowing arrangement. We encourage Borrowers to seek legal representation to assist in this process. 

Loan Authorization and Agreement (Form 1391) 

➢ The Loan is priced at 3.75% fixed for 30 years. No payments of interest or principal are due for 12 months, with the balance amortized over 30 years from the date of the Promissory Note. 

➢ Loan amounts over $25,000 are secured by all business assets of the company through a UCC filing. ➢ Under the heading: REQUIREMENTS RELATIVE TO COLLATERAL, Borrowers are agreeing to the following statement: “Borrower will neither seek nor accept future advances under any superior liens on the collateral securing this loan without the prior written consent of the SBA.

o This statement appears to restrict a Borrower’s ability to utilize an existing Bank line of credit if the line of credit is secured by the same collateral. 

➢ The use of Loan proceeds is restricted to working capital, and the Borrower must maintain itemized receipts for three years. 

➢ Borrower is required to submit proof of active hazard insurance to the address listed within 12 months. 

➢ Borrower is required to provide fiscal year-end statements to the SBA within three months after the close of their fiscal year end. 

➢ Upon written request of the SBA, Borrower will accompany such statements with an “Accountant Review Report” prepared by an independent public accountant at the Borrower’s expense. 

➢ Under the heading: LIMITS ON DISTRIBUTION OF ASSETS, Borrower is agreeing to the following statement: “Borrower will not, without the prior written consent of SBA, make any distribution of Borrower’s assets…”

o This statement appears to disallow any Borrowers from making cash distributions for any reason, such as for taxes (unless approved by the SBA). 

➢ Borrower must send within 180 days a Resolution from the Board of Directors authorizing the funds. 

Security Agreement (Form 1059) 

➢ Borrower certifies “Collateral is free of all adverse claims, liens, or security interests (unless expressly permitted by Secured Party).”

o Borrowers are required to obtain Bank approval for the SBA lien if the Bank holds a collateral interest in the company. 

For more information on this and additional SBA updates, please refer to our Platinum Bank website 

or contact one of our business bankers at 651.332.5200