Payroll Protection Program (PPP) portal resumes January 11, 2021 to accept applications for First Draw PPP Loans.  Second Draw Loan applications are accepted January 13, until March 31, 2021.  The Payroll Protection Program is a direct incentive for small businesses to keep their employees on payroll.

  • Loans have 1% interest rate.
  • Loans issued before June 5, 2020 have a term of 2 years.  Loans issued after June 5, have a term of 5 years.
  • Loan payments are deferred for those who apply for forgiveness.  Those who do not apply for forgiveness have a deferment of 10 months after the end of the covered period, either 8 or 24 weeks.
  • No collateral or personal guarantees are required.
  • No fees from the government or lending institution.

Applications are accepted at any SBA 7(a) lender, or through a federally insured depository or credit union, or a Farm Bureau.

First Draw Loans

The SBA is opening PPP portal to accept 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.

The First Draw loans are for small businesses and their affiliates with less than 500 employees including non-profits, veterans organizations, tribal concerns, self-employed, sole proprietorships, and independent contractors.  Existing PPP loan recipients who did not receive forgiveness by December 27, 2020 may also apply if they returned some or all of the funds from the previous loan, or they did not receive the full amount for which they were eligible.

First Draw Loan application revised 1.08.21

Forgiveness

First Draw Loan recipients may be eligible for full term forgiveness if during the 8- to 24- week covered period:

  • Employee and compensation levels are maintained.
  • The loan was used for payroll and other eligible expenses.
  • At least 60% of the proceeds are used for payroll costs.

Second Draw Loans

If you received a First Draw Loan, the PPP now allows certain eligible borrowers to receive a Second Draw Loan with the same general loan terms as the first.  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.

The borrower may be eligible for a Second Draw Loan if he or she received the First Draw loan and used the funds for eligible expenses, and has no more than 300 employees, and can demonstrate at least a 25% reduction in gross receipts in comparable quarters 2019 and 2020.

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. For 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.

Second Draw Loan Application, revised 1.08.21

Forgiveness

Second Draw Loan recipients may be eligible for full term forgiveness if during the 8- to 24- week covered period:

  • Employee and compensation levels are maintained in the same manner as the First Draw loan.
  • The loan was used for payroll and other eligible expenses.
  • At least 60% of the proceeds are used for payroll costs.

With coronavirus continuing to plague the nation, Congress is continuing efforts to boost the economy.  Businesses looking for relief can turn to their lending institutions for Payroll Protection Program loans and forgiveness.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and should not be acted upon as such.  This post may contain hyperlinks to forms, materials, and websites operated by parties other than Unique Employment Services.  Such hyperlinks are provided for reference only. Unique Employment Services does not control such websites and is not responsible for their content.