Are you currently banking with a Community Financial Institution (CFI)? If so, you may be able to apply for a PPP2 first draw loan as early as today! The SBA has re-opened the PPP loan portal to these smallest lenders to help businesses that are looking to apply for a PPP loan for the first time starting today. If you are looking for a second draw loan and work with a CFI, the portal will open for these applications on Wednesday, January 13th.
Whether you work with a CFI or not, you can still be prepared to submit your application as soon as the time comes. Here are the items you will need to have ready for submission:
First-time borrowers:
- An SBA lender – PPP loans can only be processed through an SBA approved lender. We recommend reaching out to your current banker or review the list found HERE to find participating lenders in your state.
- Eligible payroll costs – your maximum loan amount will be calculated based on the greater of 2019 OR 2020 total eligible payroll costs. These costs include gross salary, up to $100,000 per employee plus employer costs for group life, disability, health, dental, and vision insurance, retirement contributions, and state and local taxes paid. For partnerships, self-employment income for partners is included as an eligible payroll costs, not to exceed $100,000. For Schedule C filers, owner compensation replacement is an eligible payroll cost if the business saw a net profit in 2019. For Schedule F filers, gross income (less eligible payroll costs to employees) is an eligible payroll costs.
- The application for First Time PPP Borrowers can be found HERE.
Second-time borrowers:
- An SBA lender – second-time borrowers can use the same lender that they received their first PPP loan with OR they can use a different lender.
- Eligible payroll costs – see list of includable costs above
- Proof of reduction in gross receipts of at least 25% between a calendar quarter in 2019 to a calendar quarter in 2020. If you were in business for all of 2019, you may also use a reduction of annual gross receipts of 25% between the years. Gross receipts include all revenue from all sources, excluding any forgiven amount from a first time PPP loan and an Economic Injury Disaster Loan (EIDL) advance. Per current guidance, it is assumed that the gross receipts method of accounting (accrual or cash basis) will be based on the method by which you file your annual tax return.
- The application for Second Time PPP Borrowers can be found HERE.
Did you know that you can request an increase in your original first draw PPP loan if you did not include all eligible payroll costs when calculating the maximum loan amount? Eligible payroll costs now include group life, disability, dental, and vision insurance, so this may apply to many applicants! Please reach out to your lender if you determine you are eligible for an increase in your first draw funds.
Stay Tuned
View our previously recorded webinar for a deeper dive into all things PPP2, including how and where to apply and what these rules mean for your organization.
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