Software Development. 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. If a borrower has not submitted new payroll documentation with its Second Draw PPP Loan application because it previously submitted 2019 payroll information to the same lender when it applied for its First Draw PPP Loan, then the lender must confirm the borrower's average monthly payroll costs based on that prior documentation. 10. documents in the last year, 492 First-time borrowers (including newly eligible borrowers) can once again apply under the first-round program. The maximum for "second draw" PPP loans is $2 million, less than the $10 million cap for PPP's first round. For loans of $150,000 or less, Applicant will provide documentation substantiating the decline in gross receipts upon or before seeking loan forgiveness for the Second Draw Paycheck Protection Program Loan or upon SBA request. 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. If you are applying for a second draw PPP loan, you need to make sure each number and name matches the first draw loan application exactly. Second draw PPP loans now available If your business received a PPP loan in 2020 and have already exhausted that funding, you may be able to apply for second PPP loan if: Your business has fewer than 300 employees You have exhausted all funds obtained from a previous PPP loan. These applications can be for a completely "new" first draw loan or to "right size" (discussed below) their original loan. Loan forgiveness of Second Draw PPP Loans and the loan review process for Second Draw PPP Loans are generally subject to the interim final rules regarding Loan Forgiveness and SBA Loan Review Procedures and Related Borrower and Lender Responsibilities, as modified to conform to the Economic Aid Act by the Consolidated First Draw PPP IFR, which is being published concurrently with this IFR. The local SBA Field Office may be found at https://www.sba.gov/tools/local-assistance/districtoffices. Owner of The Law Office of Ren P. Moniz 2y The Administrator has concluded that a limitation of $4,000,000 is appropriate because it is proportional to the $20,000,000 maximum amount for corporate groups that is provided under the Consolidated First Draw PPP IFR when the maximum loan amount for a single PPP loan is $10,000,000. (3) SBA will pay lenders fees for processing Second Draw PPP Loans in the following amounts:Start Printed Page 3722. (ii) an authorized representative of the applicant must also certify: (A) The Applicant has realized a reduction in gross receipts in excess of 25% relative to the relevant comparison time period. Allowing borrowers to calculate payroll costs based on calendar year 2020 is also not expected to result in a significant difference in payroll costs compared to the twelve months preceding the date the loan is made because all Second Draw PPP Loans will be made in the first quarter of 2021. Comments and Immediate Effective Date, III. No collateral will be required. It was viewed 67 times while on Public Inspection. ), and inserted so as to appear after section 7 of the Small Business Act (15 U.S.C. (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. Given the short duration of this program, and the urgent need to issue loans quickly, the Administrator in consultation with the Secretary has determined that it is impractical and not in the public interest to provide a 30-day delayed effective date. 14. Uses of your new Second Draw PPP Loan: The SBA has expanded the uses for a Second Draw PPP Loan, beyond the simple payment of your monthly "owner profit." However, at least 60% of the new Second Draw PPP Loan must be used to pay your owner profit each month and cannot be more than $8,333/month or $100,000/year. in terms of organisations or incentives for innovation (Walker, 1994). documents in the last year, 1489 should verify the contents of the documents against a final, official 636(a)(36); Coronavirus Aid, Relief, and Economic Security Act, Pub. to formulate solutions to problems. Each document posted on the site includes a link to the 1503 & 1507. 801 et seq.) (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. 29. The PPP is now a $284 billion refundable loan offering aimed at struggling small businesses. The Administrator, in consultation with the Secretary, has determined that this methodology is necessary to provide small businesses in the accommodation and food services sector the full amount of relief provided in the Economic Aid Act while allowing these borrowers to calculate their average monthly payroll costs accurately. [30] Second draw PPP loans are intentionally narrower and smaller in terms of eligibility and amount. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish the applicant was in operation on February 15, 2020. Subsection (i) of the IFR establishes procedures relating to the handling of a Second Draw PPP Loan application by a borrower whose First Draw PPP Loan is under review by SBA (unresolved borrower). 301 et seq.) This IFR clarifies that the same general calculation for farmers and ranchers applicable to First Draw PPP Loans applies to Second Draw PPP Loans, with adjustments that (i) eliminate the provision for refinancing of an Economic Injury Disaster Loan (EIDL), which does not apply to Second Draw PPP Loans, and (ii) apply the choice of time period for calculating a farmer's or rancher's payroll costs for Second Draw PPP Loans, consistent with other Second Draw PPP Loans. Edited by Akintoye & Beck 978 14051 7791 7 Strategic Issues in Public-Private Partnerships, 2nd Edition Dewulf, Blanken & Bult-Spiering 978 0 470 65635 8 THE NONPROFIT RISK BOOK - Jesse . This table of contents is a navigational tool, processed from the More information and documentation can be found in our As described in SBA's interim final rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities, SBA may review any PPP loan, as the Administrator deems appropriate. 808(2). and services, go to (1) If a First Draw PPP Loan is under review pursuant to PPP rules and/or information in SBA's possession indicates that the borrower may have been ineligible for the First Draw PPP Loan it received or for the loan amount received by the borrower, the lender will receive notification from SBA when the lender submits an application for guaranty of a Second Draw PPP Loan (unresolved borrower). In order to be eligible, businesses must be able to demonstrate that they experienced a 25 percent reduction in gross receipts in a 2020 calendar quarter compared to the same quarter in 2019. Loans of $150,000 or less account for 93% of outstanding PPP loans, the SBA said. Accordingly, subsections (c)(1)(i) through (c)(1)(iv) of this IFR implement these criteria. (C) a warrant or right, other than a right to convert, to purchase, sell, or subscribe to a share or interest described in (A) or (B), respectively; (iii) Executive department has the meaning given the term in section 101 of title 5, United States Code; (iv) Member of Congress means a Member of the Senate or House of Representatives, a Delegate to the House of Representatives, and the Resident Commissioner from Puerto Rico; and. All Second Draw PPP Loans will have the same terms regardless of lender or borrower. 35), and the Regulatory Flexibility Act (, Paperwork Reduction Act, 44 U.S.C. [29] documents in the last year, 438 Subsection (c)(2) of the IFR generally defines gross receipts to include 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. If you wish to submit confidential business information (CBI) as defined in the User Notice at www.regulations.gov,, please send an email to ppp-ifr@sba.gov. Given the short duration of this program, and the urgent need to issue loans quickly, the Administrator in consultation with the Secretary has determined that it is impractical and not in the public interest to provide a delayed effective date. Economic Aid Act Provides Second Draw PPP Loans, Jan. 15, 2021 SBA to Require PPP Borrowers of $2 Million-Plus to Complete Loan Necessity Questionnaires, November 24, 2020 SBA Issues Much-Anticipated Guidance Regarding Changes of Ownership in PPP Loans, October 8, 2020 18. for guidance on these standards for business concerns with more than one physical location, except that, for Second Draw PPP Loans, the number of employees per physical location is limited to 300 rather than 500. See PPP FAQ #24 (posted April 13, 2020), available at https://www.sba.gov/sites/default/files/2020-12/Final%20PPP%20FAQs%20%28December%209%202020%29-508.pdf. This document has been published in the Federal Register. See generally section (B)(2) of the Consolidated First Draw PPP IFR. Moreover, this approach is appropriate because, if annual filings show a 25 percent revenue reduction, then at least one quarter in 2020 would have had at least a 25 percent revenue reduction. Section 339 of the Economic Aid Act added calculated on a non-compounding, non-adjustable basis to the maximum interest rate for a PPP loan. 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. In addition, the SBA has addressed some issues in their guidance. L. 116-260) into law to provide continued assistance to individuals and businesses that have been financially impacted by the ongoing coronavirus pandemic. The Small Business Administration ("SBA") and the Department of the Treasury have begun releasing guidance for the reopened Paycheck Protection Program ("PPP") for "First Draw" PPP loans and for the new "Second Draw" PPP loans, both provided for under the recently enacted COVID 19 relief package (the "Act").This alert summarizes the SBA's top-line overview of the First and . 34. documents in the last year. Subsection (j) contains forgiveness provisions specific to Second Draw PPP loans. The second draw loan program, which closes March 31, 2021, contains stricter eligibility requirements and a lower loan limit, but it retains many of the original terms and conditions of the PPP program. If a borrower's First Draw PPP loan is under review by SBA and/or information in SBA's possession indicates that the borrower may have been ineligible for the First Start Printed Page 3717Draw PPP Loan it received or for the loan amount it received, the lender will receive notification from SBA when the lender submits an application for a guaranty of a Second Draw PPP Loan and will not receive an SBA loan number until the issue related to the unresolved borrower's First Draw PPP Loan is resolved. Borrowers may consult PPP Frequently Asked Question (FAQ) 24[15] (iv) For loans with a principal amount greater than $150,000, documentation sufficient to establish that the applicant experienced a reduction in revenue, as provided in subsection(c)(1)(iv), must be Start Printed Page 3721provided at the time of application, which may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicant's quarterly income statements or bank statements. (j) Are Second Draw PPP Loans eligible for loan forgiveness? However, we lack data to estimate the effects of this rule. Subsection (g) of this IFR contains the provisions specific to lenders for Second Draw PPP Loans. A borrower must calculate this revenue reduction by comparing the borrower's quarterly gross receipts for one quarter in 2020 with the borrower's gross receipts for the corresponding quarter of 2019. (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. [4] This provision will allow a borrower to provide annual tax return forms to substantiate its revenue reduction. Key insights. 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. 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