The SBA has announced that applications for both first- and second-draw PPP forgivable loans will open today, January 15, for lenders with a maximum of $1 billion in assets. Lenders with larger assets will start accepting first- and second-draw loan applications on Tuesday, January 19 until March 31, 2021. PPP loans for first-time borrowers started last January 11, for selected businesses from community financial institutions.
The PPP applicants forms:
- Form 2483 – Paycheck Protection Program Borrower Application Form, Form 2483 is updated from previous iterations that begin with the original PPP program, to be filled up by the authorized representative of the applicant.
- Form 2483-SD – PPP Second Draw Borrower Application Form. Is the application form for second-time borrowers.
The forms released last Friday lays out directions consistent with what was provided in the two interim final rules (IFRs). For more information on this, check out our previous article on the released IFRs, if you’ve received a PPP loan previously and are planning on getting another one, read this article to find out what a second-time borrower needs to know now.
The following information are what a first-time borrower needs to know now:
Who is eligible for first-draw loans of the program?
First-draw loans are available to eligible small entities that were in operation on February 15, 2020, and is part of one of the following categories:
- Businesses with maximum 500 employees that are eligible for other SBA 7(a) loans.
- Nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors
- Businesses with North American Industry Classification System (NAICS) codes starting with 72. that have less than 500 employees per physical location.
- News and Broadcast Organizations with less than 500 employees per location, that are controlled or majority-owned by an NAICS code 511110 or 5151 business or nonprofit public broadcasting organization with a trade under NAICS code 511110 or 5151.
- 501(c)(6) business leagues, except sports leagues, that have a maximum of 300 employees and do not get greater than 15% of lobby receipts. The lobbying activities must comprise no more than 15% of the organization’s total activities must include lobbying activities and they should not cost no more than $1 million during the most recent tax year.
How much can I receive?
For eligible 1st-time borrowers, you can receive loan funds based on 2.5 times the average total monthly payroll cost in 2019, capped at $10 million (compared to 2 million cap for 2nd-time borrowers). NAICS Code 72 entities, on the other hand, are eligible to utilize 3.5 as the multiplier, still subject to the $10 million maximum. These generally include restaurants and hotels who have suffered the most during the pandemic.
What are the ‘’eligible costs’’ for loan forgiveness?
Your first-draw loan will be forgiven if it is utilized on eligible costs such as payroll, rent, covered mortgage interest, and utilities just like the previous rules. At least 60% must be spent on payroll within the eight or 24 weeks covered period of your loan. Additionally, qualifying expenses have been expanded to include:
- Covered worker protection and facility expenditures (incl. PPEs) in compliance with the COVID19 guidelines.
- Covered property damage expenditures related to the 2020 public disturbances that were not covered by insurance or other compensation.
- Covered Costs to essential suppliers
- Covered operating costs, (incl. softwares or cloud services needed in business operations, delivery, payroll expenses, sales and billing, HR, or accounting or tracking of supplies, inventory, records, and expenses).
How to apply?
For first-time borrowers, you can apply for a loan through any participating lender or institution. Applicants must send documentation to establish eligibility and to show the qualifying payroll amount. This documents may include: Form 941, Employer’s Quarterly Federal Tax Return, (or other forms with equivalent information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (depending on what is used to calculate the amount of loan), or equivalent payroll processor records, along with supporting evidences.
If you need assistance on applying for a PPP loan, book a consultation with us at https://calendly.com/levine-and-associates or send us an email at josh@levineandassoc.com.