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Small Business Relief

Paycheck Protection Program

Hawaii National Bank is committed to ensuring that Hawaii business owners receive the support and latest updates you need during the COVID-19 pandemic.

Congress recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to assist small businesses that have been impacted by the COVID-19 pandemic. The Paycheck Protection Program (PPP) was created to help small businesses cover certain business expenses like employee payroll costs, rent, mortgage interest, and utilities.

Updates

August 20, 2020: We will begin onboarding PPP borrowers to the Hawaii National Bank Forgiveness Portal in late August. Please note that each borrower must apply for loan forgiveness – forgiveness is not automatic. Please see the Loan Forgiveness section below for more detailed information.

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June 11, 2020: The SBA and US Department of Treasury released an interim final rule to reflect changes made by the recently passed Paycheck Protection Program Flexibility Act (H.R. 7010). The SBA also published updated, streamlined loan forgiveness application forms for borrowers and lenders to use for loans made on or after June 5, 2020.

The interim final rule codifies several changes to the program. Specifically, it:

  • Confirms that borrowers that use less than 60% of their PPP loan amount for payroll costs during the forgiveness covered period will still be eligible for partial loan forgiveness.

  • Extends the end date of the covered period for a PPP loan from June 30, 2020 to Dec. 31, 2020.

  • Provides a five-year maturity for loans made on or after June 5, 2020, and provides an option for loans made prior to that date to extend maturity from two years to five years at the mutual agreement of the borrower and lender.

  • Extends the loan forgiveness period from eight weeks to 24 weeks. (For loans made prior to June 5, 2020, borrowers may opt to keep the forgiveness period at eight weeks.)

  • Clarifies that if a borrower submits its forgiveness application within 10 months of the end of the loan forgiveness period, the borrower will not have to make any payments on the loan before the date SBA remits the forgiven amount to the lender.

  • Reiterates that the last day a lender can obtain an SBA loan number for a PPP loan is June 30, 2020.

The SBA is expected to issue additional revisions to its interim final rules to address changes made to loan forgiveness requirements by the PPP Flexibility Act. We are continuing to monitor information as released and will provide an update as soon as possible.

Source: ABA and SBA

May 15, 2020: The SBA and US Department of Treasury released the Paycheck Protection Program Loan Forgiveness Application today. We are carefully reviewing the application and instructions and will provide an update on the loan forgiveness process as soon as possible.

Source: SBA

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May 13, 2020: Due to the high volume of PPP applications received, we are no longer accepting new applications at this time. We are working diligently to process the applications already received. Mahalo for your understanding.

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May 6, 2020: Effective May 5, 2020, the SBA is extending the repayment date for the safe harbor from May 7 to May 14, 2020. For more, see the updated FAQ here.

Source: SBA

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April 28, 2020: Effective April 28, 2020, the SBA issued new guidance for the PPP program that included a Limited Safe Harbor clause with respect to certification concerning the need for a PPP loan request. In conjunction with this new guidance, if you no longer need your PPP loan to support your ongoing operations, or if you misunderstood the requirements for forgiveness, you may return funds without penalty under safe harbor terms by May 7, 2020. Additional information on the Interim Final Rule outlining safe harbor regulations can be found here.

Source: SBA

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April 27, 2020: Congress recently approved a second round of funding for the Paycheck Protection Program. We will be prioritizing previously submitted loan applications, but are also accepting new applications from those unable to submit during the first round of PPP assistance. Applications will be processed in the order received while PPP funding is available. We may not be able to process all applications received before the funds are depleted. Applications will be accepted beginning Monday, April 27, 2020.

If you have any questions, please contact your Relationship Officer or email PPPLoans@HNBhawaii.com.

All loan terms are the same regardless of the lender, and funds are limited, so it’s best to submit your application as soon as possible.

Loan Forgiveness

There are four steps for PPP Loan Forgiveness:

1. Online Portal Registration

- You will receive an email notification when your Forgiveness Portal access is ready - the email will be sent from SBA.PPP.Forgiveness@hnbhawaii.com.

- Email notifications will be sent in phases - the first phase will include loans greater than $150,000.

2. Complete Forgiveness Application

- You will need to complete the application and upload documents in accordance with SBA guidelines.

- Refer to the Borrower Forgiveness Guide for more information.

3. Hawaii National Bank Reviews Forgiveness Application

- HNB has up to 60 days to review a signed application.

4. SBA Forgiveness Decision

- The SBA has up to 90 days to review.

Loan Forgiveness - Where to Begin

To prepare for the forgiveness application, we recommend that you first determine which Forgiveness form you should complete. There are two forgiveness applications, Form 3508 and the simplified 3508EZ form, that will be available in the Forgiveness Portal. You can review the SBA’s Checklist for Using SBA Form 3508EZ to help you determine which application is right.

You can also begin preparing support documents for your forgiveness application. Please keep in mind that support documents vary depending on your application type and use of funds. In addition to submitting support documents, SBA guidelines also require borrowers to maintain certain types of information that may be requested by the SBA. Refer to SBA instructions for the most up-to-date guidance:

Form 3508 – Refer to page 10

Form 3508EZ – Refer to page 4

Loan Forgiveness Guidelines

Loan forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

Your PPP loan can be partially or fully forgiven if, within 8 weeks from receiving funds, you use the loan proceeds for:

·         Payroll costs (at least 60% of loan proceeds)

·         Mortgage interest, rent and utilities (no more than 40% of loan proceeds)

Any funds not used within the eight weeks will not be eligible for loan forgiveness. In addition, you will have to submit evidence to Hawaii National Bank that documents the use of loan proceeds by June 30, 2020.

Any portion of the funds that are not forgiven will need to be paid back over 18-months (2-year term, 6 months deferred) at an interest rate of 1.0%. There is no prepayment penalty or fees for paying off the loan earlier.

Please Note: The SBA continues to make revisions to the Paycheck Protection Program, including details regarding loan forgiveness, and information is subject to change. Please refer to the SBA’s website for the most up-to-date information.

  • You are eligible to apply if you meet the following criteria:

    1. Your business or entity was in operation on February 15, 2020

    2. You are a:

    • Small business

    • Sole proprietorship, independent contractor, or self-employed

    • 501(c)(3) nonprofit organization or 501(c)(9) veterans organization

    • Tribal business concern that has fewer than 500 employees or the applicable size standard in number of employees for the North American Industry Classification (NAICS) industry as provided by SBA, if higher. 

    • A business that employs 500 or less employees per physical location and has a NAICS code beginning with 72 (accommodations and restaurants), for which the affiliation rules are waived*.

    3. You have 500 employees or less

    *Affiliation rules are also waived for any business operating as a franchise that is assigned a franchise identifier code by the SBA, and any company that receives funding through a Small Business Investment Company.

  • The purpose of the loan is to help you cover payroll and other operating costs, so the PPP loan allows you to borrow up to 2.5 times your average monthly payroll costs, or up to $10 million (whichever amount is lower).

    Your average monthly payroll costs can include the following:

    • Compensation (salary, wage, commission, or similar compensation, payment of cash tip)

    • Payment for vacation, parental, family, medical, or sick leave

    • Allowance for dismissal or separation

    • Payment required for health care benefits, including insurance premiums

    • Payment of any retirement benefit

    • Payment of State or local tax assessed on the compensation of employees

    The following costs are not considered in determining your loan size:

    • Compensation over $100,000

    • Certain withheld taxes

    • Compensation for employees outside of the U.S.

    • Required leave under the Families First Coronavirus Response Act, for which a credit is allowed

  • Loan terms are the same for all borrowers:

    • No collateral or personal guarantee required

    • No fees and a 1.0% interest rate

    • Loans can be fully forgiven

    • No payments for 6 months

  • You can use PPP Loans for:

    Your Employees (at least 60% of the loan funds can go to these items):

    • Payroll costs (all costs mentioned in “How much can I borrow?”)

    • Costs related to group health care benefits during periods of paid sick, medical or family leave, and insurance premiums

    • Employee salaries, commissions, or similar compensations (except as excluded in “How much can I borrow”)

    Your Business (up to 40% of the loan funds can go to these items):

    • Payments of interest on any mortgage (but, not payment or prepayment of principal)

    • Rent and Utilities

    • Interest on any other debt obligations that were incurred before February 15, 2020.

Questions

  • You are eligible to apply if you meet the following criteria:

    1. Your business or entity was in operation on February 15, 2020

    2. You are a:

    • Small business

    • Sole proprietorship, independent contractor, or self-employed

    • 501(c)(3) nonprofit organization or 501(c)(9) veterans organization

    • Tribal business concern that has fewer than 500 employees or the applicable size standard in number of employees for the North American Industry Classification (NAICS) industry as provided by SBA, if higher. 

    • A business that employs 500 or less employees per physical location and has a NAICS code beginning with 72 (accommodations and restaurants), for which the affiliation rules are waived*.

    3. You have 500 employees or less

    *Affiliation rules are also waived for any business operating as a franchise that is assigned a franchise identifier code by the SBA, and any company that receives funding through a Small Business Investment Company.

  • The purpose of the loan is to help you cover payroll and other operating costs, so the PPP loan allows you to borrow up to 2.5 times your average monthly payroll costs, or up to $10 million (whichever amount is lower).

    Your average monthly payroll costs can include the following:

    • Compensation (salary, wage, commission, or similar compensation, payment of cash tip)

    • Payment for vacation, parental, family, medical, or sick leave

    • Allowance for dismissal or separation

    • Payment required for health care benefits, including insurance premiums

    • Payment of any retirement benefit

    • Payment of State or local tax assessed on the compensation of employees

    The following costs are not considered in determining your loan size:

    • Compensation over $100,000

    • Certain withheld taxes

    • Compensation for employees outside of the U.S.

    • Required leave under the Families First Coronavirus Response Act, for which a credit is allowed

  • Loan terms are the same for all borrowers:

    • No collateral or personal guarantee required

    • No fees and a 1.0% interest rate

    • Loans can be fully forgiven

    • No payments for 6 months

  • You can use PPP Loans for:

    Your Employees (at least 60% of the loan funds can go to these items):

    • Payroll costs (all costs mentioned in “How much can I borrow?”)

    • Costs related to group health care benefits during periods of paid sick, medical or family leave, and insurance premiums

    • Employee salaries, commissions, or similar compensations (except as excluded in “How much can I borrow”)

    Your Business (up to 40% of the loan funds can go to these items):

    • Payments of interest on any mortgage (but, not payment or prepayment of principal)

    • Rent and Utilities

    • Interest on any other debt obligations that were incurred before February 15, 2020.

NOTE: The SBA continues to make revisions to the Paycheck Protection Program, and information is subject to change. As such, additional documentation and information may be required.

Additional Resources