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SBA Announces Terms For New Round of PPP Funding
We have exciting news; the SBA has announced the terms for the new round of funding for the Paycheck Protection Program. The PPP is now open for new borrowers and existing PPP borrowers! First Draw PPP Loans: If you have not received PPP funds you may be eligible to apply now. Small businesses, farmers, non-profits, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors can apply. Second Draw PPP Loans: If you received PPP funds you may be eligible for a Second Draw PPP funding.
Calculating Your Second Draw PPP Loan
2.5 times your average monthly payroll with a maximum loan amount of $2 million.
The average monthly payroll is calculated by using 2019 or 2020 total payroll expenses divided by 12.
When calculating payroll costs, the borrower must subtract any compensation paid to an employee in excess of $100,000 on an annualized basis.
If the borrower has a NAICS code beginning with 72 (hospitality, restaurants, etc.), the calculation is 3.5 times the average monthly payroll costs.
Schedule F (Farmers), the maximum loan amount is obtained by dividing the borrower’s gross income as reported on 2019 or 2020 Schedule F that is not more than $100,000 divided by 12 and multiplied by 2.5. ($20,800 max).
Eligibility Requirements - 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 of that loan.
- Has no more than 300 employees; and
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020, or on an annual basis.
*If you are a first-time borrower you are not required to show a reduction in your gross sales.
Below we have provided links to the SBA documents explaining the new round of funding.
- First-time borrower of PPP funds click here to access details for “First Draw” PPP loans.
- Second-time borrower of PPP funds click here to access the PPP “Second Draw” PPP loans.
- When applying for a PPP loan for the first time, you will be asked to submit documentation of your 2019 or 2020 payroll to substantiate your loan calculation.
- When applying for a Second Draw PPP loan you will be asked to submit documentation of your 2019 or 2020 payroll to substantiate your loan calculation (if you haven’t already sent this to Northwest Bank) and tax forms or financial statements documenting your gross receipts reduction of 25% or greater. For Second Draw loans at or under $150,000 the documentation of reduced gross receipts is not required at the time of application but supporting information will be required as a condition for forgiveness. Northwest highly recommends submitting this information in order to facilitate the future forgiveness process.
Loan forgiveness will be similar to the first round; you have 8 – 24 weeks to spend the money and 60% must go to payroll expenses.
If you had an EIDL Loan the advance portion will not be deducted from the PPP forgiveness amount. If your loan has already been forgiven and the EIDL advance was deducted from your loan you will be reimbursed.
We will keep you informed as we receive updates. We look forward to working with you and supporting your business needs.
PPP Resources - We are here for you!
Funding is available to you whether you are a first-time PPP borrower or those who have already had a PPP loan and are interested in getting another one.
Contact your local Business Banker today for more details.
PPP Public Data
12/1/2020: The SBA released public data about PPP borrowers—specifically, the borrowers’ names, addresses, exact loan amounts and who their PPP lenders were. This was done by court order following lawsuits brought by media organizations seeking the data. We want you to know that we, as your bank, did not publicly disclose the data and played no role in the court decision. Our commitment to protect your privacy is paramount, and we follow all applicable laws and regulations.
Unfortunately, we have heard that some third party businesses are using information from the court-ordered data release to market themselves to PPP customers. These communications may reference our bank’s name and may even imply that we have some kind of relationship. You should be aware that we will communicate directly with you about your PPP loan and the forgiveness process. If you have any doubt, please call us directly. We also advise you that this information may be used by hackers in phishing emails. Please exercise caution when opening emails regarding PPP actions.
- Contact your local Business Banker today for more details.
- PPP FAQs
- SBA Website