In addition, subsection (c)(1)(ii) of the IFR clarifies that the borrower must have spent the full amount of its First Draw PPP Loan on eligible expenses under the PPP rules to be eligible for a Second Draw PPP Loan. Subject to subsection (e) of this section, below, the following applicants are eligible for Second Draw PPP Loans: (1) An applicant is eligible for a Second Draw PPP Loan if it is a business concern, independent contractor, eligible self-employed individual, sole proprietor, nonprofit organization eligible for a First Draw PPP Loan, veterans organization, Tribal business concern, housing cooperative, small agricultural cooperative, eligible 501(c)(6) organization or destination marketing organization, or an eligible nonprofit news organization[33] Register documents. Second Draw PPP Loans are subject to SBA's and the Department of the Treasury's (Treasury's) Different eligibility requirements apply to Second Draw PPP Loans. (f) What is the maximum loan amount for a Second Draw PPP Loan? (d) How do SBA's affiliation rules affect an applicant's eligibility for a Second Draw PPP Loan? Moreover, this definition will enhance the administrability of Second Draw PPP Loans because it is a definition already used by the Administration and many small businesses. (A) Confirm receipt of borrower certifications contained in Paycheck Protection Program Second Draw Borrower Application Form (SBA Form 2483-SD) or lender's equivalent; (B) Confirm receipt of information demonstrating that a borrower was either an eligible self-employed individual, independent contractor, or sole proprietorship with no employees or had employees for whom the borrower paid salaries and payroll taxes on or around February 15, 2020; (C) Confirm the dollar amount of average monthly payroll costs for 2019 or 2020 (whichever was used to calculate loan amount) by reviewing the payroll documentation submitted with the borrower's application; (D) For a Second Draw PPP Loan greater than $150,000 or a loan of $150,000 or less where the borrower provides documentation of revenue reduction, confirm the dollar amount and percentage of the borrower's revenue reduction by performing a good faith review, in a reasonable time, of the borrower's calculations and supporting documents concerning the borrower's revenue reduction. that is not more than $100,000, divided by 12; (2) the average total monthly payment for employee payroll costs incurred or paid by the borrower during the same year elected by the borrower; by, (B) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 as defined in subsection (f)(10) at the time of disbursal, 3.5); or. L. 116-260, section 303. on The requirements applicable to PPP lenders are in sections (C) and (D) of the Consolidated First Draw PPP IFR. FAQ #63 and subsection (c) of the interim final rule for Second Draw PPP Loans. include documents scheduled for later issues, at the request 1503 & 1507. First-time borrowers (including newly eligible borrowers) can once again apply under the first-round program. Second Draw PPP Loans are subject to SBA's and the Department of the Treasury's (Treasury's) consolidated interim final rules implementing updates to the Paycheck Protection Program for First Draw PPP Loans (Consolidated First Draw PPP IFR) issued concurrently with this interim final rule (IFR)[1] The rule has no preemptive or retroactive effect. 78f), where the terms exchange, issuer, and security have the meanings given those terms in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 01/12/2021 at 4:15 pm. without regard for whether such a station is a concern as defined in 13 CFR 121.105, or any successor thereto) that employs not more than 500 employees, or the size standard established by the Administrator for the NAICS code applicable to the business concern, per physical location of such business concern and is majority owned or controlled by a business concern that is assigned a NAICS code beginning with 511110 or 5151; or (b) any nonprofit organization that is assigned a NAICS code beginning with 5151. This provision will allow a borrower to provide annual tax return forms to substantiate its revenue reduction. (B) 3 percent of the balance of the financing outstanding at the time of disbursement of the loan for a loan above $350,000. SBA will consider these comments and the need for making any revisions as a result of these comments. Section 322 of the Economic Aid Act. Borrowers may consult PPP Frequently Asked Question (FAQ) 24[15] [31] The Economic Aid Act authorizes the U.S. Small Business Administration to guarantee additional loans under the temporary Paycheck Protection Program, which was originally established under the Coronavirus Aid, Relief, and Economic Security Act to provide economic relief to small businesses nationwide adversely impacted under the Coronavirus Disease 2019 (COVID-19) Emergency Declaration (COVID-19 Emergency Declaration) issued by President Trump on March 13, 2020. Only official editions of the A lender must make disbursement of the loan within ten calendar days of loan approval. The molecular formula of the compound is C10 H120. 5. Corporate group has the same meaning as in subsection (B)(4)(f) of the Consolidated First Draw PPP IFR. As a result, Nashville's City Council recently approved a significant property tax increase of 34% to make up for the tax losses brought about by COVID-19. This site displays a prototype of a Web 2.0 version of the daily The PPP is now a $284 billion refundable loan offering aimed at struggling small businesses. Undersecretary of Works in Bahrain with primary focus on major infrastructure ,PPP/ affordable housing . Section 311 of the Economic Aid Act adds a second temporary program to SBA's 7(a) Loan Program titled, Paycheck Protection Program Second Draw Loans. This interim final rule implements the key provisions of section 311 of the Economic Aid Act and requests public comment. The interest rate will be 100 basis points or one percent, calculated on a non-compounding, non-adjustable basis. An updated PPP application form has been issued by the SBA, together with an application for the new Second Draw Loan program. Key insights. (B) If a borrower has acquired an affiliate or been acquired as an affiliate during 2020, gross receipts includes the receipts of the acquired or acquiring concern. 34. (D) The Applicant is not required to submit a registration statement under section 2 of the Foreign Agents Registration Act of 1938 (22 U.S.C. It is not an official legal edition of the Federal Tick your Download Entire Update checkbox. Two distinct Paycheck Protection Programs (PPP) opened on January 19, 2021. (9) Businesses that are part of a single corporate group shall in no event receive more than $4,000,000 of Second Draw PPP Loans in the aggregate. (9) an entity that has permanently closed. The bigger issue, of course, is resolving baseless loan rejections before the second round of PPP funding runs out of money. Gross receipts do not include the following: Taxes collected for and remitted to a taxing authority if included in gross or total income (such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees); proceeds from transactions between a concern and its domestic or foreign affiliates; and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker. Paragraph 7(a)(36)(D)(iv) of the Small Business Act (15 U.S.C. 1. documents in the last year, 881 Federal Register provide legal notice to the public and judicial notice Pursuant to section 808(2) of the CRA, SBA finds, for good cause, that a 60-day delay in the effective date is unnecessary and contrary to the public interest. This article summarizes which businesses are not eligible for First Draw PPP Loans and Second Draw PPP Loans. (ii) that retains, as a member of the board of directors of the business concern, a person who is a resident of the People's Republic of China; (4) any person required to submit a registration statement under section 2 of the Foreign Agents Registration Act of 1938 (22 U.S.C. SBA has drafted this rule, to the extent practicable, in accordance with the standards set forth in section 3(a) and 3(b)(2) of Executive Order 12988, to minimize litigation, eliminate ambiguity, and reduce burden. Effective Date: This interim final rule is effective January 12, 2021. Paragraph 7(a)(37)(O) of the Small Business Act provides that a Second Draw PPP Loan may be made only to a borrower that received a First Draw PPP Loan under paragraph 7(a)(36). The Economic Aid Act does not include a general definition of gross receipts for purposes of determining a borrower's revenue reduction. The Second Draw PPP IFR confirms that the last day to "apply for and receive" a Second Draw PPP loan is March 31, 2021. (iii) A lender may rely on any certification or documentation submitted by an applicant for a PPP loan or an eligible recipient or eligible entity that (A) is submitted pursuant to all applicable statutory requirements, regulations, and guidance related to a PPP loan, including under sections 7(a)(36) or (37) of the Small Business Act (15 U.S.C. 04/17/2023, 242 Second Draw PPP Loans are eligible for loan forgiveness on the same terms and conditions as First Draw PPP Loans, except that Second Draw PPP Loan borrowers with a principal amount of $150,000 or less are required to provide documentation of revenue reduction if such documentation was not provided at the time of the loan application as specified in subsections (g)(2)(iv) and (v) of this section. Under section 311, SBA may guarantee loans under the PPP Second Draw Program through March 31, 2021 (Second Draw PPP Loans) to borrowers that previously received a PPP loan under section 7(a)(36) of the Small Business Act (First Draw PPP Loans) and have used or will use the full amount of the initial PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw PPP Loan. 1602), including any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy or Start Printed Page 3719otherwise describes itself as a think tank in any public documents; (i) For which an entity created in or organized under the laws of the People's Republic of China or the Special Administrative Region of Hong Kong, or that has significant operations in the People's Republic of China or the Special Administrative Region of Hong Kong, owns or holds, directly or indirectly, not less than 20 percent of the economic interest of the business concern or entity, including as equity shares or a capital or profit interest in a limited liability company or partnership; or. 15 U.S.C. Subsection (b) also confirms that SBA's Consolidated First Draw PPP IFR, Frequently Asked Questions (FAQs), and other guidance about PPP loans under section 7(a)(36) of the Small Business Act (15 U.S.C. has no substantive legal effect. Follow the instructions for submitting comments. (4) if the applicant was not in business during 2019, but was in operation on February 15, 2020, the applicant had gross receipts during the second, third, or fourth quarter of 2020 that demonstrate at least a 25 percent reduction from the gross receipts of the entity during the first quarter of 2020 (for example, an applicant that had gross receipts of $50,000 in the first quarter of 2020 and had gross receipts of $30,000 in the fourth quarter of 2020demonstrating a reduction of 40 percent from the applicant's gross receipts during the first quarter in 2020). (2) What do lenders have to do in terms of loan underwriting? This good cause justification also supports waiver of the 60-day delayed effective date for major rules under the Congressional Review Act at 5 U.S.C. documents in the last year, by the Federal Aviation Administration The biggest difference between the First Draw and Second Draw PPP option is the eligibility and some of the terms. the current document as it appeared on Public Inspection on Paragraph 7(a)(37)(A)(iv)(III)(cc) of the Small Business Act. The Second Draw PPP Loan is limited to the lesser of 2.5 times your average monthly payroll or $2,000,000. All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer's request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts. on SBA will set aside available appropriations to fund Second Draw PPP Loans applied for by unresolved borrowers in the event they are approved. on (iii) For an eligible nonprofit organization, a veterans organization, an eligible nonprofit news organization, an eligible 501(c)(6) organization, or eligible destination marketing organization, gross receipts means gross receipts within the meaning of section 6033 of the Internal Revenue Code of 1986. (1) A lender approved to make First Draw PPP Loans may make Second Draw PPP Loans under the same terms and conditions applicable to First Draw PPP Loans, including all requirements under sections (C) and (D) of the Consolidated First Draw PPP IFR, except as otherwise provided in this section. Such analysis must address the consideration of regulatory options that would lessen the economic effect of the rule on small entities. (A) Operates as a sole proprietorship or as an independent contractor, or is an eligible self-employed individual; (B) reports farm income or expenses on a Schedule F (IRS Form 1040); and. on Procedures for Addressing Unresolved Issues on Borrower First Draw PPP Loans CONTROL NO. On April 6, 2021, the FAQs were further updated. All loans will be processed by all lenders under delegated authority and lenders will be permitted to rely on certifications of the borrower to determine the borrower's eligibility and use of loan proceeds. A partnership must also include its IRS Form 1065 K-1s. 801 et seq.) (1) In general, the maximum loan amount for a Second Draw PPP Loan is equal to the lesser of two and half months of the borrower's average monthly payroll costs or $2 million, except as otherwise specified in this subsection (e). (7) The maximum amount of a Second Draw PPP Loan to a borrower that has income from self-employment and files a Form 1040, Schedule C, is calculated as follows, depending on whether the borrower has employees: (i) For a borrower that has income from self-employment and does not have any employees, the maximum loan amount is the lesser of: (1) The net profit of the borrower in 2019 or 2020, as reported on IRS Form 1040 Schedule C, that is not more than $100,000, divided by 12; and. Unlike First Draw PPP Loans, the Economic Aid Act provides that the relevant time period for calculating a borrower's payroll costs for a Second Draw PPP Loan is either the twelve-month period prior to when the loan is made or calendar year 2019. Subsection (d)(2) implements these revised affiliation waivers. On December 27, 2020, President Trump signed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act) (Pub. This rule is necessary to implement the Economic Aid Act in order to provide economic relief to small businesses nationwide adversely impacted under the COVID-19 Emergency Declaration. Section 317 of the Economic Aid Act modified this provision for Second Draw PPP Loans by reducing the limit on employees per physical location to 300. Eligible employers can claim a tax credit equal to 50% of qualifying wages (defined as wages plus the cost of employer-provided healthcare up to $10,000 per employee) paid between March 13, 2020, and December 31, 2020. Such documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, quarterly financial statements or bank statements. These methodologies have been adjusted to eliminate the provision for refinancing of an EIDL loan, which does not apply to Second Draw PPP loans and to apply the choice of time period for calculating payroll costs, consistent with other Second Draw PPP loans. The Second Edition of this best-selling introduction for practitioners uses new (2)(i) Gross receipts includes all revenue in whatever form received or accrued (in accordance with the entity's accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. (ii) Each lender's underwriting obligation under the Second Draw PPP is limited to the items above and reviewing the Paycheck Protection Program Second Draw Borrower Application Form (SBA Form 2483-SD) or lender's equivalent form. In addition, for a Second Draw PPP Loan greater than $150,000, the lender must confirm the dollar amount and percentage of the borrower's revenue reduction by performing a good faith review, in a reasonable time, of the borrower's calculations and supporting documents concerning the borrower's revenue reduction. (4) Any business concern, or any station which broadcasts pursuant to a license granted by the Federal Communications Commission under title III of the Communications Act of 1934 (47 U.S.C. However, if a borrower sold a segregable division during 2020, the gross receipts will continue to include the receipts of the division that was sold. 04/17/2023, 272 Document page views are updated periodically throughout the day and are cumulative counts for this document. that: (i) Previously received a First Draw PPP loan in accordance with the eligibility criteria in the Consolidated First Draw PPP IFR; (ii) has used, or will use, the full amount of its First Draw PPP Loan (including the amount of any increase on such First Draw PPP Loan) on authorized uses under subsection (B)(11) of the Consolidated First Draw PPP IFR on or before the expected date on which the Second Draw PPP Loan will be disbursed;[34], (iii) employs not more than 300 employees, unless it satisfies the alternative criteria for businesses with a North American Industry Classification System (NAICS) code beginning with 72 and eligible news organizations with more than one physical location described in subsection (c)(3) or (c)(4) of this section; and. partnerships between a public agency and one or several private firms, was excluded. 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