g)    The SBA will still have the right to review and audit these loans to ensure against fraud, ineligibility or other material non-compliance with the PPP loan program. The bill authorizes $147 billion for first-time loans, and $137 billion for second-time loans (“second draw”). The deadline to apply is March 31, 2021. PPP loans have been a saving grace to many small businesses, non-profits, and others. LEGAL DISCLAIMER b)    Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance. In addition, borrowers whose loan calculations have increased due to changes in interim final rules to work with lenders to modify their loan value regardless of whether the loan has been fully disbursed, or if Form 1502 has already been submitted. It is not intended to be legal advice. Businesses and organizations that meet the standards set by the SBA may qualify for a second loan. On Monday, December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (CAA), … f)     No other information will be required, although a borrow may, in its discretion, provide demographic information of the owner of the borrower, including the sex, race, ethnicity, and veteran status. v.         For loans of not more than $150,000, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits their loan forgiveness application and non-profit and veterans’ organizations may utilize gross receipts to calculate their revenue loss standard. The Small Business Administration (SBA) recently released more information regarding the second round of Paycheck Protection Program (PPP) loans, as the application process opened Monday, Jan. 11 under the $284 billion program authorized by the $900 billion stimulus relief bill signed on Dec. 27, 2020. Loan proceeds may be used for the following: The application process (once open) will be similar to the first round. The PPP will open to all participating lenders shortly thereafter. SBA released guidance regarding how to calculate revenue reduction and loan amounts for a Second Draw PPP loan. Second Draw Loans and Other PPP Updates in New Covid Relief Bill December 22, 2020 On December 21, after months of negotiations, Congress overwhelmingly passed the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (H.R. iii. As of Tuesday, all lenders could offer loans through the U.S. Small Business Administration program that is designed to help firms weather the pandemic. 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. PPP loans are getting a second life. Not be permanently closed. , The Small Business Administration (SBA) recently released more information regarding the second round of Paycheck Protection Program (PPP) loans, as the application process opened Monday, Jan. 11 under the $284 billion program authorized by the $900 billion stimulus relief bill signed on Dec. 27, 2020. Additional expenses that will qualify for PPP loan forgiveness (both second draw and original PPP loans for which no forgiveness has been submitted): a)     Payment for any software, cloud computing, and other human resources and accounting needs. Since you don't have the option to get the PPP modal on your QuickBooks Desktop, I would recommend checking this with our PPP Support. The agency also issued forgiveness guidance and new forgiveness applications. Update: Figures from M&T Bank's first two days of processing second-round PPP loans have been added. Now businesses with less than 300 employees and demonstrated revenue declines of at least 25 percent in one quarter of 2020 compared to 2019 can get a second, smaller PPP loan. The Economic Aid Act signed December 27, 2020 made several changes to the PPP loan program, including the ability of an entity to apply for a second draw. Thank you! Section 11 of H.R. I follow this guy on TikTok and he gives daily updates on all things stimulus, PPP and EIDL. Waiver of affiliation rules that applied during initial PPP loans apply to a second loan. The maximum amount is, again, 2.5 times average monthly payroll costs (3.5 times for hotels, restaurants, and other accommodation/food service businesses). vi. As the COVID-19 pandemic has raged on, this program’s second iteration hopefully serves as a positive sign for business owners as many have expressed the need for further support. 6. First Draw PPP loans are f ... i'm assuming we're all still waiting for clarity from the SBA but my questions is for those that already received a 2nd PPP loan, will we be eligible to adjust our loans? The program is now open to all participating lenders for first and second Draw loan applications. As part of this "Coronavirus Response and Relief Supplemental Appropriations Act 2021," $431 billion has been allocated for a second round of Paycheck Protection Program loans … If you have any questions, please contact authors Michael D. Ecker at 215.851.8507 or mecker@eckertseamans.com, Daniel A. c)     In addition, the borrower must also attest that borrower accurately provided the required certification and complied with the PPP loan requirements. US Bank Second Draw PPP. 133) (the “Act”). To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. New bill would allow small businesses to get second PPP loan Jessica Smith 6/18/2020 Lack of equity within priority groups leaves Covid-19's most vulnerable without vaccine, analysis suggests SITEMAP, © 2021, Eckert Seamans Cherin & Mellott, LLC. b)    Not clear if the SBA/Treasury’s requirement to pro rate or project the full period if a shorter period is selected, but probably not. Borrowers of a PPP second draw loan would be eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period, subject to the 60/40 cost allocation between payroll and non-payroll costs in order to receive full forgiveness will continue to apply. January 28, 2021. The loans are available to both first-time and second-time borrowers. h)    Section 1110(e)(6) of the CARES Act required the up to $10,000 EIDL advance to reduce the amount of PPP loan forgiveness. Congress designated $137 billion for PPP second draw loans as part of a larger funding and relief package. These have terms generally similar to First Draw PPP Loans with respect to what expenses funds can be used for, interest rates and loan forgiveness. The second PPP loan update further allows certain borrowers who previously received a First Draw PPP Loan to apply for a Second Draw PPP Loan. 3. The amount a borrower can obtain through a second draw PPP loan is determined much the same way it was for first round PPP loans. 4. Fees are waived for both borrowers and lenders to encourage participation. 7. 5. Temporarily closed businesses are eligible. Update as of February 22, 2021: The White House has announced key changes to the paycheck protection program (PPP): From Wednesday February 23, 2021 – March 10, 2021, PPP loan applications will be open exclusively to businesses and … The Act mandates a simplified forgiveness applicable form for PPP loans that are less than $150,000, regardless of the date the PPP loan was made. d)    The SBA is directed to issue guidance addressing barriers to access to capital for underserved communities no later than ten days after the Act becomes law. e)    Group life, disability, vision, and dental insurance are expressly listed as payroll costs. Be able to demonstrate a revenue decline of at least 25% for any quarter of 2020 relative to the same quarter in 2019; Have used (or will use) the full amount of the first PPP loan; and. 8. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here. UPDATE: The updated forgiveness application for first draw and second draw PPP loans indicates that the SBA separately applies the $2 million uncertainty certification safe harbor to first draw PPP loans and second draw PPP loans, rather than to combine first draw PPP loans and second draw PPP loans. Loan forgiveness is somewhat more flexible with the second round. 2. The application provides: “If Borrower (Together with … All Rights Reserved. But There's a Fix While trying to be efficient and fair, the SBA's new software is bouncing some eligible second … There will be some helpful changes, like tax deductions for expenses paid with forgiven loan proceeds. a)     The Act makes all such expenses fully deductible. The Small Business Administration (SBA) issued an Interim Final Rule (IFR) on January 6 th on Second Draw Loans, which were established through the Economic Aid Act. This COVID-19 Legal Update is intended to keep readers current on developments regarding the CARES Act II. Brion Collins, CFP, CLU, ChFC is managing director of the Delafield, Wisconsin office of Wealthspire Advisors. 2 immediately below. For borrowers in the Accommodation … Except for borrowers who have already had their PPP loans forgiven, the expanded list of forgivable expenses may be utilized by borrowers for all PPP loans, whether issued before or after Act. PPP applicants can get a maximum loan of $2 million in the second funding round. Entities in industries assigned to NAICS code 72 (accommodation and food services) may receive PPP second draw loans of up to 3.5x their average monthly payroll costs. The PPP loan had reopened last January 11, 2021. Note: On January 19, the PPP was opened to all lenders. Supplier costs of perishable goods can be made before or during the life of the loan. Cash Flow The SBA's PPP Loan Platform Is Rejecting Some Worthy Businesses. MILWAUKEE (CBS 58) – The Better Business Bureau is encouraging eligible businesses to apply for second draw Paycheck Protection Program loans.According to the BBB, at least $25 billion has been set c)     Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Note: Click here for our 1/16/2021 PPP Update on Round 2 Loans The United States Government passed an additional $900 billion pandemic economic relief package on December 27th. PPP Loans Update: First and Second Time Borrowing January 11, 2021 Good news for small business owners, the Paycheck Protection Program (PPP) is re-opening the week of January 11 for another round of coronavirus relief funding. Second Draw PPP Loans are eligible for loan forgiveness on the same terms and conditions as First Draw PPP Loans, except that Second Draw PPP Loan borrowers with a … d)    SBA is obligated to establish the form within 24 days of the Act becoming law. Payroll costs (at least 60% must be used in this category); Rent, utilities, mortgage payments, software, human resources, and accounting; Property damage sustained during protests that were not covered by insurance; and, The covered period can be any length between eight and 24 weeks as best meets business needs; and. The Act affords those eligible entities who did not previously apply for a PPP loan until March 31, 2021 to seek an initial PPP loan. Update: Starting Monday, Jan. 11, 2021, the SBA will begin to accept First Draw PPP Loan applications only from community financial institutions. “In conversations with small businesses up and down the state of Delaware, it’s become clear that many employers in vital sectors need more federal aid through the Paycheck Protection Program. Borrowers who returned PPP loan proceeds will be provided an opportunity to reapply for the maximum amount if they have not received forgiveness. Second Draw Loans are an extension of the Paycheck Protection Program (PPP), which previously was available April 2020 through August 8, 2020. a)     Under the  Act, the borrower can select a “covered period” beginning on the date of origination and ending between eight and 24 weeks after origination for purposes of determining the spend applicable for PPP loan forgiveness. Update February 23, 2021: The White House has announced several changes to the PPP program to allow smaller businesses to access PPP funds, including a new loan amount calculation for the self-employed who file Schedule C. a)     Limited to one page (but no limit on size of font or margins). | | First time borrowers are eligible for up to $10 million, while second round borrowers’ loans are capped at $2 million. 35 comments. b)    Basically an affidavit certifying the number of employees the borrower was able to retain because of the PPP loan, the estimated total amount of the PPP loan spent on payroll costs, and the total loan amount. The primary difference with the PPP loan update is that it not only offers first-time loans to eligible businesses but also second-time loans to eligible businesses that received and used their first PPP loan last year. iv. Borrowers of $150,000 or less can submit a one-page certification detailing number of employees retained as a result of the loan, total loan amount, amount of loan spent on payroll costs, and proof of qualifying revenue loss (if not submitted with application). You may wish to use the same lender as used in the first round given that some have already opened portals where preliminary applications can be submitted (corresponding to less paperwork). The bill, … 133 creates a second loan from the Paycheck Protection Program (PPP) called a “PPP second draw” loan for smaller and harder-hit businesses, with a maximum amount of $2 million. Interestingly, average monthly payroll costs can be calculated in one of three ways: First-time borrowers must have fewer than 500 employees and do NOT need to demonstrate a revenue drop as required for second time borrowers as outlined in item No. During the January 5th Small Business Update, U.S. Chamber of Commerce executive vice president and chief policy officer Neil Bradley and Jeanette Mulvey, content director at CO—, discussed the coronavirus relief bill in more detail, including the Employee Retention Tax Credit (ERTC), Economic Injury Disaster Loans (EIDLs), second draw PPP loans … Previously, for a borrower to obtain PPP loan forgiveness the borrower had to spend the PPP loan proceeds on the original list of approved expenses (“payroll” as defined, rent, utilities and interest on secured indebtedness) within eight weeks of origination of the PPP loan (subsequently expanded to 24 weeks). The Small Business Administration (SBA), in consultation with the Department of the Treasury, is providing this guidance to assist businesses in calculating their revenue reduction and payroll ii. — SBA (@SBAgov) January 8, 2021. A portion of the  Act appropriations ($15B) will be available for eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives who demonstrate a 25 percent reduction in revenues, with an additional set-aside for eligible entities that employ not more than 50 employees. (1/21/21, 1:46 p.m.) The Paycheck Protection Program (PPP) is now fully reopened. The U.S. Small Business Administration (SBA) has approved over 400,000 loans worth approximately $35 billion in the latest round of Paycheck Protection Program (PPP) loans, which opened Jan. 11. PRIVACY POLICY/YOUR PRIVACY RIGHTS An eligible entity may only receive one PPP second draw loan. For companies which already have received a PPP loans, those with 100 employees or fewer – including sole proprietorships and self-employed individuals, would be eligible for a second loan. 9. e)     Additionally, borrowers of these smaller loans are required to retain relevant records related to employment for four years and other records for three years. Click here to sign up for the free IB Ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. Flexibility on applicable “covered period” to spend PPP loan proceeds. It has not yet been announced when applications will begin being accepted from other lenders other than “soon,” but the last day for application has been announced as March 31. The loan limit is $2 million, and the amount a small business will qualify for is determined by taking their average monthly payroll in 2019 and multiplying it by 2.5… 9. Virtual Panel Discussion: Black Economic Empowerment, Dane County Small Business Awards Application, Selling change in a world that’s constantly changing, Why we like State Street, why we fear it at times, Radio personality charged with possession of child porn, City approves housing, grocery store on south side, City to sell vacant lots of failed subdivision. We encourage clients to be prepared to apply promptly. In an effort to give priority to underserved businesses including veteran, minority, and women-owned businesses, only loans from community financial institutions will be accepted initially (starting Jan. 11 for first-time borrowers and Jan. 13 for second-time borrowers). The extended deadline had been August 8, 2020.​. Second Draw Paycheck Protection Program (PPP) Loans: How to Calculate Revenue Reduction and Maximum Loan Amounts Including What Documentation to Provide . d)    Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration. On the theory it would be double dipping to have a forgiven loan not be considered income, and permit expenses used to obtain forgiveness to be deductible, the IRS had announced that expenses paid with PPP loan funds that have been forgiven would not be permitted to be used as deductions for purposes of determining taxable income. The Act eliminates that requirement, making the EIDL advance fully a grant. Brion Collins. Small businesses should expect fewer banks and lenders to participate in a second round of Paycheck Protection Program loans. Glass at 202.659.6651 or dglass@eckertseamans.com, or any other attorney at Eckert Seamans with whom you have been working. New applications were not accepted after August 8, 2020, most earlier loan recipients completed their 8-week covered period over the summer, and the pace of revisions to the program finally slowed down. 6 New PPP Loan Forgiveness Updates It has been awhile since we updated our clients and friends about the Payroll Protection Program (PPP).
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