Paycheck Protection Program (PPP) Update

The Paycheck Protection Program is an SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. It's designed to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA may forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

As you may be aware, the Treasury Department and Small Business Administration (SBA) have released the new application and instructions for the new round of Paycheck Protection Program (PPP) loans to extend access to PPP loans through March 31, 2021.

SECOND DRAW PPP LOAN INFORMATION

Congress has passed additional funding for PPP loans to aid small businesses including the ability to utilize a second draw for existing PPP customers. The same general loan terms apply to this second draw and can be used to help fund payroll costs including benefits, mortgage interest, rent, utilities, worker protection costs and more.

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:  

  • Previously received a First Draw PPP Loan and 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.

In order to apply, please submit the following items:

  1. The PPP Second Draw Borrower Application, completed and signed;
  2. One of the following documents to validate your eligibility based on the ability to demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020:
    • Profit/Loss statement for the same quarter of 2019 and 2020, or
    • Three months of bank statements for the same quarter of 2019 and 2020 (only submit the first page showing deposits), or
    • Accountant-prepared/Payroll Support-prepared documents for the same quarters of 2019 and 2020.
  3. One of the following documents to validate the average monthly payroll cost:
    • IRS form 940 or 941, or
    • Account-prepared/Payroll Support-prepared documentation, or
    • Schedule C (if self-employed) or Schedule F (if a farmer) for 2019 or 2020, or
    • Payroll software supported documentation (QuickBooks, etc.), or
    • IRS form 1065 K-1 (if partnership)

Please note, the SBA has advised that due to additional front-end compliance checks in this round of PPP origination, there will be a time lapse between when a Lender submits a PPP Loan Request to SBA (both First and Second Draw Requests) and when SBA provides a loan number back to the Lender. Lenders may only proceed to close the loan once the loan number is given. This time lapse is expected and does not indicate that PPP funds have been depleted.

 

FIRST DRAW PPP LOAN INFORMATION

First Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for 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.

Who can apply:
Eligible small entities, that together with their affiliates (if applicable), have 500 or fewer employees — including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors — can apply. Entities with more than 500 employees in certain industries that meet SBA’s alternative size standard or SBA’s size standards for those particular industries can also apply.

Also eligible to apply for First Draw PPP Loans are businesses with a NAICS Code that begins with 72 (Accommodation and Food Services sector) or eligible news organizations with no more than 500 employees per physical location, as well as housing cooperatives, 501(c)(6) organizations, or destination marketing organizations with no more than 300 employees.

Please send an inquiry to ppploans@peoplesbankofseneca.com for more information.

Please note, the SBA has advised that due to additional front-end compliance checks in this round of PPP origination, there will be a time lapse between when a Lender submits a PPP Loan Request to SBA (both First and Second Draw Requests) and when SBA provides a loan number back to the Lender. Lenders may only proceed to close the loan once the loan number is given. This time lapse is expected and does not indicate that PPP funds have been depleted.

 

TOP-LINE OVERVIEW

First Draw PPP Loans

https://www.sba.gov/document/support-top-line-overview-first-draw-ppp

Second Draw PPP Loans

https://www.sba.gov/document/support-top-line-overview-second-draw-ppp

 

BORROWER APPLICATIONS

Updated First Draw PPP Borrower Application

https://www.sba.gov/document/sba-form--paycheck-protection-program-borrower-application-form

Updated Second Draw PPP Borrower Application

https://www.sba.gov/document/sba-form-2483-sd-ppp-second-draw-borrower-application-form

For additional information, or to submit a complete application package, please send all inquiries to ppploans@peoplesbankofseneca.com.

 

ADDITIONAL RESOURCES

Additional resources are available for your review in full on the SBA PPP website or the Treasury website.