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Paycheck Protection Program 

SBA Paycheck Protection Program (PPP)

Please note that Cathay Bank is no longer accepting new PPP loan applications.

The Paycheck Protection Program (PPP) Flexibility Act was enacted into legislation on Friday, June 5th. This new legislation, supplementing the original CARES Act, intends to provide businesses with more time and flexibility to keep their employees on payroll and ensure their continued operations as we safely reopen our country.  

Cathay Bank is not accepting PPP Loan Forgiveness Applications at this time.  We are working diligently to finalize the online portal which will be accessible to all our existing PPP loan recipients within the coming weeks.  We are also monitoring several legislative proposals that may simplify the PPP Loan Forgiveness process for those of you with loans of $150,000 or less.

We want to inform you about the important rules that give you more time and flexibility to spend your PPP funds to qualify for Forgiveness. This legislation also gives you more time to request Forgiveness.

Here are the highlights:

  • You have up to 24 weeks – previously 8 weeks – to spend loan funds in the Covered Period.
  • You must use at least 60% of funds for eligible payroll costs to qualify for full loan forgiveness, down from 75%.
  • You can use up to 40% of funds for eligible non-payroll costs, up from 25%.
  • You may be able to use FTE Safe Harbor provisions if you have fewer employees now.
  • You have until 10 months from the end of your Covered Period to apply for loan forgiveness.
  • You must retain PPP documentation in your files for 6 years after the date the loan is forgiven or repaid in full.

If you apply for Forgiveness, you will not have to start making payments until U.S. SBA makes a decision or remits the funds. 

We are anticipating accepting PPP loan forgiveness applications once our online forgiveness application portal is open. We will continue to monitor for changes and updates from U.S. Small Business Administration on a regular basis.

Additional information on the PPP Loan Forgiveness can be found on the U.S. Treasury website below. 

https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

Frequently Asked Questions

1. Is Cathay Bank currently accepting Paycheck Protection Program (“PPP”) Loan Forgiveness Applications?

We are not accepting Paycheck Protection Program (“PPP”) Loan Forgiveness Applications at this time as we are waiting for U.S. SBA to issue written guidance related to the new PPP loan forgiveness guidelines as a result of the PPP Flexibility Act. Furthermore, a new application form is expected to be released.

As of June 15, 2020

2. What is the general process to obtain loan forgiveness?

To receive loan forgiveness, the Borrower must complete and submit the Loan Forgiveness Application (SBA Form 3508) along with supporting documents to the lender. As a general matter, the lender will review the application and make a decision regarding loan forgiveness. The lender has 60 days from receipt of a complete application to issue a decision to SBA. Borrowers will not have to make the PPP loan payments until the debt forgiveness decision is made.

As of June 15, 2020

3. How much time do I have to use the PPP loan proceeds?

Borrowers who received PPP loan proceeds prior to June 5, 2020, can choose to extend the 8-week period (known as the “covered period”) to 24-weeks. Borrowers who received PPP loan proceeds on or after June 5, 2020, will have a 24-week covered period. The PPP Flexibility Act was designed to make it easier for more borrowers to reach full, or almost full, forgiveness.

As of June 15, 2020

4. When does the covered period start?

On the first day of loan disbursement or on the first day that payroll expenses are paid on the normal payroll cycle. Covered period cannot extend beyond December 31, 2020.

As of June 15, 2020

5. What portion of the debt forgiveness amount needs to be for payroll and other qualified expenses?

At least 60% of the debt forgiveness amount must be used for payroll expenses and 40% on qualified expenses to be eligible for full forgiveness. If less than 60% of the debt forgiveness amount was used for payroll expenses, the borrower may qualify for partial forgiveness.

As of June 15, 2020

6. What is the new safe harbor deadline?

Borrowers can use the 24-week covered period to restore their workforce levels and wages to pre-pandemic levels required for full forgiveness. This must be done by December 31, 2020, a change from the previous deadline of June 30, 2020.

As of June 15, 2020

7. If a portion of my PPP loan is not forgiven, what is the repayment term?

If the Borrower received the SBA Loan Number on June 5, 2020, or later, the repayment term will be 5-years with 1.00% interest. If the Borrower received the SBA Loan Number prior to June 5, 2020, the repayment term will be 2-years with 1.00% interest.

As of June 15, 2020

8. Will loan forgiveness amount be reduced if borrower laid-off or reduced the hours of an employee, then offered to rehire same employee for the same salary and number of hours, or restore the reduction in hours, but employee declined offer?

No. Employees whom the borrower offered to rehire are generally exempt from the CARES Act’s loan forgiveness reduction calculation. Borrower must maintain documentation evidencing the rehiring efforts.

As of June 15, 2020

9. Are there caps on the amount of loan forgiveness available for owner-employees and self-employed individuals’ own payroll compensation?

Yes, the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation can be no more than $15,385 per individual.

As of June 15, 2020

10. What is the Paycheck Protection Program (PPP)?

The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone. Eligible use of proceeds includes the following:

  • Payroll costs, including benefits
  • Mortgage interest obligations for business related debt, incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities related to business operations, for which service began before February 15, 2020

As of April 7, 2020

11. Is this loan considered “free money”?

No. The Paycheck Protection Program was initiated primarily to ensure that employees in the U.S. are paid due to wage interruptions caused by the COVID-19 pandemic. Please be advised that any portion of the loan that is not forgiven will be payable and due based on loan terms set forth by the program. Applicants should utilize this program responsibly while taking into consideration that debt forgiveness is not guaranteed approval and subject to extensive eligibility requirements & documentation after the loan is funded. Submission of a completed application package does not automatically guarantee processing or approval from the lender and U.S. Small Business Administration. Applicants should also take into consideration their ability to repay all or a portion of this loan.

As of April 7, 2020

12. Who can apply?

All businesses – including nonprofits, veterans’ organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet the applicable SBA employee-based size standards for those industries.

As of April 7, 2020

13. How many loans can I take out under this program?

Only one.

As of April 7, 2020

14. What can I use these loans for?

  • Payroll costs, including benefits
  • Mortgage interest obligations for business related debt, incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities related to business operations, for which service began before February 15, 2020

As of April 7, 2020

15. What counts as payroll costs?

Payroll costs include:

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

As of April 7, 2020

16. How large can my loan be?

The lesser of $10,000,000 or 2.5 times your average monthly payroll costs for the past year. Please refer to the calculation worksheet provided separately.

As of April 7, 2020

17. What is my interest rate?

1.00% fixed.

As of April 7, 2020

18. Can I pay my loan earlier than 2 years?

Yes. There are no prepayment penalties or fees.

As of April 7, 2020

19. Do I need to pledge any collateral for these loans?

No. Collateral will not be required for this loan.

As of April 7, 2020

20. Do I need to personally guarantee this loan?

No. There is no personal guarantee requirement. However, if the loan proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.

As of April 7, 2020

21. Can I apply for this loan if I already applied for the SBA Economic Injury Disaster Loan?

Yes. However, you cannot apply for the Paycheck Protection Loan for the same use of proceeds requested in the SBA Economic Injury Disaster Loan. For example, you cannot receive an SBA Economic Injury Disaster loan and Paycheck Protection Program loan for payroll expenses; however, you could get a loan for working capital through the SBA Economic Injury Disaster loan and apply for payroll related assistance through the Paycheck Protection Program.

As of April 7, 2020

22. Can I apply for this loan if I am a landlord of an investment property generating rental income from tenants?

No. However, you are eligible to apply for relief assistance through the SBA Economic Injury Disaster loan program.

As of April 7, 2020

Cathay Bank

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Have a Question?

Please contact our SBA Department for all your SBA Loan needs at 866-228-4296 or speak with your local Cathay Bank branch manager.