SVB and Government Relief Programs Frequently Asked Questions
What is the process for PPP loan forgiveness?
On May 15, the SBA released a PPP Forgiveness Application. The SBA has indicated it will be releasing further guidance, and SVB is currently setting up a process to handle requests for PPP loan forgiveness. When we set a date to accept forgiveness applications, which we expect to be after the SBA’s June 30 program end date, we will inform PPP borrowers. Until then, we are not accepting forgiveness applications.
PPP borrowers have a six-month deferral period from the date of the loan, during which no payments are due on the loan, to the extent not forgiven.
The amount of your PPP loan that will be eligible for forgiveness will depend on the total amount of payroll, mortgage interest, rent and utility costs incurred by the entity that borrowed the PPP loan during the eight-week period after the loan was funded. Accordingly, keeping accurate records of these payments, including records of compensation paid by the borrower directly to eligible employees, will be important. Failure to provide adequate records evidencing these expenses may impact the amount of forgiveness for which you are eligible.
The SBA has provided the following information about PPP loan forgiveness:
- Loan forgiveness is not automatic and must be requested through SVB.
- To be eligible for loan forgiveness, PPP loan proceeds must be used for specified purposes, and at least 75% must be used for payroll costs, as defined by the SBA.
- Not more than 25% of the loan forgiveness amount may be attributable for non-payroll costs.
- Generally, PPP borrowers must maintain their employee headcount and compensation levels during the 8-week period after loan disbursement.
- The amount of loan forgiveness can be up to the full principal amount of the PPP loan and any accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount of the following uses of the PPP loan proceeds over the eight-week period following the date of the loan disbursement:
- Payroll costs
- Payments of interest on mortgage obligations incurred before February 15, 2020
- Rent payments on leases dated before February 15, 2020 and
- Utility payments under service agreements dated before February 15, 2020
- Loan payments will be deferred for 6 months, but interest will continue to accrue, even if the loan is not forgiven, in part or in full. The borrower will be responsible under the loan for any amounts not forgiven.
- The SBA may limit the timeframe by which you’ll need to ask for forgiveness.
In the interim, we recommend you:
- Visit SBA.gov for information on loan forgiveness.
- Document your expenses, both payroll costs and other eligible expenses incurred directly by the borrower named on the PPP loan note, in the 8 weeks following loan disbursement.
- Review and modify any automatic payments like ACH and automatic debits for the account holding the PPP loan proceeds to ensure those funds are not used for ineligible purposes.
- SVB will email you when you can request loan forgiveness online.
- You will need to certify and provide documentation that you used the loan funds for SBA-eligible purposes.
Please note, it is your obligation, as the borrower, to make sure you understand the SBA's rules. Other eligibility requirements may apply.
How do I repay all, or a portion, of my PPP loan?
If you would like to repay your PPP loan, please follow the process on SVB Learning Central and send an email to PPPRevokeRequest@svb.com with the required information. Repayment of your PPP loan is final and may not be revoked.
How can I request consent from SVB for a transaction that will change the ownership or business structure of my company that received a PPP loan?
The SBA’s standard loan note includes a number of restrictions on PPP Borrower actions including limitations on the Borrower’s ability to merge, consolidate or otherwise change its ownership or business structure. In the absence of guidance from the SBA as to what standard to apply to determine whether a transaction of this type is acceptable, SVB is not able to provide its consent with respect to any of these types of transactions while a PPP loan remains outstanding. If the SBA publishes guidelines on how to evaluate these transactions, we will review them and update our approach. Repayment of a PPP loan removes these restrictions and repayment can be made at any point.
How do I request an amortization schedule for my PPP loan?
PPP loans will not be amortized until after the six-month period of no interest and forgiveness, resulting in a paydown of principal.
Accurate amortization will depend on the portion of the loan reduced (potentially) for forgiveness. After SVB processes the portion of the loan that has been forgiven, borrowers may request an amortization schedule. The SBA has not yet provided loan forgiveness guidance beyond what is currently available on the SBA PPP website.
Are you accepting new applications?
In order to ensure we are able to process as many previously received applications as possible, we are not accepting new PPP applications.
How is SVB helping clients?
What matters to us is listening to your needs, being flexible with our solutions and being patient in our approach. SVB’s venture debt relief initiative, launched on April 1, has enabled more than 1,000 startups to defer their principal payments on a combined $2.1 billion in funded debt for six months. The Premium Wine Division is enabling a majority of clients to defer principal payments for three or six months, and SVB Private Bank clients are given the option to defer mortgage payments for 90 days.
SVB also participated in the Paycheck Protection Program under the US CARES Act, and we are in the process of applying to become an accredited lender in the UK under the Coronavirus Business Interruption Loan Scheme (CBILS).
How does SVB venture debt relief work?
The venture debt principal deferral program was launched on April 1, 2020 and is an SVB-only program, not under the auspices of any government agency. The program is applicable to SVB venture debt borrowers with a funded term loan balance or aggregate term loan commitment of $10M or less. The program defers all principal payments for six months. Eligible borrowers were notified by SVB directly. The program has enabled more than 1,000 startups to defer their principal payments on a combined $2.1 billion in funded debt for six months.
How do I keep up-to-date on what is available from SVB?
This is a fluid situation and we intend to communicate with our clients frequently. Please be patient as we try to get back to your calls and questions as quickly as we can. In addition to your Relationship Managers, Relationship Advisors and Client Service, please seek information from our COVID-19 Relief website here: www.svb.com/covid-relief
What is SVB's point of view about new client lending and whether clients should draw down on loans or lines of credit?
We have the financial capacity and willingness to lend. We have a highly liquid balance sheet, and we have the capability meet our clients’ needs now and invest for the future. As with any major financial decision, we recommend that you consult your advisors before accessing credit. If you have cash and don’t need to borrow now, you may want to wait instead of incurring additional debt service costs.
Is SVB an SBA Lender?
Yes, we are an approved SBA lender and are able to process PPP loan applications.
What is the process to apply with SVB for PPP?
Please visit www.svb.com/paycheck-protection-program to review the process.
Who should apply for the PPP?
The PPP program is specifically designed for those companies who can certify that they need the funds under the PPP requirements. We ask that you carefully consider how the COVID-19 crisis has actually impacted your ability to fund payroll, rent, mortgage interest or utilities before you sign your loan certification.
Why might I be turned down for a PPP loan?
In addition to the eligibility requirements of the PPP program, there are a number of SBA rules and requirements that may apply to your application. Also, all PPP applications are subject to a verification process to ensure that the payroll costs and other inputs required to determine the eligible loan amount as well as the know-your-customer review that banks are required to conduct by law. These and a number of other factors may have bearing on whether an application is accepted or declined.
Am I eligible for PPP if I’m a venture-backed company?
As of now, the affiliation rules are in force, which means venture-backed companies will need to consider them when determining their eligibility for a PPP loan. As part of the application process, we will ask you to make additional representations set forth below. We will not require you to provide a legal opinion in connection with your application.
In order to ensure that you take the SBA's affiliation rules into account and to help you consider some of the scenarios that might trigger affiliation under these rules, we will ask you to make these additional certifications when you complete your application. Please consult your legal counsel as you review them:
- No business which, when combined with the Applicant, would have more than 500 employees (or any higher number provided in SBA standards for the relevant industry): (a) owns or controls more than 50% of the Applicant's equity, or (b) has, pursuant to the Applicant's charter, bylaws or shareholder agreements, the ability to prevent a quorum or otherwise block action by the Applicant board of directors or shareholders, or (c) has the ability to control day-to-day activities of the Applicant through its Board or Shareholders (including for example, setting employee compensation, hiring and firing of executives, and purchasing or selling equipment);
- The Applicant is not one of the types of businesses ineligible for SBA business loans (see 13 CFR 120.110), nor is any owner of 20% or more of the business;
- The Applicant has considered the SBA's affiliation rules and included the employees of its affiliates (at any level) when determining its eligibility for this program; and
- The Applicant has considered existing options, convertible securities, and agreements to merge when determining its eligibility for this program.
Is SVB offering loans under the Main Street Lending Program?
We are currently assessing the updated program framework and details that were announced by the Federal Reserve on April 30, 2020. As we evaluate the changes to the program, we are also continuing to listen to our clients to understand their needs and aiming to be flexible with our solutions.
Is SVB participating in the Coronavirus Business Interruption Loan Scheme (CBILS) in the UK?
SVB is in the process of applying to become an accredited lender under the Coronavirus Business Interruption Loan Scheme (CBILS).
Please share details about SVB’s Community Response.
SVB is targeting philanthropic efforts in three primary areas: health, food security and shelter, and small business relief. The bank has committed $5.5 million to COVID-19 charitable relief initiatives across the eight countries and 15 US states where the bank operates. This includes corporate contributions to global, national and regional charities, direct community-based giving and a 3:1 match for SVB employees’ donations to relevant causes. In addition, SVB will contribute net PPP loan origination fees it receives from the SBA to relief efforts.
The COVID-19 Global Impact & Innovation Fund, in partnership with Founders Pledge on March 30, 2020 was established to identify and consolidate into a single fund high-impact organizations that are creating solutions to the pandemic crisis. The fund is now focused on activities to help slow COVID-19’s spread and provide immediate relief to those affected. Looking ahead, it will target initiatives to better prepare for future pandemics. SVB made an initial $1 million investment in the fund, and we invite you to join us. Learn more and donate at https://www.founderspledge.com/svb-covid-19.
As part of our regional effort, SVB offices have supported many health, food security and shelter organizations. In the UK, for example, SVB has partnered with Meals for the NHS, a tech ecosystem initiative to provide much needed meals to frontline hospital staff that are dealing directly with COVID-19. Meals for the NHS is now operating across 75 hospitals in 21 towns and cities across the UK. Learn more at mealsforthenhs.com. In the US, SVB is supporting a similar effort nationwide led by Frontline Foods.
SVB is also supporting emergency small business grants through our partner Hello Alice's Business for All initiative. Hello Alice provides grants and guidance to small, women- and minority-owned businesses and hosts a free COVID-19 Business Resource Center to link these businesses to relief programs, funding opportunities, mentors and other support programs designed for New Majority entrepreneurs. To learn more and apply for emergency grants, visit www.covid19businesscenter.com/.