Second Round of SBA Paycheck Protection Program Funding
The US government has recently approved a new round of funding for the SBA Paycheck Protection Program to provide further COVID-19 economic relief to small businesses. Bank Independent will be pleased to once again participate to ensure you have the resources your business needs to weather these difficult times. We are committed to providing you the most accurate information as it becomes available through the SBA.
Here’s what we know:
Second Round PPP Launch
The initial launch will accept loan applications first from Community Financial Institutions (CFIs). CFIs include Community Development Financial Institutions, Minority Depository Institutions, Certified Development Companies, and Microloan Intermediaries. Based on best guidance to date, Bank Independent does not fall into any of these categories.
- On Wednesday, the above listed lenders may begin making second-draw PPP loans.
- The program will open to all remaining lenders (to include Bank Independent) “shortly thereafter.”
First Draw PPP Loans
- 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.
Full Forgiveness Terms
First Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- 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.
Who Can Apply
- Eligible small entities, that together with their affiliates (if applicable), have 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—can apply.
- Entities with more than 500 employees in certain industries that meet SBA’s alternative size standard or SBA’s size standards for those particular industries can also apply.
Reapplying and Loan Increases
- Existing PPP borrowers that did not receive loan forgiveness by December 27, 2020 may:
- reapply for a First Draw PPP Loan if they previously returned some or all of their First Draw PPP Loan funds, or
- under certain circumstances, request to modify their First Draw PPP Loan amount if they previously did not accept the full amount for which they are eligible.
How and When to Apply
- Borrowers can apply for a First Draw PPP Loan until March 31, 2021, through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP.
- Please note, Second Draw borrowers will be required to provide their initial SBA PPP loan number. This loan number can be found in your original SBA PPP note or within your forgiveness application.
PPP Second Draw Loans
Eligible borrowers that previously received a PPP First Draw Loan may apply for a PPP Second Draw Loan of up to $2 million with the same general loan terms as their PPP First Draw Loan.
- For most borrowers, the maximum loan amount of a PPP Second Draw Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million.
- For borrowers in the Accommodation and Food Services sector (NAICS 72), the maximum loan amount for a PPP Second Draw Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.
- PPP Second Draw Loan applicants must use the new SBA Form 2483-SD Borrower Application.
The Borrower now has the option to select a covered period during which they can use PPP loan proceeds anytime between 8 and 24 weeks after disbursement.
- SBA will no longer deduct EIDL advances from forgiveness payment.
- If lender has already received a forgiveness payment net of an EIDL Advance, SBA will provide a reconciliation payment to lender to be applied to the outstanding loan balance.
- Under development: simplified forgiveness application for loans $150K and under.
Simplified Form 3508S for Loans Less Than $50,000
Bank Independent is pleased to provide an SBA PPP update specifically for borrowers with loans less than $50,000. The SBA has released Form 3508S which requires fewer calculations and less documentation for eligible borrowers. Here's what we know about Form 3508S:
- Borrowers that use Form 3508S are exempt from reductions in loan forgiveness amounts based on reductions in full-time equivalent (FTE) employees or in salaries or wages.
- The borrower is not required to show the calculations used to determine their loan forgiveness amount.
- However, the SBA may request information and documents to review those calculations as part of its loan review process.
- Borrowers that use Form 3508S are required to submit backup documentation to demonstrate how funds were used.
- Borrowers must submit a complete loan forgiveness application within 10 months after the last day of the borrower's loan forgiveness covered period. For example, a borrower whose covered period ends on October 30, 2020 has until August 30, 2021 to apply for forgiveness before loan repayment begins.
- There are no adverse consequences for those waiting to apply.
- A new, unique SBA PPP Loan Forgiveness Application link will be sent to the email used to apply for the original loan directing qualified users to the new Form 3508S.
- The SBA PPP Loan Forgiveness portal will be capable of accepting Form 3508S on November 13, 2020.
Answers to Your SBA PPP Forgiveness questions
Bank Independent has gathered resources on document collection, form submissions, and timelines in order to help you complete your application quickly and accurately.
On this page, you will find checklists, video tutorials, and more walking you through the calculations, supporting documentation, and the application process.
Thank you for trusting Bank Independent to serve your business banking needs.
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Bank Independent is pleased to pass along an update from the Small Business Administration announcing a modified SBA Paycheck Protection Program (SBA PPP) Loan Forgiveness Application Form 3508EZ and a three-page Instruction guide to the “EZ” SBA PPP loan forgiveness application. The SBA modified the new application form 3508 to reflect the recent changes made by Congress in the PPP Flexibility Act.
The new application requires less documentation and fewer calculations than previously expected. The “EZ” SBA PPP loan forgiveness application is designed for borrowers who meet any of the following three criteria listed below:
- Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (except laid-off employees who refused an offer to return).
- Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.
The SBA is now accepting PPP Loan Forgiveness applications. Borrowers have until December 31, 2020 to submit a complete loan forgiveness application and there are no adverse consequences for those waiting to apply. The SBA has confirmed a simplified application form 3508S for loans under $50,000. We anticipate the SBA will begin accepting this form through the forgiveness submission portal in the next few weeks. We will keep our borrowers notified if any new legislation is passed. We have emailed a unique SBA PPP Loan Forgiveness Applications link to the email address used in the borrower’s original application. If you have not yet received your link, reach out to your sales officer. We will be happy to help you begin the process. You can refer to the following links to familiarize yourself with the existing applications and instructions:
UPDATED SBA PPP Forgiveness Guidelines Town Hall
We hosted a follow-up Town Hall to address new changes to the SBA PPP Loan Forgiveness Process on June 25. You can view the webinar in its entirety below. And, thank you for trusting Bank Independent with your business banking needs.
SBA PPP Town Hall
Bank Independent hosted a PPP Forgiveness Town Hall on May 21 to share with our customers and community what to expect with the forgiveness process and application. While the newly passed PPP Flexibility law does effect some of the details discussed, we hope this information is generally helpful.
If you have questions about your specific situation, we encourage you to consult with your accountant or tax adviser.
Thank you for trusting Bank Independent with your business needs.