The Paycheck Protection Program (PPP) is a Small Business Administration loan program aimed at helping small businesses who have been impacted by COVID-19. All or a portion of the loan may be forgiven depending on how the funds are used.
On January 11, 2021, the SBA opened Paycheck Protection Program (PPP) lending to certain specialized community and minority lenders who are focused on disadvantaged borrowers. We expect the program to become generally available to other lenders and applicants very soon. When it does, we will make applications available for first or second draw Paycheck Protection Program loans.
The program will be open to new eligible applicants who did not receive a loan in 2020. Additionally, eligible borrowers who received a PPP loan in 2020 may apply for a second draw loan. Applications will be available via an online portal on the Community First Bank website. This renewed program will be available until March 31, 2021, or until the funds have been exhausted.
Please note that if you received a PPP loan through Community First Bank in the first round, forgiveness will be paused until additional guidance and application documentation have been issued. These updates should be ready on or around 1/20/21.
Below you will find a summary of this round of the Paycheck Protection Program (as of 1/8/21):
Important Borrower Information and Eligibility:
- PPP borrowers can set their loan’s covered period to be any length between 8- and 24- weeks to best fit their business needs
- There will be a simplified loan forgiveness process for loans less than or equal to $150,000
- The Paycheck Protection Program’s eligibility has been expanded to include 501(c)(6) organizations, housing cooperatives, and direct marketing organizations, among others
- The PPP provides greater flexibility for seasonal employees
- EIDL Advances are non-taxable and will not reduce the amount of PPP loan forgiveness
- The SBA will make an adjustment for borrowers whose loan forgiveness was previously reduced by an EIDL Advance
- Certain existing PPP borrowers can request to modify their first draw PPP loan amount; and
- Certain existing PPP borrowers are now eligible to apply for a second draw PPP loan
Loan Expense Coverage:
- PPP loans will cover payroll and other additional expenses, including:
- Operations Expenditures
- Including software, cloud computing, and other human resource and accounting expenses
- Property Damage Costs
- Resulting from public disturbances in 2020 not already covered by insurance
- Supplier Costs
- Expenditures to a supplier pursuant to a contract, purchase order, or order of goods in effect prior to taking out a loan that are essential to the recipient’s operations. Supplier costs of perishable goods can be made before or during the life of the loan
- Worker Protection Expenditures
- PPE and adaptive investments to help a loan recipient comply with the federal health and safety guidelines, or any equivalent state and local guidance related to COVID-19, between March 1, 2020 and the end of the national emergency declaration
- These additional eligible expenses apply to PPP loans made before, on, or after the enactment of this act, but exclude borrowers who have already had their loans forgiven
Second Draw PPP Loan Borrower Eligibility:
- Previously received a first draw PPP loan and will or have used the full amount for authorized uses only
- All proceeds from the first draw PPP loan must have been used for eligible expenses (or will be used by the time the second draw is disbursed)
- Has no more than 300 employees; and
- Can demonstrate at least 25% reduction in gross receipts between comparable quarters in 2019 and 2020
Second Draw PPP Loan Terms:
- Generally, all borrowers may receive a loan amount of up to 2.5 times the average monthly payroll costs in the one year prior to the loan or the calendar year
- No second draw PPP loan may be greater than $2 million
- Seasonal employers may calculate maximum loan amount based on a 12-month period – February 15, 2019 through February 15, 2020.
- Entities in industries assigned to NAICS code 72 (Accommodation and Food Services) may receive loans of up to 3.5 times their average monthly payroll costs
- An eligible entity may only receive one single PPP second draw loan
- Entities applying for their first PPP loan in 2021 are not eligible for a second draw loan
- The second draw loan will include an interest rate of 1.0%, with a maturity date based on the date the loan was disbursed to the borrower