Borrowers cannot receive more than one loan in the first draw; A company that received a loan in the first draw in 2020 will not be able to apply for another in 2021, but may be eligible for a loan in the second draw. A borrower can also only receive a second loan. Update: The Paycheque Protection Program ended on May 31, 2021. For more information on applying for PPP loan forgiveness, read our overview here. Many of the guidelines on eligibility, pardon and others have changed from the first to the second round of PPPs, which was created with a pool of over $284 billion through the Small Business, Not-for-Profit and Hard-Hit Sites Economic Assistance Act (Economic Assistance Act), promulgated on December 27, 2020. The American Rescue Plan Act, which was passed on September 11. Starting in March 2021, it added $7.5 billion in new funding; It also expanded eligibility and adjusted the remittance rules that apply to approved PPP loans and loan forgiveness applications submitted on or after March 11, 2021. (For more information on specific changes to the American Rescue Plan Act, click here.) As mentioned earlier, borrowers who repaid or did not accept their loan in whole or in part during the first draw may have the right to reapply for new loans for the first draw or to request an increase. In such cases, the lender must have reported the repayment or rejection to the SBA before December 27, 2020, and the SBA must not yet have transferred a pardon payment. To qualify for a PPP loan in this cycle, a potential borrower (as well as all affiliates) will need: If a borrower`s loan is reviewed in the first draw and/or if the SBA has information indicating that they may not have been eligible for that loan or the loan amount, the SBA will notify the lender, if the lender submits the guarantee request for the second draw. In such a case, the lender will not receive an SBA loan number until (and if) the SBA resolves the issue.
Second Draw PPP loans can be issued on the same terms as PPP loans at the first draw, except that PPP borrowers with a principal of $150,000 or less are required to apply for credit remittance of income reduction documents if these documents were not submitted at the time of the loan application. As with first draw PPP loans, second draw PPP loans granted to eligible borrowers are entitled to full loan relief if, during the period covered from 8 to 24 weeks after the disbursement of the loan: (a) the level of staff and remuneration is maintained in the same way as for the PPP loan from the first draw; (b) the proceeds of the loan shall be used for salary costs and other eligible expenditure; and (c) at least 60 per cent of the proceeds shall be spent on labour costs. In the rules of the second draw, the SBA stated that it intends to issue a consolidated rule that governs all aspects of credit issuance and the credit review process, and guidelines were issued on January 19, 2021. See “Requesting Remission: Revised PPP Loan Forgiveness Applications and Guidelines” (updated March 3, 2021). If you have already received a loan for the first draw, we recommend that you continue reading the section on the first draw, as some conditions for the first draw have changed and may affect the borrower, for example the possibility of.B increasing the loan amounts, as well as supplements to covered and repayable fees, for example, the possibility of increasing the loan amounts, as well as supplements to covered and repayable expenses. Partnerships are eligible for PPP loans, but individual partners are not allowed to submit separate PPP loan applications for themselves as self-employed. “Instead, self-employment income can be reported by active general partners as salary costs of up to $100,000 on an annualized basis, prorated to the period during which payments are made or the requirement to make payments on a PPP loan application submitted by or on behalf of the partnership,” indicates the IFR. A partnership and its partners, as well as LLCs that file tax returns as a partnership, are limited to a PPP loan. Reference period: The CARES Act states that borrowers must calculate the maximum amount of their loan based on the “salary costs incurred during the one-year period preceding the loan date,” so most borrowers used 2019 in 2020.
The IFR allows new borrowers who receive initial loans in 2021 to use 2019 or 2020 to calculate the maximum amount of their loan of their choice so that they can “obtain financing on terms consistent with existing PPP borrowers” and “do not have their eligible loan amounts reduced due to financial hardship in 2020.” (Farmers and ranchers are included in this flexibility, which otherwise does not affect credit conditions, processes, and procedures.) It should also be noted that many of the different rules apply differently to different types of borrowers: first-time borrowers, second borrowers, borrowers whose first PPP loans have already been issued, certain industries and entity structures, and other groups within the PPP ecosystem. Contact our team or another trusted advisor to confirm the details of your particular case. The maximum loan amount is lower for second loans. In general, borrowers can take the cheapest of: “First-Draw” refers to a borrower`s first PPP loan, whether it was raised in the first round of financing in 2020 or with this new wave in 2021. .