BREAKING – On March 31, 2021, President Biden signed the PPP Extension Act of 2021 into law, extending the Paycheck Protection Program an additional two months to May 31, 2021, and then providing an additional 30-day period for the SBA to process applications that are still pending.
First & Second Draw PPP
On January 11, the SBA reopened the Paycheck Protection Program and is now accepting loan applications from ALL participating lenders. To find a lender near you, click here to view the SBA lender map.
Who qualifies for a first draw loan?
- Sole proprietors, independent contractors, and self-employed persons
- Any business, non-profit organization, veterans organization, or tribal business with 500 or fewer employees. 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
- Any business with a NAICS code that begins with 72 (Accommodations and Food Services) with no more than 500 employees per physical location
- Eligible news organizations with no more than 500 employees per physical location
- Housing cooperatives, 501(c)(6) organizations, or destination marketing organizations with no more than 300 employees
Who qualifies for a second draw loan?
Any business that has previously received a First Draw PPP Loan and:
- Will or has used the full amount only for authorized uses; and
- Has no more than 300 employees; and
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020
PPP Loan Forgiveness
First and Second Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds are spent on payroll costs and other eligible expenses; and
- At least 60 percent of the proceeds are spent on payroll costs
An eligible borrower that received a loan of $150,000 or less should use the shorter one-page application (SBA Form 3508S). Furthermore, at the time of application, businesses with this loan size are not required to submit any additional application or documentation.
Payroll costs including salary, wages, and tips, up to $100,000 of annual pay per employee as well as covered benefits for employees (but not owners), including health care expenses, retirement contributions, and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums), but excluding any qualified wages taken into account in determining the Employer Retention Credit.
Eligible Non-payroll Expenses:
- Operations Expenditures – business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses
- Property Damage Costs – cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation
- Supplier Costs – expenditure to a supplier for goods that—(A) are essential to business operations at the time at which the expenditure is made; and (B) is made pursuant to a contract, order, or purchase order—(i)at any time before the covered period; or (ii) with respect to perishable goods, in effect before or at any time during the covered period
- Worker Protection Expenditure – an operating or capital expenditure to facilitate the adaptation of the business activities to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19, during the period beginning on March 1, 2020 and ending the date on which the national emergency expires
- Business mortgage interest payments
- Business rent or lease payments
- Business utility payments
Additional Guidance & Resources:
- PPP First Draw Loan Overview
- PPP Second Draw Loan Overview
- PPP Guidance from SBA Administrator Carranza on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns
- Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act
- Interim Final Rule on Second Draw PPP Loans