More news, and clarity, on PPP2

Dear Clients & Friends,

A lot has happened since our last PPP update on January 12. While the President has already raised the prospect of a new stimulus package, as expected, there is continuity on existing programs, so the details included in our last update are still valid.

Who’s eligible? 

This week, all banks (not just community financial institutions) should now be accepting loan applications for PPP2. There is now a more comprehensive range of applicants eligible for PPP2, to include the following organizations: 

• chambers of commerce; 
• housing cooperatives; and 
• local newspapers 

Meanwhile, it’s important to remember that borrowers who received a PPP loan in the first round may also be eligible for a second loan if they experienced a revenue decline of 25% or more in any quarter of 2020 (compared to the same quarter in 2019), and businesses applying for the second round of PPP will not have to provide as many documents this time.

There is also good news in that the rules are now much better defined. This week, the Small Business Administration (SBA) and Treasury have issued several documents clarifying these rules to include:

• How to Calculate Revenue Reduction and Maximum Loan Amounts Including What Documentation to Provide (18 pages)
• How To Calculate Maximum Loan Amounts For First Draw PPP Loans And What Documentation To Provide – By Business Type (12 pages)

For most businesses, the maximum loan is 2.5 times your average monthly payroll costs in the 12-months leading up to the loan or in the calendar year 2019, with a cap of $2 million. There is, however, welcoming news for those in the hospitality or restaurant industry (NAICS code starting with 72), as this multiple increases to 3.5 times.

Loan Forgiveness 

Moreover, those applying for the forgiveness of loans of $150,000 or less can use the updated and simplified Form 3508S. Please note that although this simplified process does not require documentation, we still recommend retaining all records in the event SBA requests additional info. 

Suppose you are eligible for the simplified 3508S Form but have already applied for loan forgiveness using the previous form. In that case, we can help you resubmit with the new one at any time until the SBA notifies the lender of a final SBA loan review decision or remits payment.

There have been some helpful clarifications, and overall, PPP2 is available to more borrowers and simpler and more accommodating terms. The final fact to bear in mind at this stage is that the deadline for applications is March 31, 2021. That’s just a short two months away to benefit from any PPP funds remaining! As ever, we are on hand to answer any questions, discuss what PPP2 could mean for your business, and assist with your loan calculations or forgiveness application. 

Stay safe and healthy,

The CJBS Team