If you haven’t previously received a PPP loan, you will fill out the first draw PPP application. If the borrower disagrees with the lender’s decision on forgiveness, they can request an SBA review of the loan or seek other legal remedies under the law. ��? Effective Jan 6, 2021. Hospitality businesses with a NAICS Code 72, eligible news organizations with a NAICS Code beginning with 511110 or 5151, and certain faith-based organizations are eligible for the affiliation waiver if they employee 300 or fewer employees per physical location. The Paycheck Protection Program was updated and expanded under the Consolidated Appropriations Act, passed in December 2020. Unfortunately, there is no clear guidance currently as to if these funds are excluded from gross receipts when determining if you meet the 25% or more decline. If a borrower has acquired an affiliate or been acquired as an affiliate during 2020, gross receipts includes the receipts of the acquired or acquiring concern. g��L���47�)��'�ov_��k�K�nf[x��8w�R+z�[y-w�G�Ij��?��� ����9?�c�̟�����/�̰� ݻ�,���Ү����r+z�G�5���QK�ٿG.#�r@� �6X�w����Y���� �褩��b�� ���t?轎�8(��y���3��L�S�,~7�������~q���%Px�Fx�e��r;��?���� C���g�3��)����d�m�=�~xPO���P��1� �ن\y?��g��F�T�I&/���I$��9I$�JRI$���I$�$�I)I$�JRb�'I)���$��H�����o;�g��P�D6$y �'p���z�X��� �v���?��i��������l�i͎\�o��� �t�թ��X߄��V�. By Office of Capital Access. Borrowers may not file an appeal before the final determination by the SBA. For loans under $150,000, the borrow must retain employment records for four years from the application date and all other records for three years following submission. When using an annual tax return to support the gross receipts decline: For a nonprofit, gross receipts are defined in Section 6033 of the Internal Revenue Code of 1986. Yes, the certification relating to economic uncertainty is related to economic concern at the time of the application. Eligibility. <> By using this site you agree to our use of cookies. It must have fewer than 300 employees. Similar to First Draw loans, a borrower is considered together with its affiliates to determine eligibility for Second Draw PPP Loans, unless a waiver under Paragraph 7(a)(36)(D)(iv) of the Small Business Act applies. SBA issued a new interim final rule on loan amount calculation and eligibility, March 3, 2021; SBA issued new FAQs outlining various eligibility considerations for first and second time PPP borrowers, March 3, 2021 These changes generated many questions, and our experts gathered the most frequently asked questions here, along with our responses. 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 $2 million. The round one funds simply need to be spent entirely on eligible expenses prior to receiving the Second Draw funds. Business are part of a single corporate group if they’re majority-owned, directly or indirectly, by a common parent. For additional information about the process, see our PPP … The program is now open to all participating lenders for first and second Draw loan applications. What additional costs can be used to support forgiveness on First and Second Draw loans? If you are applying through the same lender, they should have your SBA Loan number on file. On the loan application for Second Draw PPP Loans, the application is asking for a certification of loan necessity due to economic uncertainty. The timeline below is an abbreviated version of our comprehensive annotated timeline – please contact us for additional information. This number is not listed on loan documentation provided for your First Draw PPP … <>/Metadata 1808 0 R/ViewerPreferences 1809 0 R>> PPP second draw requirements. In order to be eligible for the Second Draw, entities must: Employ not more than 300 employees. endstream The Consolidated Appropriations Act includes the following additional eligible expenses as an allowable use of PPP funds: What is the covered period for Second Draw loans? x��RMk1�/��SДH����(!۩I �&�B��G�[�9�'�_v$���S�ћّ�\��?&��:7]h���/u���4h��&ct��5�N�j\W_`QW�_F��ړ�-��u�\͇�q�%|�+�������Ysӽ�>?�N����'9�[��Og�Ӿ�Vδ0���� �W�!cT���Q&�0(M��MN%�b���;CI$�h�X���OP���9Z#~��!Rڶ����꒹}���z��t�w=�*ގ���P�C0͡p�Eپ�Ɖ�%F�2�3�x��F�6o��0��O�%���#C>�Q��d�B6��� e�yG���TA��_C�Yk�G��̆�G7>�@'^ ɰvdń� �Y1��1��v�X���T�Xq�m�;��������MkT�$�$ArF�b=;�^�?41>���䴸�mM�s(}��?6Y� Details are subject to change, so please check back for updates as more information becomes available. The borrower has the entire life of the loan to apply for forgiveness. Lenders shall follow separate guidance for document retention.). 2021 Plante & Moran, PLLC. CARES Act: Get clarity. The stated paragraph of the Small Business Act notes that the affiliate rules are waived for certain business concerns including those assigned a NAICS Code beginning with 72. Topics include the Second Draw loan covering eligibility, the gross receipts test, the loan forgiveness application, and the process of appealing decisions as they relate to forgiveness. PPP Second Draw Loans. To qualify for a second PPP loan of up to $2 million, for example, a business has to have fewer than 300 employees and demonstrate a drop of 25% or more in gross receipts. Borrower showing proof that the appeal was filed timely and the appeal is under OHA jurisdiction, Copy of the loan review decision (forgiveness determination), A statement of why the decision is erroneous, Signed copies of payroll tax filings reported to IRS and related state(s) filings, Name, address, and telephone number of borrower or their attorney. While many of the forgiveness rules released with the second wave of Paycheck Protection Program (PPP) loans are the same as they were for the first round, there are some key differences to be aware of when planning spending and forgiveness for your first- or second-draw loan.. The covered period may be any period from 8 to 24 weeks and begins upon loan disbursement. For months, there was pressure from borrowers for the IRS to make PPP-funded expenses tax-deductible, but they seemed unwilling to budge. Generally speaking, this includes: How does the audit process work for First Draw PPP and if borrowers obtain a Second Draw loan, are the loans combined for the audit? If you have additional questions, please reach out to your Plante Moran advisor. Then take action. Covered operations expenditures: A payment for any 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. What is the timeline and process for submitting the loan forgiveness application and what remedies are available throughout the process if there are disagreements with the lender’s or SBA’s decision on forgiveness? Second Draw PPP Loans are also eligible for loan forgiveness on the same terms and conditions as First Draw PPP Loans. How is the 300-employee headcount determined when analyzing eligibility for Second Draw loans? PPP Second Draw Loan over $150,000 (capped at $2,000,000) PPP Borrower Application Form SBA Form 2483-SD No additional payroll documentation is required if using same payroll as used for PPP First Draw and Webster was the lender of PPP First Draw. In doing so, the SBA is giving priority to the smallest businesses, minority-owned, veteran-owned, and impact organizations. What is the difference between the affiliate rules and the corporate group rules? First Draw PPP Loans. This is available on the SBA website. Gross receipts are defined to include all revenue in whatever form received or accrued, in accordance with the entity’s accounting method, from whatever source. Borrowers who received a First Draw may apply for a Second Draw. For individual loans of $150,000 or more, the borrower must maintain documentation for six years after the loan is forgiven or repaid in full. The borrower may defer payments on the loan if the borrower applies for forgiveness within 10 months of the covered period. IFR: Paycheck Protection Program (PPP) Second Draw Loans. Currently, the last day to apply for and receive a PPP loan of any kind – first- or second-draw – is March 31, 2021. This includes sales of products or services, interest, dividends, rents, royalties, fees, or commission, reduced by returns and allowances. Unless a wavier applies, gross receipts of a borrower with affiliates is calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate in order to determine eligibility. 2 0 obj PPP and EIDL forgiven funds are excluded from gross receipts. An entity is eligible for a second draw if all of the following are true. Then, poof! The PPP interim final rule for Second Draw loans mentions that you’re only eligible if you received a First Draw PPP Loan and, before the Second Draw PPP Loan is disbursed, you will have used the full amount of the First Draw loan funds on eligible expenses. 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 in the same manner as required for the First Draw PPP loan The loan … Automated first and second draw loan applications; Note that once you submit your application via PPP Fast Lane and it is forwarded to your lender, your loan approval timeline is determined by your lender and the SBA. If a borrower is filing an appeal, there is a specific set of information required. k� � ( $ P H H ���� Adobe_CM �� Adobe d� �� � The new law's PPP extension and expansion will provide for a second draw loan to some PPP borrowers who meet certain eligibility requirements. If a company received a First Draw loan for PPP but didn’t receive full forgiveness, are they still eligible to receive a Second Draw PPP Loan? Covered worker protection expenditures: An operating or capital expenditure to facilitate the adaption of the business activities of an entity to comply with requirements established or guidance issued by the DHHS, CDC, or OSHA or equivalent guidance issued by state or local government related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement. This number was issued to you by the SBA when they approved your application for First Draw funds. Borrowers can apply for a Second Draw PPP Loan 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. Wells Fargo customer who had a First Draw PPP Loan with us, and you would like to apply with a different lender for a Second Draw PPP Loan - You will need to contact us at (844) 304-8911 to request your PPP First Draw SBA Loan Number. <> If the amount of forgiveness granted by the SBA is different than the amount the lender determined forgivable, the borrower can appeal to the Office of Hearings and Appeals (OHA). ���� JFIF � � ��|Exif MM * b j( 1 r2 ��i � � � � Adobe Photoshop 21.0 (Windows) 2020:01:24 15:46:11 � �� Z �" �� What additional costs can be used to support forgiveness on First and Second Draw loans? If a borrower sold a division during 2020, the gross receipts of the division will be included. Information contained within this document includes direct excerpts from Small Business Administration (SBA) guidance available here. If the following statements apply to your business, you are eligible to apply for your second PPP loan in 2021. Thank you for reviewing our frequently asked questions. The trouble is we didn’t know which developments would happen. <> Paycheck Protection Program (PPP) Second Draw Overview December 22, 2020 Program End Date •March 31, 2021 Eligible Businesses •Small businesses, nonprofits, Tribal business concerns, housing cooperatives, and veteran’s organizations that: •Have no more than 300 employees For first-time borrowers—called “first draw applicants” in SBA parlance—who apply through community financial institutions, the … For any loan (First or Second Draw) made after Dec. 27, 2020, a borrower has until the last day of the loan’s covered period to restore any salary and wage and FTE decline in order to avoid a reduction in its loan forgiveness amount. What is the safe harbor date to avoid any impact to loan forgiveness for a salary and wage decline or FTE reduction on a Second Draw loan? Deadline for filing appeal petition is within 30 calendar days after the borrower’s receipt of the final SBA loan review decision or notification by the lender of the final SBA loan review decision, whichever is earlier. The SBA has a PPP lender search tool that makes it easy to find your lender. The SBA and the Treasury Department fully re-open the Paycheck Protection Program (PPP) loan portal on Tuesday, Jan. 19, 2021, to all participating PPP lenders to submit First and Second Draw … These responses are based on the latest guidance, as of Jan. 28, 2021. Second Draw general requirements. SBA began accepting Second Draw PPP Loan applications through community financial institutions •January 13th, 2021 January 15, 2021 for eligible lenders with less than $1B in assets January 19, 2021 to all eligible lenders PPP Stimulus Bill Timeline 5 If you're a Second Draw PPP applicant, you must meet the following additional criteria and note that additional conditions may apply: Have 300 or fewer employees 2; Have used your entire First Draw PPP loan on PPP-eligible expenses; Demonstrate a 25% or greater reduction in revenue over a certain period Are CARES Act or other relief funds included in gross receipts? Gross receipts don’t include taxes collected for and remitted to a taxing authority that are included in gross or total income, proceeds from transactions between a business concern and its domestic or foreign affiliates, and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder, or customs broker. 3 !1AQa"q�2���B#$R�b34r��C%�S���cs5���&D�TdE£t6�U�e���u��F'���������������Vfv��������7GWgw�������� 5 !1AQaq"2����B#�R��3$b�r��CScs4�%���&5��D�T�dEU6te����u��F���������������Vfv��������'7GWgw������� ? Covered property damage costs: A cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that wasn’t covered by insurance or other compensation. Section 11 of H.R. <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 960 540] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> 1 0 obj Cookie Notice: This site uses cookies to provide you with a more responsive and personalized service. There have been various rounds of additional funds including Higher Education Emergency Relief Funds (HEERF) or Provider Relief Funds. (The lender will not be required to assist borrower in document retention. The PPP interim final rule for Second Draw loans indicates the gross receipts definition will be consistent with the definition of receipts in 13 C.F.R. This aggregation would apply for the entire period of measurement, not just after the affiliate arose. Wealth Management. Small businesses and non-profits with fewer than 20 employees and sole proprietors can apply for Second Draw PPP loans from February 24 through March 9, 2021. Are affiliates’ gross receipts included when determining if the 25% or more decline test is met? The borrower must apply for forgiveness for the First Draw loan before or at the time of the forgiveness application for any Second Draw loan greater than $150,000, even if the First Draw loan forgiveness is $0. The SBA may audit loans of any size anytime within the time frames discussed below. 5 0 obj endobj Additional payroll costs: Any payments for group life, disability, dental, or vision insurance premiums paid by the employer (no portion of the employee responsibility). Learn more about the Second Draw loan and see the top questions our experts have received so far. The application timeline is then broken down by first-time borrowers and businesses applying for additional PPP funds. endobj The “covered period” for the loan is between 8 and 24 weeks, and the period generally begins the day the loan funds are disbursed. Partnerships use Form 1065, sum of lines 2 and 8, minus line 6. No alternative size standard options are mentioned in the Second Draw loan guidance. stream endobj For additional information about the process, see our PPP Fast Lane FAQs. C corporations use Form 1120, sum of lines 2 and 11, minus the sum of lines 8 and 9. At Optus Bank in South Carolina, CEO Dominik Mjartan said many applicants have been new customers applying for their first PPP loan or coming over from a … This doesn’t require full forgiveness of the First Draw loan. So, for the vast majority of … The affiliate rules are used to determine if you meet eligibility requirements, such as employee count and gross receipts test. Business are subject to this limitation even if they meet an affiliate waiver. It must have received a first draw PPP loan, and it must have either fully spent the entire proceeds of the first draw or applied for forgiveness of the first draw. stream Second-draw PPP … �m�3�X�� U�~B�ޡ��/q��;�� $��%�F2��hG$���Q��1n��f��� ��I��n��G�]� �5%�N\���C��,y�f;f���?�|N�z�1�L{~@�B�ާ����Xi(���P� ������JL���8?��z��!�fN;���w��I+��{)5�g�s��$(��\�,�� You have used up your first PPP loan; Your business was operational before February 15, 2020; Your business is still open and operational Automated first and second draw loan applications; Note that once you submit your application via PPP Fast Lane and it is forwarded to your lender, your loan approval timeline is determined by your lender and the SBA. Is this in addition to the reduction of income annually or for a quarter in 2020? You’ll need the following to apply for a PPP Second Draw: SBA Loan Number. The first step to securing your PPP loan is to fill out your loan application with a PPP-approved lender. Alternative covered periods are no longer part of the PPP. The gross receipts of a former affiliate aren’t included for the entire period of measurement. %���� One of the documents a potential borrower may want to use to assist with thinking through and in the documentation of this certification is the Questionnaire for Loan Necessity that was used in the first round of lending for loans over $2 million dollars. While second-draw PPP loans generally have the same terms and conditions as first-draw loans, there are some key differences aside from the initial eligibility requirements. Covered supplier costs: An expenditure made by an entity to a supplier of goods for the supply of goods that are essential to the operations of the entity at the time the expenditure is made, is made pursuant to a contract or purchase order in effect at any time before the covered period or with respect to perishable goods, in effect before or at any time during the covered period. 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