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Paycheck Protection Program First Draw Loans

Summary

A Paycheck Protection Program First Draw Loans overview stating that SBA is reopening the program for First Draw Loans the week of January 11, 2021. It states that First Draw PPP Loans can be used to fund payroll costs, including benefits, as well as mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs and certain supplier costs. It states that loans qualify for full forgiveness if, during the 8- to 24-week covered period, employee and compensation levels are maintained, the proceeds are spent on payroll costs and other eligible expenses, and at least 60 percent is spent on payroll costs.

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“Paycheck Protection Program First Draw Loans.” Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/department-of-the-treasury-top-line-overview-of-first-draw-ppp-1-8-202-ee0e1d5bc0/, SHA-256 81cc27338718603098a0458611c1ebf11c7fa111f9aecd6469f4c2390312ad02.

Full text

               PAYCHECK PROTECTION PROGRAM FIRST DRAW LOANS
SBA is reopening the Paycheck Protection Program (PPP) for First Draw Loans the week of
January 11, 2021. 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.
                                      Full Forgiveness Terms
First 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.
                                          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. 1
                                  Reapplying and Loan Increases
Existing PPP borrowers that did not receive loan forgiveness by December 27, 2020 may: (1)
reapply for a First Draw PPP Loan if they previously returned some or all of their First Draw
PPP Loan funds, or (2) under certain circumstances, request to modify their First Draw PPP
Loan amount if they previously did not accept the full amount for which they are eligible.
                                      How and When to Apply
Borrowers can apply for a First 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.
All new First Draw PPP Loans will have the same terms regardless of lender or borrower. A
list of participating lenders as well as additional information and full terms can be found HERE.
                                      Ensuring Access for All
SBA continues to call upon its lending partners, including Community Development Financial
Institutions (CDFIs) and Minority Depository Institutions (MDIs), to redouble their efforts to
assist eligible borrowers in underserved and disadvantaged communities. At least $15 billion is
being set aside for First Draw PPP loans to eligible borrowers with a maximum of 10
employees or for loans of $250,000 or less to eligible borrowers in low- or moderate-income
neighborhoods. To promote access for smaller lenders and their customers, SBA will initially
only accept loan applications from community financial institutions starting on January 11,
2021. The PPP will open to all participating lenders shortly thereafter.
  Visit www.sba.gov or www.treasury.gov for more information and details, including the
                                  comprehensive program rules.
1
 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.

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