ppp second draw issues

This interim final rule announces the implementation of section 311 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act). SBA, however, is proceeding under the emergency provision at Executive Order 12866 section 6(a)(3)(D) based on the need to move expeditiously to mitigate the current economic conditions arising from the COVID-19 emergency. The loan proceeds may be used to cover payroll costs, rent, interest, and utilities. Small Business Paycheck Protection Program Which Paycheck Protection Software fixed by the CARES Act, is implemented by aforementioned Small Business Administration in support from the Department off an Treasury. 1503 & 1507. 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. Like means that borrowers receiving PPP loans in the initial tranched for early- to mid-April 2020 leave got due dates beginning in July 2021. p.9. Relative to First Draw PPP loans, the Economic Aid Act adjusted the methodology for calculating a borrower's payroll costs. developer tools pages. All Second Draw PPP Loans will have the same terms regardless of lender or borrower. The PPP is now a $284 billion refundable loan offering aimed at struggling small businesses. SBA has determined that this rule will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various layers of government. Subsection (c)(2) of the IFR clarifies that this definition, which generally relates to eligible nonprofit organizations, applies only to eligible nonprofit news organizations rather than to all eligible news organizations. This clarification will help ensure program integrity by preventing a borrower from receiving a Second Draw PPP Loan if the borrower has not complied with PPP loan program requirements.[6]. Questions on the Paycheck Protection Program 7(a) Loans (First Draw PPP Loans and Second Draw PPP Loans) may be directed to the Lender Relations Specialist in the local SBA Field Office. The Economic Aid Act included a new payroll cost calculation for farmers and ranchers receiving First Draw PPP Loans. (v) For loans with a principal amount of $150,000 or less, the applicant must submit documentation sufficient to establish that the applicant experienced a reduction in revenue as provided in subsection (c)(1)(i) of this section at the time of application, on or before the date the borrower submits an application for loan forgiveness, or, if the borrower does not apply for loan forgiveness, at SBA's request. 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. See subsections (B)(4)(b) and (B)(4)(e) of the Consolidated First Draw PPP IFR. informational resource until the Administrative Committee of the Federal 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. [29] These categories of prohibited borrowers are listed in subsection (e) of the IFR: In addition, subsection (e)(9) of this IFR provides that an entity that has previously received a Second Draw PPP Loan may not receive another Second Draw PPP Loan, as required by the Economic Aid Act. For second draw loans, the bill appears to exclude from eligibility borrowers that previously qualified as a "small business concern" under the "alternative size standard" or the borrower's NAICS Code. Second Draw PPP Loans are subject to SBA's and the Department of the Treasury's (Treasury's) of the consolidated interim final rule implementing . (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. 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. No personal guarantees will be required. Notwithstanding this requirement, section 808(2) of the CRA allows agencies to dispense with the requirements of section 801 when the agency for good cause finds that such procedure would be impracticable, unnecessary, or contrary to the public interest and the rule shall take effect at such time as the agency promulgating the rule determines. For borrowers assigned a NAICS code beginning with 72 at the time of disbursement, the Economic Aid Act provides that the maximum loan amount is equal to three-and-a-half (3.5) months of payroll costs rather than two-and-a-half (2.5) months. Subsections (c)(3) and (c)(4) of the IFR implement these statutory provisions. These include but are not limited to: The SBA guaranteeing 100%. This repetition of headings to form internal navigation links For a loan of $150,000 or less where the borrower does not provide documentation of revenue reduction with its application, the lender shall perform this review when the borrower provides such documentation. On December 27, 2020, President Trump signed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act) (Pub. on FederalRegister.gov Subsection (c)(2) of the IFR defines gross receipts consistent with the definition of receipts in 13 CFR 121.104 of SBA's size regulations because this definition appropriately captures the type of income that is typically included in a small business's gross receipts. SBA guarantees 100 percent of Second Draw PPP Loans and SBA may forgive up to the full principal loan amount. (2) a business concern or entity primarily engaged in political activities or lobbying activities, as defined in section 3 of the Lobbying Disclosure Act of 1995 (2 U.S.C. provide legal notice to the public or judicial notice to the courts. electronic version on GPOs govinfo.gov. See paragraph 7(a)(37)(I)(ii) of the Small Business Act. Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans. Document page views are updated periodically throughout the day and are cumulative counts for this document. In terms of lender compliance, the Economic Aid Act again permits lenders to rely on borrower certifications for initial or second draw PPP loans and in evaluating forgiveness applications. (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. In such cases, additional documentation is not required because the lender already has the relevant documentation supporting the borrower's payroll costs. 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. and services, go to The Consolidated First Draw PPP IFR titled Business Loan Program Temporary Changes: Extension of and Changes to Paycheck Protection Program restates existing regulatory provisions to provide lenders and new PPP borrowers a single regulation to consult on borrower eligibility, lender eligibility, and loan application and origination requirements issues for new First Draw PPP loans, as well as general rules relating to First Draw PPP Loan increases and loan forgiveness. The Economic Aid Act also prohibits several additional categories of borrowers from receiving a Second Draw PPP Loan under section 7(a)(37) of the Small Business Act. (2) If the lender receives notification that the Applicant for a Second Draw PPP Loan is an unresolved borrower, the lender will not receive an SBA loan number. 35. documents in the last year, 37 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. (i) for a Second Draw PPP Loan of up to (and including) $50,000, in an amount equal to the lesser of: (A) 50 percent of the balance of the financing outstanding at the time of disbursement of the loan; or. Consistent with the Economic Aid Act, subsections (f)(3) and (f)(4) of the IFR include tailored calculation methodologies for seasonal businesses, new entities that did not exist for the full twelve-month period preceding the Second Draw PPP Loan, and borrowers assigned a NAICS code beginning with 72 at the time of disbursement. This interim final rule is being issued without advance notice and public comment because section 303 of the Economic Aid Act authorizes SBA to issue regulations to implement the Economic Aid Act without regard to notice requirements. Under section 801(3) of the CRA, a major rule takes effect 60 days after the rule is published in the Federal Register. (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). We anticipate that this rule will result in substantial benefits to small businesses, their employees, and the communities they serve. Information about this document as published in the Federal Register. 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. documents in the last year, 29 If you do go back into your application and make. The Public Inspection page Use the PDF linked in the document sidebar for the official electronic format. Let's try checking if QuickBooks is up-to-date with our latest payroll release to run the PPP Forgiveness Payroll report for the second draw loans. the material on FederalRegister.gov is accurately displayed, consistent with (C) The gross receipts of a former affiliate are not included. (8) The maximum amount of a Second Draw PPP Loan to a borrower that files taxes as a partnership is calculated as the lesser of: (A) The sum of (1) net earnings from self-employment of individual general partners in 2019 or 2020 (at the election of the borrower), as reported on IRS Form 1065 K-1, reduced by section 179 expense deduction claimed, unreimbursed partnership expenses claimed, and depletion claimed on oil and gas properties, multiplied by 0.9235,[37] (iii) If a borrower meeting the criteria in subsection (6)(i) of this section has employees, the maximum loan amount is calculated as the lesser of: (1) The sum of (i) the difference between gross income and employee payroll costs of the borrower in 2019 or 2020 (at the election of the borrower), as reported on a Schedule F (IRS Form 1040), that is not more than $100,000, divided by 12, and (ii) the average total monthly payment for employee payroll costs incurred or paid by the borrower during the same year elected by the borrower; by. 34. This treatment follows the computation of self-employment tax from IRS Form 1040 Schedule SE Section A line 4 and removes the employer share of self-employment tax, consistent with how payroll costs for employees in the partnership are determined. 1. and all PPP loan program requirements, except as specified in this IFR. documents in the last year, 881 Since most borrowers will use 2019 or 2020 the rule text refers only to 2019 or 2020 for simplicity and readability. The documents posted on this site are XML renditions of published Federal However, if a concern acquired a segregable division of another business concern during 2020, gross receipts do not include the receipts of the acquired division prior to the acquisition.

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