The PPP is back and in full effect as of 01/11/2021 and will end 03/31/2021. The short window of time to apply and the many changes will have an effect on your application. The Act changes PPP primarily in three ways.
First, the Act allows new PPP loan applications to be submitted by eligible applicants that never obtained a PPP loan.
Second, the Act permits some businesses that have already obtained a PPP loan to obtain a second PPP loan, called a "PPP second draw."
Third, the Act changes PPP rules-for existing PPP loans, new PPP loans, and PPP second draws-in the areas of eligibility, allowable expenses, forgiveness, and more.
Whether you already have an existing PPP loan, are interested in obtaining a PPP loan, or want to obtain a PPP second draw, the Act makes changes to PPP rules that may be relevant to you.
We took the time to take all the information and reduce it down to 8 points:
(1) Know the two types of PPP borrowers- in 2021 you have two types:
First draw applicants - You have not taken forgiveness from the first draw by 12/27/2020.
Second draw applicants- You have taken forgiveness from the first draw by 12/27/2020
(2) Who Can Apply:
HAVE 500 OR FEWER EMPLOYEES.
EXCEPTION FOR FOOD SERVICES.
NON-PROFIT. NOW 501(C)(6) business leagues, chambers of commerce, boards of trade, and similar organizations
SELF-EMPLOYED (GIG WORKERS)
SOLE PROPRIETORSHIPS
INDEPENDENT CONTRACTORS
(3) HOW TO PROVE AVG MONTHLY PAYROLL
FORM 941 OR W3
SCHEDULE K FOR FORM 1065
SCHEDULE E FOR RENTAL PROPERTY ( SEE VIDEO FOR MORE INFO)
SCHEDULE C AND SCHEDULE SE.
(4) FULL FORGIVENES TERMS
• Employee and compensation levels are maintained;
• The loan proceeds are spent on payroll costs and other eligible expenses; and
• At least 60 percent of the proceeds are spent on payroll costs.
(5) 1st DRAW BORROWERS CAN REAPPLY AND REQUEST LOAN INCREASES:
YOU DID NOT RECEIVE LOAN FORGIVENESS BY 12/27/2020 YOU MAY:
1. REAPPLY IF YOU RETURNED SOME OR ALL OF THE FIRST DRAW. OR
2. MODIFY YOUR FIRST DRAW PPP LOAN IF THEY DID NOT ACCEPT THE FULL AMOUNT.
(6) WHEN YOU CAN APPLY:
January 11th, 2021 to March 31st, 2021
(7) TARGETED ELIGIBILITY FOR 2ND DRAW ONLY:
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
Has no more than 300 employees; and
Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
(8) LOANS FOR ALL.
Loans to minority & women owned entities, low income and disadvantaged communities. (See video for more information)
CDFI LOCATOR LINK: https://ofn.org/cdfi-locator
MDI LOCATOR LINK: https://www.investopedia.com/black-owned-banks-by-state-5024944
Good luck to all.