Paycheck Protection Program (PPP)
PPP Status Updated 1/7/2021
On December 27, 2020, a new economic stimulus bill was signed into law which will provide additional funding for a new “Round 2” of PPP funding and make changes to the forgiveness process. There are other significant benefits created by the legislation which will help small businesses this year.
On January 6, 2021, the SBA issued interim guidance on the changes and we are actively working to set up our systems in response to these changes. As with the prior PPP program, the best source of information is the SBA website: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program. We encourage any potential business applicant to carefully review the guidelines of the program as published by SBA and to contact their accountant or other financial advisor for specific questions about eligibility and forgiveness. Many of the same eligibility requirements will apply as the first round; however, there are other significant changes in eligibility which should be reviewed prior to submitting an application for the Round 2 PPP.
Round 2 (2nd Draw) PPP Funding:
For existing business customers of the bank that meet the eligibility for a second draw PPP and would like the new PPP application sent to them when it becomes available, please contact your Branch Manager or Commercial Loan Officer and we will add you to our inquiry list.
The Round 2 PPP “preliminary” eligibly summary:
- Intended for “hardest hit businesses” with 300 or fewer employees.
- Funds have been reserved for first time PPP borrowers as well as second draw PPP loans for borrowers who already received PPP funds.
- Borrower must demonstrate a 25% or greater decline in gross receipts in 2020 as substantiated by a decline in gross receipts for any one quarter in 2020 in comparison to the same quarter in 2019 (Additional guidance may be required for required documentation).
- The maximum loan is $2,000,000
- The amount of the loan is based on 2.5 months of average annual payroll. The amount is higher (3.5 months of average annual payroll) for NAICS Code 72 (generally hotels and restaurants).
- The covered period after funding is flexible, between 8 and 24 weeks
- For full forgiveness, 60% of the PPP loan must be used for payroll with the same and expanded uses for the remaining 40%.
- As with the original PPP program, SBA requires the certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”.
The new legislation repeals the EIDL advance reduction from the PPP Forgiveness.
- For those businesses that have already received PPP forgiveness and had the EIDL loan advance deducted, the legislation requires SBA to “make whole” these businesses.
- For borrowers with a remaining PPP loan balance due to the EIDL advance reduction, the bank is working with the SBA to obtain the funds to pay the balance off and refund any payments made.
- For borrowers who paid off the remaining PPP loan balance due to the EIDL reduction, we will be refunding this amount once the funds are received from the SBA.
- The bank will be sending correspondence to you soon on the handling of the EIDL advance reduction refunding process.
The new legislation also instructs SBA to provide a newly revised forgiveness application for PPP borrowers with loan amounts less than $150,000.
- The new application is intended to be a “one page” application with certification by the business that the PPP forgiveness eligibility has been met. The new application should not require the business to submit back up documentation to the bank or SBA unless requested.
- If you have not yet made your forgiveness application and your loan amount is under $150,000, we will be sending the new application when it is available via DocuSign.