CARES Act

PPP Updates

Important Updated Documents:

First-draw Application Form
Second-draw Application Form
First-draw Schedule C gross income Form
Second-draw Schedule C gross income Form

Second Draw PPP Loan Details

UPDATE: 01/09/2021

The SBA released the Second Draw PPP Borrower application earlier this morning. Please review the application and related instructions for completion. The SBA has stated that the portal for application submission may open on Wednesday, January 13th or shortly thereafter for community banks such as Premier Bank.

We encourage each eligible borrower to consult with your original PPP lender at Premier Bank and your accountant for further assistance in completing the Second Draw application. For further information on the Second Draw Payment Protection Program please reference the SBA website and the communication below regarding second round PPP. (which was also emailed on January 8, 2021.)

The SBA continues to define and clarify program rules and eligibility requirements. Premier Bank will provide further information as it becomes available.

Second Draw Borrower Application

Interim final rule on second-draw PPP loans

UPDATE: 01/08/2021

The SBA recently provided preliminary information related to an additional economic aid program labeled the “Paycheck Protection Program Second Draw Loan”. Similar to the “First Draw PPP Loans, the Second Draw Program is intended to provide financial relief to small businesses all over the country (less than 300 employees).

The key differences between First Draw PPP Loans and Second Draw PPP Loans are described in the most recent 42-page interim financial ruling provided by the SBA. Please reference this interim financial ruling for all PPP eligibility requirements.

Main elements for eligibility related to the Paycheck Protection Program Second Draw Loan are summarized below:

Borrower must have been in business prior to February 15, 2020
Borrower must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019 (see below for further details*).
Borrower must have already received and spent 100% of the funds from their first Payment Protection Program Loan on eligible expenses.
Borrower must be in compliance with all requirements related to their first PPP Loan
Borrower must have less than 300 employees
Other requirements for eligibility may exist and all information is subject to change by the SBA or the United States Treasury.
All loans will be processed by lenders under delegated SBA authority and lenders will be permitted to rely on certifications from the borrower to determine the borrower’s eligibility and use of loan proceeds.

Additional details within the PPP Second Draw Loan program include the following:

Maximum loan amount is the lesser of $2 million or 2.5 times the borrower’s average monthly payroll costs.
This figure increases to 3.5 times the borrower’s average monthly payroll costs for borrowers assigned NAICS codes beginning with 72 at the time of disbursement.
No collateral will be required
No personal guarantees will be required
The interest rate will be 1%
Loan maturity of up to five years

*The Economic Aid Act provides that, to be eligible for a Second Draw PPP Loan, the borrower must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019. 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.

For example, a borrower with gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020 has experienced a revenue reduction of 40% between the quarters and is therefore eligible for a Second Draw PPP Loan (assuming all other eligibility criteria are met).

The SBA has not provided an application for the Second Draw PPP Loans as of yet, nor has it opened a portal for submission of any applications. Premier Bank is providing the information above for reference purposes and would like each potential borrower to be prepared when the final PPP application is provided. Please consult with your accountant as soon as possible if you are unsure about the eligibility requirement concerning a 25% revenue reduction in 2020 vs. 2019. Funds for this program are limited therefore any applicable financial data should be collected quickly in anticipation of the SBA releasing a final Second Draw PPP Loan application.

SBA Streamlines PPP Forgiveness for Loans of $50,000 and Under

The Small Business Administration last night released a much-anticipated, streamlined loan forgiveness application for Paycheck Protection Program loans totaling $50,000 or less. While eligible loans account for just 9% of overall PPP loan dollars, they amount to about two-thirds of all PPP loans.

The two-page forgiveness application, Form 3508S, includes certifications from the borrower but does not require calculations to be submitted with the application. Applicants must submit documentation verifying forgivable payroll and non-payroll expenses. Borrowers are required to retain the documentation supporting their certifications for six years, but do not need to submit it.

Once the application is received, the lender must confirm that it received the borrower’s certifications and documentation. “Providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower,” SBA said in an interim final rule, reiterating previous guidance that “lenders may rely on borrower representations. . . . [T]he lender does not need to independently verify the borrower’s reported information if the borrower submits documentation supporting its request for loan forgiveness and attests that it accurately verified the payments for eligible costs.”

Loan Forgiveness and Instructions 3508S. (for borrowers with balances under $150,000)

PPP Key Updates & Loan Forgiveness

Loan Forgiveness

In June 2020, several significant changes were made to the SBA’s Paycheck Protection Program (PPP). Here are the key changes we wanted you to know about:

The SBA rolled-out new forgiveness applications incorporating recent amendments made by the SBA, including, the introduction of an EZ application. Borrowers can follow the EZ Instructions and Application if they meet one the following requirements:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
Borrowers that do not qualify for the EZ application, can use the updated Form and Instructions.
Your business now has 24 weeks to spend PPP loan funds (up from the original 8 week period). Importantly, you are still allowed to use the original 8-week period if you prefer for your forgiveness application.
- Salary, wages and tips in excess of $100,000 of annualized pay per employee for:
  - 24 weeks is a maximum of $46,514 per individual.
  - 8 weeks is unchanged at a maximum of $15,385 per individual.
- Owner compensation replacement:
  - When using a 24 week covered period, the replacement amount is limited to 2.5 months (2.5/12) of 2019 net profit up to $20,833.
  - When using an 8 week covered period, the compensation replacement amount is unchanged at a limit of 8 weeks (8/52) of 2019 net profit up to $15,385.

The bank has 60 days to review all completed forgiveness applications prior to making any type of decision on final PPP loan forgiveness. We expect the SBA will continue to release further guidance and updates that we will continue to communicate to you. At this time, there is no urgency to apply for forgiveness as a process for banks to submit the forgiveness applications has not been established by the SBA.

Additional information about the CARES Act and Paycheck Protection Program is available from the US Department of the Treasury and US Small Business Administration (SBA).

On June 10, 2020, the SBA and US Treasury publish guidance for Paycheck Protection Program Flexibility Act. Read the Interim Final Rule.
On June 5, 2020, the Paycheck Protection Program Flexibility Act was signed by President Trump and became law. Read the act here: Paycheck Protection Program Flexibility Act.

(Original Information)
Paycheck Protection Program (PPP)
A provision designed to provide direct assistance to small businesses is the “Paycheck Protection Program”. This program provides $349 billion for expedited individual loans through approved lenders that are guaranteed 100 percent by the U.S. government through the Small Business Administration. The loan proceeds can be used to cover payroll costs, such as employee salaries, paid sick or medical leave, insurance premiums, and mortgage, rent, and utility payments incurred from February 15, 2020, through June 30, 2020.

To apply for this program with Premier Bank, please review the steps below.

We are currently accepting applications for the SBA PPP for Premier Bank customers.
Contact your Business Banker or Commercial Lender. If you and your banker agree a PPP loan is right for your business, we can get you started with the app, which you will then send back to us to process with the SBA on your behalf.
Read the PPP Borrower Fact Sheet.
Gather your payroll information. Note: If you use a payroll processor, they may have the resources you need readily available to help.
Complete the Application and save: Borrower Paycheck Protection Program Application (deadline 06/30/2020)
Send the saved application back to your banker (via email or fax provided) for review and submission to SBA.

Loan Terms

The maximum amount of a loan equals 2.5 months of regular payroll expenses or net earnings from self-employment (subject to a cap of $100,000 of annual salary per employee). Borrower and lender fees are waived. Collateral and personal guarantee requirements are waived. The maximum interest rate is four percent and loan maturity can be as long as 10 years. No prepayment fees will be charged. Loan payments can be deferred for 6-12 months.

Eligibility

Generally, any business with fewer than 500 employees is eligible if it was operational on February 15, 2020, and had employees for whom it paid salaries and payroll taxes, or had paid a worker classified as an independent contractor. Nonprofits also are eligible.

Prepared by the US Chamber of Commerce

The following is the US Chamber of Commerce Coronavirus Emergency Loans Small Business Guide and Checklist for more detailed information:

Small Business Guide & Checklist

All Covid-19 Response Updates

All Updates