Paycheck Protection Program (PPP): Re-Launch Overview
Summary
An SBA slide presentation, Paycheck Protection Program (PPP) Re-Launch Overview, on PPP loan processes under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act). It lists the Act's appropriations, including $284.45 Billion for the PPP. The First Draw and Second Draw loan portal opened on January 11 and January 13 to Community Financial Institutions only, reopened to lenders with $1 billion or less in assets on January 15, 2021, and was fully open as of January 19, 2021. It covers the Shuttered Venue Operator (SVO) Grant Program, funded at $15B with a set-aside for small employers for the first 60 days. The loan terms listed are a 1% interest rate, a 5 year maturity and a loan amount of 2.5 times average monthly payroll (3.5 times for NAICS code 72), and First Draw applications are accepted until March 31, 2021.
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U.S. Small Business
Administration
Paycheck Protection Program (PPP)
Re-Launch Overview
This presentation is developed to provide a general overview of PPP loan processes related to provisions in
the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act). In the
event of any inconsistency between this presentation and the Economic Aid Act, the Paycheck Protection
Program Flexibility Act of 2020, the CARES Act, PPP IFRs, PPP FAQs, PPP Application Forms and Instructions,
and other PPP guidance (together, official guidance), the official guidance governs.
MA Retailers, Restaurants and Independent Businesses - Information accurate as of
SBA’s Funding Options
Economic Aid Act Increased Appropriations
Paycheck Protection EIDL Program SBA’s Lending SBA Debt Relief
Program Programs • $3.5Billion
• First Draw PPP • $20 Billion in • $2Billion in 7a & • Extending
Loan Details EIDL Advances 504 Program Payments for
• Second Draw PPP • Extended Loan Enhancements new and existing
Loan Requirements Application • New 504 Express SBA Loans (2/10
• $284.45 Billion Deadlines Program – 9/30/2021)
3
PPP Access to Capital
Paycheck Protection Program Rollout
To ensure increased access to PPP for minority, underserved, veteran, and
women-owned business concerns, SBA is undertaking the following steps,
among others:
• PPP First Draw and PPP Second Draw loan portal opened on January 11, 2020 and
January 13, 2020 to accept loan applications only from Community Financial Institutions
(CFIs). CFIs include Community Development Financial Institutions, Minority Depository
Institutions, Certified Development Companies, and Microloan Intermediaries.
• Lender Match will direct borrower inquiries to these mission-based lenders, who
generally assist the underserved communities.
• Re-open the Paycheck Protection Program (PPP) loan portal to PPP-eligible lenders with
$1 billion or less in assets for First and Second Draw applications on Friday, January 15,
2021 at 9 a.m. EST.
• The portal is fully open as of Tuesday, January 19, 2021 to all participating PPP lenders
to submit First and Second Draw loan applications to SBA.
Shuttered Venue Operator (SVO) Grant Program
Consolidated Appropriations Act of 2021
Program Funding: $15B, of which $2B must be set aside for small employers
(i.e., those not having more than 50 FT employees) for only the first 60 days after
we begin awarding SVO grants. On Day 61 the set aside expires and that money
goes back in the general pot. Eligible Entities include:
(1) live venue operators or promoters;
(2) theatrical producers;
(3) live performing arts organization operators;
(4) relevant museum operators;
(5) motion picture theater operators;
(6) talent representatives, and each business entity an eligible entity owns that
also meets the eligibility requirements.
Shuttered Venue Operator (SVO) Grant Program
Consolidated Appropriations Act of 2021
o Must have been in operation as of Feb 29, 2020.
o Borrowers must choose between SVO Grant and PPP – cannot apply for both.
o Detailed information on eligibility requirements coming soon. Initial
information webinar by SBA on 1/14 @ 3:00 pm and others will be announced
before SVO program rollout
o Priorities anticipated for smallest entities and hardest hit. (Amount of full
time employees and revenue reduction between April 2020 and December
2020 will factor into the priority)
EIDL Advance Provisions
Consolidated Appropriations Act of 2021
• Section 31: Targeted EIDL Advance for Small Business Continuity, Adaptation, and
Resiliency.
• Provides additional targeted funding for eligible entities located in low-income
communities through the EIDL Advance program from Section 1110 of the CARES Act.
• Makes entities in low-income communities that received an EIDL Advance under
Section 1110 of the CARES Act eligible to receive an amount equal to the difference of
what the entity received under the CARES Act and $10,000.
• Provides $10,000 grants to eligible applicants in low-income communities that did not
secure grants because funding had run out (Had applied for EIDL loan by 12/27/20).
• Guidance being developed;
• SBA Developing a mapping tool;
• 30% economic loss. 7
Enhancements to SBA’s Lending Programs
Consolidated Appropriations Act of 2021
• Temporarily enhances the terms of the 7(a) loan program by increasing the
loan guarantee from 75 to 90 percent and offering reduced or no fees for the
borrower and the lender.
• Temporarily increase the 7(a) express loan limit to $1 million to 10/1/21 (then
reduces to $500K) and loan guarantee to provide access to needed working
capital.
• Temporarily eliminates fees for the 504 loan program and favorable terms for
refinancing loans.
• Increases the aggregate loan limit for microloan intermediaries in order to
ensure intermediaries have increased capacity to make loans to underserved
and underbanked borrowers.
SBA’s Debt Relief Programs
Consolidated Appropriations Act of 2021
Economic Aid Act extends the Small Business Debt Relief program, Section 1112 of
the CARES Act, which would defer payments of principal and interest on new and
existing SBA 7(a), 504, and Microloan programs for eligible entities.
• All existing borrowers with loans in regular servicing will receive 3 additional
months of P & I starting February 2021 subject to a $9,000 a month maximum
• Underserved borrowers to receive an additional 5 months of P & I payments
• For newly approved SBA loans (2/1 – 9/30/21) SBA to make 6 months of P & I
payments
NAICS codes: 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812.
Educational Services; Arts, Entertainment and Recreation; Accommodation and Food Service; Support Services for
Mining, Oil and Gas Exploration; Apparel Manufacturing; Clothing and Clothing Accessory Stores; Sporting Good,
Hobby, Musical Instrument and Book Stores; Air Transportation; Transit and Ground Passenger; Scenic and Sightseeing
Transportation; Publishing; Motion Picture and Sound Recording; Broadcasting; Rental and Leasing Services; Personal
and Laundry Services
Best Resources for Most Accurate Information
Beware of Outside Information
MA District Office
• MassachusettsDO@sba.gov
• www.sba.gov/updates
Official SBA Website:
• Coronavirus Relief Options (sba.gov)
• Paycheck Protection Program (sba.gov)
• PPP -- IFR -- Paycheck Protection Program as Amended by Economic Aid Act (1.6.2021).pdf (sba.gov)
• PPP -- IFR -- Second Draw Loans (1.6.2021).pdf (sba.gov)
Treasury’s Website:
• https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses
Comments on the Paycheck Protection Program Interim Final Rules must be submitted to https://www.regulations.gov/, unless the comment
includes confidential business information, in which case, the comment should be directed to ppp-ifr@sba.gov.
10
Economic Aid Act Enhancements
PPP Eligibility & Forgiveness Updates
• Business entities (e.g., partnerships, Borrower now has the option to select a
corporations, LLCs) covered period during which they can use
• Sole proprietors, independent contractors, PPP loan proceeds anytime between 8 and
self-employed individuals 24 weeks after disbursement.
• 501(c)(3) • SBA will no longer deduct EIDL advances
• 501(c)(6) from forgiveness payment.
• 501(c)(19) Veterans organization • If lender has already received a forgiveness
• Tribal business, and payment net of an EIDL Advance, SBA will
provide a reconciliation payment to lender
• Housing cooperatives, destination to be applied to the outstanding loan
marketing organizations, and eligible balance.
news organizations.
Must comply with size standards, eligibility • Under development: simplified forgiveness
criteria, and certain limitations. application for loans $150K and under. 11
What businesses, organizations, and individuals are eligible?
Economic Aid Act Eligibility Enhancements
• A housing cooperative, an eligible section 501(c)(6) organization, or
an eligible destination marketing organization , that employs no
more than 300 employees.
• A news organization that is majority owned or controlled by a NAICS
code 511110 or 5151 business or a nonprofit public broadcasting
entity with a trade or business under NAICS 511110 or 5151, that
employs no more than 500 employees (or, if applicable, the size
standard in number of employees established by SBA in 13 C.F.R.
121.201 for your industry) per location
12
How Can PPP Loans Be Used
Enhancements to Eligible Payroll & Non-Payroll Expenses
• Covered operations expenditures (payments for
• Payroll costs (as defined in
any business software or cloud computing service
the CARES Act, Economic Aid that facilitates business operations, product or
Act and this interim final rule) service delivery, the processing, payment, or
tracking of payroll expenses, human resources,
• Costs related to the sales and billing functions, or accounting or
continuation of group health tracking of supplies, inventory, records and
care, life, disability, vision, or expenses)
dental benefits during periods • Covered property damage costs (costs related to
of paid sick, medical, or property damage and vandalism or looting due to
family leave, and group public disturbances that occurred during 2020 that
health care, life, disability, was not covered by insurance or other
vision, or dental insurance compensation)
premiums • Covered worker protection expenditures 13
First Draw PPP Loan Eligibility
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 the following industries
can also apply.
• Businesses with a NAICS Code that begins with 72 (Accommodation and Food
Services sector)
• 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. 14
Forgiveness PPP Loan Details
Forgiveness & Loan Terms
• First Draw and Second Draw PPP Loans • SBA 100% guarantee
made to eligible borrowers qualify for • No Collateral Requirements
full loan forgiveness if during the 8- to • No personal guarantee
24-week covered period following loan • Interest rate – 1% (non
disbursement: compounding and non
• Employee and compensation levels adjustable)
are maintained; • 5 year maturity
• The loan proceeds are spent on • Processed by PPP lenders
payroll costs and other eligible • Lender reliance on borrower
expenses; and certifications
• Loan amount is 2.5 x’s average
• At least 60 percent of the proceeds
monthly payroll (3.5x’s for NAICS
are spent on payroll costs.
code 72) 15
First Draw PPP Loan Details
Application and Eligibility
• 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.
• 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.
• All new First Draw PPP Loans will have the same terms regardless of lender or
borrower. 16
Second Draw PPP Loan Details
Who can apply for PPP Second Draw
Targeted Eligibility, a borrower is generally eligible for a PPP Second
Draw Loan if the borrower:
• Was eligible for and previously received a PPP First Draw Loan;
• Has or will use the full loan amount only for eligible expenses before the
PPP Second Draw Loan is disbursed;
• Has no more than 300 employees; and
• Can demonstrate at least a 25% reduction in gross receipts between
comparable quarters in 2019 and 2020.
17
Second Draw PPP Loan Details
Application and Eligibility
• Eligible 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.
• 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 $2 million.
• Borrowers in the Accommodation and Food Services sector the maximum loan
amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020
payroll costs up to $2 million.
18
PPP Second Draw Loans
Application and Streamlined Forgiveness
• PPP Second Draw Loan applicants must use the new SBA Form 2483-SD
Borrower Application.
• Calculating borrower’s payroll costs for a Second Draw PPP Loan is either the
twelve-month period prior to when the loan is made or calendar year 2019.
• If Borrower is using 2019 as basis for calculating PPP second draw loan and
going to same lender, no need to provide documentation to support requested
loan amount since lender already has received such documentation
• Economic Aid Act simplified forgiveness process for loans under $150,000
• No upfront documentation for revenue reduction on loans under $150,000,
borrowers have until loan forgiveness time to submit such documentation 19
PPP Forgiveness Process
Application and Streamlined Forgiveness
• An eligible borrower that received a loan of $150,000 or less should use the SBA
Form 3508S and shall not, at the time of its application for loan forgiveness, be
required to submit any application or documentation in addition to the
certification and information required by section 7A(l)(1)(A) of the Small Business
Act.
• However, an eligible borrower that received a Second Draw loan of $150,000 or less
and is using the SBA Form 3508S must, before or at the time of its application for
loan forgiveness, submit documentation sufficient to establish that the borrower
experienced a reduction in revenue as provided in subsection (g)(2)(v) of the
interim final rule on Second Draw PPP Loans, unless the borrower already provided
such documentation at the time of its application for the Second Draw PPP Loan
20
Important FTE Exemptions
PPP Streamlined Forgiveness
Provisions of the interim final rule are an exercise of rulemaking authority by
Treasury and SBA
• de minimis exemption provided with respect to certain offers of rehire,
• the de minimis exemption from the full-time equivalent employee reduction penalty
when an employee is, for example, fired for cause,
• de minimis exemption from the fulltime equivalent employee reduction penalty when
the borrower eliminates reductions by December 31, 2020 or, for a PPP loan made after
December 27, 2020, the last day of the loan’s covered period,
• de minimis exemption from the full-time equivalent (FTE) employee reduction penalty
for certain PPP loans of $50,000 or less, and
• de minimis exemption from the employee salary and wages reduction penalty for
certain PPP loans of $50,000 or less. 21
No Fees for First and Second Draw PPP Loans
• When evaluating an applicant’s eligibility lenders will not be required to apply the
“credit elsewhere test”
• There will be no up-front guarantee fee payable to SBA by the borrower;
• There will be no lender’s annual service fee or on-going guaranty fee payable to SBA;
• Agent fees may not be paid out of the proceeds of a PPP loan.
• A lender is only responsible for paying fees to an agent for services for which the
lender directly contracts with the agent.
• The total amount that an agent may collect from the lender for assistance in
preparing an application for a PPP loan (including referral to the lender) may not
exceed:
• One (1) percent for loans of not more than $350,000;
• 0.50 percent for loans of more than $350,000 and less than $2 million; and
• 0.25 percent for loans of at least $2 million. 22
Updated Forms and Guidance
Small Business Administration Document Repository (sba.gov)
PPP First Draw and Second Draw Forms
• SBA Form 2483 - PPP First Draw Borrower Application Form (sba.gov)
• SBA Form 2484 PPP Lender Application Form (revised 1.8.2021).pdf (sba.gov)
• SBA Form 2483 SD - PPP Second Draw Borrower Application Form (1.8.2021).pdf (sba.gov)
• SBA Form 2484 SD - PPP Second Draw Lender Application Form (sba.gov)
PPP Forgiveness Forms:
• Interim Final Rule on Loan Forgiveness Requirements and Loan Review Procedures as
Amended by Economic Aid Act (Released 1/19/2021)
• PPP Loan Forgiveness Application Form 3508 (Revised 1/19/21)
• PPP Loan Forgiveness Application Form 3508EZ (Revised 1/19/21)
• PPP Loan Forgiveness Application Form 3508S (Revised 1/19/21)
• Borrower’s Disclosure of Certain Controlling Interests (Released 1/19/2021) 23
Questions?
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