PPP Second Draw Update

On Wednesday, January 13, 2021, the SBA (in consultation with the U.S. Treasury Department) announced that it will re-open the Paycheck Protection Program (PPP) loan portal to PPP-eligible lenders with $1 billion or less in assets tomorrow, Friday, January 15th, 2021 at 7 a.m.  Fortunately, we are eligible for this early opportunity to begin submitting applications to the SBA.

As a reminder, this second round of funding has been allocated $284 billion, which is less than the initial PPP funding level and, as a result, may get claimed quickly. For that reason, we’ve put together the below information to help you prepare your application for quick submission. We recommend you work with your CPA or trusted advisor should you have any questions regarding the application requirements.

Eligibility:

• Following is a summary of the primary eligibility factors:
  • 300 or fewer employees
  • Previously received a First Draw PPP loan and have fully exhausted the funds (i.e. eligible for full forgiveness)
  • Experienced a reduction in revenue in calendar year 2020, measured as follows – Applicant had gross receipts during the first, second, third, or fourth quarter in 2020 that demonstrate at least a 25 percent reduction from the applicant’s gross receipts during the same quarter in 2019 (for example, an applicant that had gross receipts of $50,000 in the second quarter of 2019 and had gross receipts of $30,000 in the second quarter of 2020 experienced a 40 percent revenue reduction between these two quarters)

• Borrowers should review the full Interim Final Rule (available on our website, here) for any questions and/or to see the detailed explanation of eligibility.

Application Information:

• Complete and sign SBA Form 2483-SD (Please reference “Common SBA Second Draw PPP Application Errors” at the bottom of this page as you fill out the application)
• Complete CB&T Revenue Reduction Worksheet
• For Loans less than $150,000 DO NOT submit any revenue reduction supporting documentation at this time.  That information will be collected prior to or during the Forgiveness process.
• For loans of $150,000 or more provide ONLY 2019 and 2020 Quarterly Income Statements for only the quarter that supports eligibility (25% reduction or more in gross receipts).
  • If you are utilizing 2019 payroll to calculate your loan amount (and we processed your first PPP loan) NO payroll information is required (we have it on file from your first PPP loan, please indicate that on the Revenue Reduction Worksheet)
  • ONLY If you are utilizing a base period different than the 2019 data that was used for your original PPP loan (this will be rare), please submit the following:
    • Applicant’s Form 941 and state quarterly wage unemployment insurance tax reporting forms from each quarter that was used calculate payroll OR
    • Equivalent payroll processor records
    • Evidence of any retirement and employee group health, life, disability, vision and dental insurance contributions, must be provided.
    • A partnership must also include its IRS Form 1065 K-1s
    • Please refer to the Interim Final Rule for this second draw PPP for complete requirements.

Applying:

• Please note we will not accept incomplete applications, so do not submit until you can include the SBA Form 2483-SD.
• Submit the following as scanned or digital attachments (we are not accepting hard copies) to seconddrawPPP@centralbancorp.com and copy your bank contact.
  1. Fully completed and executed SBA Form 2483-SD
  2. Completed Revenue Reduction Worksheet
  3. Provide any required supporting information outlined in the previous section
• In the subject line of the email please include the name of the business that took out the initial PPP loan.
• Do not submit more information than requested. Extra information and anything not specifically required will delay the processing of your request.

CB&T is wrapping up the implementation of a software platform that will automate the PPP application process for clients who wish to apply for new PPP loans.  This will streamline and automate that process for new applications.  If you have already submitted for your Second Draw PPP loan there is nothing you need to do at this time, we will process your application through the traditional process.

We do anticipate closing many of the Second Draw PPP loans through the automated system and accordingly you will be seeing an invitation to register in that portal in the near future.  This portal will manage the eventual forgiveness of the Second Draw PPP loans as well.

Common SBA Second Draw PPP Application Errors

Note:  If the Application is not completed in its entirety there is a high likelihood it will be returned.

• Year of Establishment
  • Not years in business; year started/incorporated – 2015

• NAICS Code
  • Located in upper left hand corner of tax return and is identified as “Business Activity Code” (doesn’t state NAICS)
  • The starting digits of “72” designate it as eligible for the 3.5x payroll (vs. 2.5x)

• PPP First Draw SBA Loan Number
  • The Bank emailed all existing 1^st Round Draw PPP Clients with this number
  • Contact your lender if you did not receive it

• Question #3 on Affiliates
  • Need to provide a word document (or like) titled Addendum A with a list of the other companies/affiliates owned by the principals

• Questions #4 and #5 need to be initialed
  • There is a designated area to initial near the body of the question

• For Loans > $150,000.00
  • Complete the 2020 and 2019 Quarter over Quarter revenue section on front page of the SBA application
  • Revenue Reduction Worksheet required
  • Supporting documentation required – qtr. over qtr. income statements

• For Loans < $150,000.00
  • We only need the SBA application

Forgiveness

CB&T is wrapping up the implementation of a software platform that will automate the Forgiveness Process for our clients that have not yet applied for or received Forgiveness.  Over the upcoming days you will be receiving an invite from Central Bank & Trust to register in a portal that will guide you through the Forgiveness Process.

This will automate and streamline a great deal of that process.  We will be starting with clients that have PPP loans of more than $150,000.  SBA will be releasing new requirements for loans of $150,000 or less in the next couple weeks and once those are finalized, we will be inviting clients with loans of $150,000 or less to register in the portal and complete the Forgiveness Process.

 Should you have any questions, please don’t hesitate to reach out to your Banker or Relationship Manager.