SBA Paycheck Protection Program
The recently signed COVID-19 relief bill containing the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”) provides for updates to the Paycheck Protection Program (“PPP”), including:
- A new round of funding for PPP loans, including First Draw PPP Loans and Second Draw PPP Loans (described below);
- An expanded definition of covered expenses that can be covered by PPP loan proceeds;
- A simplified one-page forgiveness application for PPP loans under $150,000; and
- The extension of debt relief programs established under the CARES Act, including the payment by SBA of principal and interest payments on all 7a loans in regular servicing status for at least three months.
We are continuing to review the Economic Aid Act and we expect more specific information and additional guidance will be forthcoming from the U.S. Department of Treasury and the SBA soon.
We will be accepting applications for First Draw and Second Draw PPP Loans from existing CSB customers once the SBA opens its lender portal on Tuesday, January 19th. To review the First Draw and Second Draw PPP Loan Application forms and instructions prior to starting the application process, please use the following links:
First Draw PPP Loan - Borrower Application Form
Second Draw PPP Loan – Borrower Application Form
Second Draw PPP Loans
The following is a summary of the SBA’s Second Draw PPP Loans. This is a summary only and you are encouraged to review the SBA website for additional details.
Overview
The Paycheck Protection Program now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan. Second 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.
Targeted Eligibility
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.
Maximum Loan Amount and Increased Assistance for Accommodation and Food Services Businesses
For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to a maximum loan amount of $2 million. For borrowers in the Accommodation and Food Services sector (NAICS Code 72), the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to a maximum loan amount of $2 million.
Full Forgiveness Terms
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 proceeds are spent on payroll costs and other eligible expenses; and
- At least 60% of the loan proceeds are spent on payroll costs.