The Small Business Administration and the US Treasury released the borrower’s loan application forms on Friday night to restart the Pay Check Protection Program (PPP), which will be launched on Monday, initially for some creditors and debtors before a wider opening takes place a few days later
The forms are: Form 2483 – Payment check protection borrower’s registration form and Form 2483-SD – PPP second draw policyholder registration form. Form 2483 is updated from previous iterations that started with the original PPP program. Form 2483-SD is a new form for eligible PPP borrowers to seek a second drawing of a forgivable loan while trying to navigate the rough economic seas in the midst of the COVID-19 pandemic.
The SBA and the Treasury also published first-line summaries of first and second draw PPP loans and a pair of procedural notices.
The document was released after the SBA and the Treasury announced on Friday that the $ 284 billion application window for forgivable PPP loans would reopen on Monday initially for community financial institutions (CFIs) serving companies belonging to minorities and women to make loans. Specifically, CFIs can start making loans to the first PPP borrowers on Monday and to the second PPP borrowers on Wednesday.
The SBA and the Treasury said the PPP would be open to all creditors a few days after opening for CFIs, but did not specify a date.
Congress revived the PPP as part of the $ 900 billion COVID-19 relief bill that was signed on December 27. The original PPP provided $ 525 billion in forgivable loans in five months before it stopped accepting applications in August. The new PPP has $ 284.5 billion available, including $ 35 billion for first loans and $ 15 billion reserved for community financial institutions.
The SBA and the Treasury issued guidelines on Wednesday night for the new PPP, which shares many of the same rules as the old PPP, but also has some significant differences. The guidance came in the form of three documents:
- An 82-page interim final rule (IFR) called “Temporary changes to the commercial loan program; Paycheck protection program as amended by the Economic Aid Act ”, which consolidates eight months of rules launched for forgiving PPP loans for first-time borrowers and incorporates changes made by the Economic Aid Act to Small Businesses, Organizations Non-Profit and Local, PL 116 -260.
- A 42-page IFR called “Temporary changes to the commercial loan program; Second Draw Loans Salary Protection Program ”, which establishes guidelines for new PPP loans for companies that have already received a PPP loan.
- A three-page document called “Guidance on access to capital for minority, underprivileged, veteran and women-owned business interests”, which includes the SBA’s commitment to making at least the first two days of the PPP registration window open exclusively to applications from community financial institutions.
PPP borrower application forms at a glance
The PPP borrower’s registration forms released on Friday contain instructions on how to calculate payroll costs according to the guidance provided on Wednesday. In general, first and second time PPP borrowers can receive a loan amount of up to 2.5 times their average monthly payroll costs (with an annualized $ 100,000 per employee limit) in 2019, 2020 or the year prior to the loan. PPP borrowers with North American Industry Classification System (NAICS) codes beginning with 72 (such as hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs on second lottery loans.
The forms also describe adjustments to the calculations for seasonal businesses, new businesses, farmers and ranchers and partnerships.
The maximum loan amount is $ 10 million for the first borrowers and $ 2 million for the second PPP borrowers.
PPP borrowers may have their first and second withdrawal loans forgiven if funds are used for the following eligible costs: payroll, rent, interest on covered mortgages and utilities, covered worker protection and facility modification expenses , covered property damage costs, covered payments to suppliers, and payments for commercial software or cloud computing services that facilitate business operations, delivery of products or services, and a range of back-office functions, including accounting.
To be eligible for full loan forgiveness, PPP borrowers must spend at least 60% of the payroll funds during a covered period of their choice between eight and 24 weeks.
PPP loans for the first time are available to borrowers who were in operation on February 15, 2020 and are from one of the following groups:
- Companies with 500 employees or less who are eligible for other SBA 7 (a) loans.
- Individual owners, independent contractors and qualified self-employed individuals.
- Non-profit, including churches.
- Accommodation and food operations with NAICS codes from 72, with less than 500 employees per physical location.
- Sec. 501 (c) (6) business leagues, such as chambers of commerce, visitor agencies, etc., and “destination marketing organizations” that have 300 employees or less and receive no more than 15% of lobbying revenues . Lobbying activities must not comprise more than 15% of the organization’s total activities and cost no more than $ 1 million during the most recent fiscal year that ended before February 15, 2020. Sports leagues are not eligible.
- News organizations that are majority owned or controlled by a NAICS code 511110 or 5151 non-profit public broadcasters or companies with a trade or business under the code NAICS 511110 or 5151. The size limit for this category is not greater than 500 employees per location.
Borrowers are eligible for a second draw PPP loan of up to $ 2 million, provided they have:
- 300 or less employees.
- Used or will use the full amount of your first PPP loan on or before the scheduled date for the second PPP loan to be disbursed to the borrower. The IFR also clarifies that the borrower must have spent the full amount of the first PPP loan with eligible expenses.
- You experienced a revenue reduction of 25% or more in all or part of 2020 compared to all or part of 2019. This is calculated by comparing gross revenue in any quarter of 2020 with a applicable quarter in 2019, or, in an added provision in IFR, a borrower that was in operation during the four quarters of 2019 can send copies of its annual tax forms that show a reduction in annual revenues of 25% or more in 2020 compared to 2019.
AICPA experts discuss the latest news about PPP and other small business aid programs during a fortnightly virtual city hall. Webcasts, which provide CPE credit, are free of charge for AICPA members. I go to the AICPA Town Hall Series web page for more information and to register.
O AICPA paycheck protection features page it houses resources and tools produced by AICPA to help address the economic impact of coronavirus.
For more news and reports on coronavirus and how CPAs can deal with outbreak challenges, visit the JofAin coronavirus resource page or subscribe to our email alerts for the latest PPP news.
– Jeff Drew ([email protected]) it is a JofA senior editor.