paycheck

Paycheck Protection Program (PPP)

The original PPP which had $525 billion in forgivable loans ended/closed in August 2020 has been resuscitated. The new, second round of the Paycheck Protection Program (PPP), was signed into law on December 27, 2020. As part of the 900 billion COVID-19 relief bill, the PPP 2 will have $284.5 billion available. Some $35 billion reserved for first-time loan borrowers and $15 billion reserved for community financial institutions. The SBA first opened the PPP to the community financial institutions on January 11, 2020. This was done to aid underserved and disadvantaged communities including minority and women-owned businesses. It was again opened on January 13, 2020, for 2nd time PPP borrowers.

The SBA and the Treasury issued the following guidelines:

  1. Guidance on Accessing Capital for Minority, Underserved, Veteran, and Women-Owned Business Concerns.

 

  1. Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans

 

  1. Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act.

 

Some of the new updates in PPP 2 include:

  1. Existing PPP borrowers are eligible to apply for a second-draw PPP loan. Second-time borrowers are eligible for a PPP loan of up to $2 million, under the following criteria/requirements:
  • Have 300 or fewer employees,
  • Have used or will use the full amount of their first PPP loan on or before the expected date for the second PPP loan to be issued, and
  • Had experienced a revenue reduction of more than 25% in any quarter of 2020 compared to the same quarter in 2019. This is calculated by comparing gross receipts in any 2020 quarter with an applicable quarter in 2019.
  1. PPP 2 loans expanded eligible expenses for loan forgiveness. PPP 2 eligible expenses now include operations expenditures, property damage costs, supplier costs, and worker protection expenditures.
  2. PPP borrowers can now set their PPP loan’s covered period to be any length between eight and 24 weeks. To be eligible for the full loan forgiveness, at least 60% of the borrower’s PPP loan funds must be spent on payroll over the covered period.

On January 8, 2020, the SBA and the Treasury released two different loan application forms: 1) Form 2483 – Paycheck Protection program Borrower Application Form, and 2.) Form 2483 SD PPP Second Draw Borrower Application Form.

The application window for Paycheck Protection Program (PPP) forgivable loans opened on January 15th to lenders with $1 billion or less in assets and will open to first and second draw loans from large lenders on Tuesday, January 19, 2020.

If you haven’t done so yet, now is the time to put together the documents required for the loan application such as payroll cost, payroll return, tax return, and financial statements. When that loan application window opens up, you will be ready. Make sure to prepare and fill out the correct form depending on whether this is the first time you are applying for the PPP or your second time. Read thru the guidance issued by the SBA and Treasury. Reach out to your financial institution to keep you updated and ask for additional guidance. Good luck!

 

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