The Small Business Administration (SBA) has announced the reopening of the Paycheck Protection Program (PPP) this week. PPP Loans can be used to help fund payroll costs, including benefits, mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations. If your organization is applying for the program for the first time, refer to the application here. If your organization is applying for a second draw-down, refer to the application here. For the full SBA guidance on the PPP program click here. For the full SBA guidance on second-draw loans click here. See below for concise summary overviews of the program for first time and second time borrowers.
First Time Borrowers
What Are Terms for Forgiveness?
For first time PPP loan borrowers, organizations will qualify for full loan forgiveness if during the 8 to 24 week covered period after loan disbursement, employee and compensation levels are maintained (or, if not, an applicable safe harbor or exemption applies), loan proceeds are spent on payroll costs and other eligible expenses, and at least 60% of the proceeds are spent on payroll costs.
Who Is Eligible to Apply?
-Non-profit organizations with 500 or fewer employees.
-Additionally, existing PPP borrowers can reapply for a first draw PPP loan if you previously returned some or all of the first draw PPP loan funds or under certain circumstances you may request to modify the first draw PPP loan amount, if your organization previously did not accept the full amount for which you were eligible to receive and did not receive forgiveness as of December 27, 2020.
Second Time Borrowers
What Are Terms for Forgiveness?
For second draw PPP loan borrowers, organizations will qualify for loan forgiveness if during the 8 to 24 week covered period after loan disbursement, employee and compensation levels are maintained (or, if not, an applicable safe harbor or exemption applies) the loan proceeds are spent on payroll costs and other eligible expenses, and at least 60% of the proceeds are spent on payroll costs.
Who Is Eligible To Apply?
Organizations previously receiving a First Draw PPP Loan and that will or has used the full amount only for authorized uses, has no more than 300 employees, and can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
What Is The Maximum Loan Amount?
For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million.
How and When to Apply for First and Second Time Borrowers?
Borrowers can apply until March 31, 2021, through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP. All new First and Second Draw PPP Loans will have the same terms regardless of lender or borrower.
If you have any questions regarding your organization’s eligibility or the application process please contact us.