A new COVID-19 relief package was signed into law allocating an additional $285 billion to fund more PPP loans and simplify the forgiveness process for existing PPP loans of $150,000 or less.
We are still waiting for the SBA to release final guidance on this program, however, we can share the following general information with you at this time. Please understand that this information is intended as a summary; it is not comprehensive and is subject to change. Please consult your legal, financial and/or tax advisor(s) for further important details.
Second PPP Loan
- Existing PPP loan borrowers may be eligible to apply for a “second draw” second PPP loan.
- Borrowers must generally have:
- Fewer than 300 employees (subject to certain conditions)
- At least a 25% decrease in revenue in any quarter in 2020 relative to same quarter in 2019
- Used or will use the full amount of the first PPP loan
- Borrowers can choose their Covered Period anywhere between eight and 24 weeks.
- Types of eligible businesses have been expanded.
- Allowable expenses have been expanded.
- The maximum loan amount is $2 million.
- May be able to apply using our online application portal (coming soon).
PPP Loan Forgiveness
- Loan forgiveness process is simplified for borrowers with PPP loans of $150,000 or less. You may want to consider waiting to apply for forgiveness until SBA guidance has been finalized.
- While expenses eligible for forgiveness still require a 60/40 split of payroll costs/other eligible expenses, certain group health insurance benefits paid by employers are now included in payroll costs (for example, group life, disability, vision and dental insurance) and other eligible expenses have been expanded.
- Apply using our online application portal (available soon).
PPP Loan Rates and Terms
- All PPP loans have a fixed interest rate of 1%. The new bill has clarified that the interest rate is non-compounding and non-adjustable for first- and second-draw loans.
- The maturity of a PPP loan is five years.
- The deferral period lasts until the loan forgiveness amount is determined.
- Borrowers who fail to apply for loan forgiveness must start making loan payments within ten months of the last day of the Covered Period.
- Borrowers may still receive loans up to 2.5 times the amount of average monthly payroll costs.
- Entities in industries assigned to NAICS code 72 (Accommodations and Food Services) may receive loans up to 3.5 times the amount of average monthly payroll costs.
- Businesses that were in operation on February 15, 2020 will be eligible for an initial PPP loan or a second draw loan.
- Sole proprietors
- Independent contractors
- Self-employed individuals
- Certain non-profits (the new bill has expanded eligible businesses to include certain 501(c)(6) non-profit organizations)
- Seasonal employers; the new bill has clarified the definition of these to be businesses that operate no more than seven months within a year or earn no more than a third of gross receipts within a six-month period
- Faith-based organizations that have less than 150 employees
- Housing cooperatives that employ less than 300 people