Paycheck Protection Program Updates

The Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act added funds to the Paycheck Protection Program and enabled those who had received PPP funds to apply for additional support. Please read below for the latest changes in accordance with guidance from the U.S. Small Business Administration. 

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First-Draw

Who Can Apply?

ELIGIBILITY

You are eligible to apply if you are a:

Small business, self-employed individual, sole proprietor, independent contractor, or small agricultural cooperative, non-profits including churches with 500 employees or less; and accommodation and food services operations with fewer than 300 employees per physical location.

  • Expanded eligibility for some 501(c)(6) organizations with 300 employees or less
  • Local newspapers, TV, and radio stations previously ineligible due to affiliation rules

YOU MUST HAVE BEEN IN OPERATION ON FEB. 15, 2020 TO BE ELIGIBLE.

How Does the Loan Work?

LOAN BASICS

How Much: Up to $10 million Interest Rates: 1% for all borrowers Repayment Terms: 5 years

No collateral or personal guarantee required. Not dependent on credit scores.

If you apply and obtain the amount you qualify for meeting the parameters set in the legislation, use it as allowed, and submit an application for forgiveness, you will not have to repay the loan funds. Please note new review processes have been put in place to ensure transparency and enforcement for misuse of funds.

In order to qualify for full loan forgiveness, at least 60% of the loan MUST be used on payroll.

How do I Apply?

You would apply through an SBA Approved Lender, which may be a local bank, credit union, or alternative online lender. Please note while there is a paper application available from the SBA, most lenders are adapting the application to be able to offer it online through their respective websites. You can view the application here, but be sure to reach out to your lender to follow their process.

First-Draw applications open to Community Financial Institutions on 1/11, to small lenders on 1/15, and to all other lenders on 1/19. You can find a list here: PPP Lenders.

How Do I Calculate How Much I Can Get?

CALCULATING THE AMOUNT YOU MAY QUALIFY FOR

NON-SEASONAL EMPLOYERS:

Calculated at 2.5x average monthly payroll costs, up to $10M (either 1 year period before loan is made, or calendar year 2019)

SEASONAL EMPLOYERS:

2.5x average monthly payroll costs, up to $10M for a 12-week period now between February 15, 2019 and February 15, 2020.

DOCUMENTATION TO GET READY

  • 2019 tax returns or 2019 year-end financial statements
  • 2020 tax returns (estimated, Schedule C/K) or 2020 year-end financial statements
  • Last 4 quarters of payroll forms (941)
  • Verification of the number of employees and payroll incurred over the most recent 12-month period identifying employees in excess of $100,000
  • Forms 1099-MISC for self-employed individuals

What Can I Use the Money for?

PAYROLL COSTS

Compensation to employees in the form of:

  • salary, wages, commissions, or similar
  • cash tips or the equivalent
  • payment for vacation, parental, family, medical, or sick leave (except FFCRA)
  • allowance for separation or dismissal
  • payment for employee benefits including group health care or group life, disability, vision, or dental insurance, including insurance premiums, and retirement
  • SUTA

For an independent contractor or sole proprietor: wages, commissions, income, or net earnings from self-employment, or similar

NON-PAYROLL COSTS

  • mortgage interest payments (but not mortgage prepayments or principal payments)
  • rent payments
  • utility payments
  • interest payments on any other debt obligations that were incurred before February 15, 2020 (allowable use but not forgivable)
  • refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020 (allowable use but not forgivable)
  • covered operations expenditures
  • covered property damage costs (if applicable)
  • covered supplier costs
  • covered worker protection expenditures

How Do I Get the Loan Forgiven?

Overall the forgiveness process remains the same as before. We will provide additional guidelines as the SBA releases additional documentation.

Be sure to use the funds only towards allowed, forgivable expenses, as detailed above.

Important Highlights

60/40 Rule Remains: At least 60% still has to be used for allowable payroll costs

Covered Period: Allows borrowers to select their loan forgiveness covered period starting on the day of disbursement of the funds, and choosing a time period between 8 and 24 weeks.

Simplified Forgiveness for Loans Under $150k: Process TBD. Also increases SBA’s ability to review and audit forgiven loans of all sizes.

The process requires certifications to be made, as well as a written description to include number of employee retains because of the PPP loan.

EIDL Advances: No longer have to be subtracted from PPP forgiveness.

Second-Draw

Who Can Apply?

If you previously applied and received a Paycheck Protection Program loan:

ELIGIBILITY

You are eligible to apply if you are a:

Small business, self-employed individual, sole proprietor, independent contractor, or small agricultural cooperative, non-profits including churches with 300 employees or less; and accommodation and food services operations with fewer than 300 employees per physical location.

  • Expanded eligibility for some 501(c)(6) organizations with 300 employees or less
  • Local newspapers, TV, and radio stations previously ineligible due to affiliation rules

All second-draw applicants must:

  • Demonstrate at least 25% reduction in gross revenues between comparable quarters in 2019-2020
  • Have used all prior PPP funds by the time of application

PLEASE NOTE YOU CANNOT RECEIVE BOTH A GRANT FOR SHUTTERED VENUE OPERATIONS & A PPP FORGIVABLE LOAN.

How Does the Loan Work?

LOAN BASICS

How Much: Up to $2 million Interest Rates: 1% for all borrowers Repayment Terms: 5 years

No collateral or personal guarantee required. Not dependent on credit scores.

If you apply and obtain the amount you qualify for meeting the parameters set in the legislation, use it as allowed, and submit an application for forgiveness, you will not have to repay the loan funds. Please note new review processes have been put in place to ensure transparency and enforcement for misuse of funds.

In order to qualify for full loan forgiveness, at least 60% of the loan MUST be used on payroll.

HOW DO I APPLY?

You would apply through an SBA Approved Lender, which may be a local bank, credit union, or alternative online lender. Please note while there is a paper application available from the SBA, most lenders are adapting the application to be able to offer it online through their respective websites.

If you expect your second-draw loan to be under $150,000, and you apply through the same lender you did before using 2019 numbers, you will not be required to submit the same payroll documents again. You can, however, apply through any lender you choose independent on which lender you used the first time. You would simply to submit all your documents again.

 

You can view the application here, but be sure to reach out to your lender to follow their process.

Second-Draw applications open to Community Financial Institutions on 1/11, to small lenders on 1/15, and to all other lenders on 1/19. You can find a list here: PPP Lenders.

How Do I Calculate How Much I Can Get?

CALCULATING THE AMOUNT YOU MAY QUALIFY FOR

NON-SEASONAL EMPLOYERS:

Calculated at 2.5x average monthly payroll costs, up to $2M (either 1 year period before loan is made, or calendar year 2019)

IMPORTANT: Small businesses with NAICS code 72 (Accommodations & Food Services) can request 3.5x average monthly payroll

SEASONAL EMPLOYERS:

2.5x average monthly payroll costs, up to $2M for a 12-week period now between February 15, 2019 and February 15, 2020.

DOCUMENTATION TO GET READY

  • 2019 tax returns or 2019 year-end financial statements
  • 2020 tax returns (estimated, Schedule C/K) or 2020 year-end financial statements
  • Last 4 quarters of payroll forms (941)
  • Verification of the number of employees and payroll incurred over the most recent 12-month period identifying employees in excess of $100,000
  • Forms 1099-MISC for self-employed individuals

What Can I Use the Money for?

PAYROLL COSTS

Compensation to employees in the form of:

  • salary, wages, commissions, or similar
  • cash tips or the equivalent
  • payment for vacation, parental, family, medical, or sick leave (except FFCRA)
  • allowance for separation or dismissal
  • payment for employee benefits including group health care or group life, disability, vision, or dental insurance, including insurance premiums, and retirement
  • SUTA

For an independent contractor or sole proprietor: wages, commissions, income, or net earnings from self-employment, or similar

NON-PAYROLL COSTS

  • mortgage interest payments (but not mortgage prepayments or principal payments)
  • rent payments
  • utility payments
  • interest payments on any other debt obligations that were incurred before February 15, 2020 (allowable use but not forgivable)
  • refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020 (allowable use but not forgivable)
  • covered operations expenditures
  • covered property damage costs (if applicable)
  • covered supplier costs
  • covered worker protection expenditures

How Do I Get the Loan Forgiven?

Overall the forgiveness process remains the same as before. We will provide additional guidelines as the SBA releases additional documentation.

Be sure to use the funds only towards allowed, forgivable expenses, as detailed above.

Important Highlights

60/40 Rule Remains: At least 60% still has to be used for allowable payroll costs

Covered Period: Allows borrowers to select their loan forgiveness covered period starting on the day of disbursement of the funds, and choosing a time period between 8 and 24 weeks.

Simplified Forgiveness for Loans Under $150k: Process TBD. Also increases SBA’s ability to review and audit forgiven loans of all sizes.

The process requires certifications to be made, as well as a written description to include number of employee retains because of the PPP loan.

EIDL Advances: No longer have to be subtracted from PPP forgiveness.

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