2021 Second Draw PPP Loan Information

March 11, 2021

With the Paycheck Protection Program (PPP) scheduled to end on March 31, 2021, House Small Business Committee leaders late yesterday reached a bipartisan agreement to extend the PPP through June 30, 2021. New applications will be accepted by SBA for an additional 60 days until May 31, 2021, after which the remaining 30 days will be used to process any outstanding loans that have been submitted to SBA. The House is tentatively scheduled to consider this extension under the non-controversial suspension calendar next week. Though this bipartisan deal was reached among House Committee leaders, the Senate Small Business Committee leaders have not officially agreed to the proposal and would need to request to have this measure move through the Senate on unanimous consent, which requires agreement from all 100 senators to proceed quickly. The ABA continues to work with key Congressional stakeholders to advance the PPP extension.

 

March 6, 2021

This is ONLY for businesses that report their business income on Schedule C on their tax return. Those businesses that have already received their loan funds are not eligible for an increase to their loan.

On Thursday, March 4, the SBA published changes to the PPP loan application process to increase access, availability, and loan amounts, especially for small businesses that are Schedule C tax return filers. These changes include a new loan application form for all applicants.

We have had to pause loan processing until our programmers can update our loan application system to reflect these changes. Our programmers are working on the changes this weekend and expect to have the new rules and new SBA forms integrated with our loan application system sometime on Wednesday, March 10.

We assume many of you will want to amend your application under the new rules for an expanded loan amount. For that reason, we will be putting all in-process applications in ‘Borrower Correction’ status so that you can make any changes you would like. Once you make your changes and resubmit, we will process and get over to the SBA as quickly as possible. (If you have no changes, just sign in and resubmit as is – the loan flow will populate into the new SBA application form that is now required by the SBA.)

NOTE: This is what we EXPECT to happen after the programming changes are made to implement the SBA's new applications and rules. This is SUBJECT TO CHANGE. We will provide additional updates once we have clarity. At worst, you will be required to resubmit your loan application.

CALCULATING YOUR NEW LOAN AMOUNT BASED ON 3/4/2021 RULE CHANGES*

*Not available for loans already closed and funded.

The new loan amount for Schedule C filers that have no employees can be calculated using your gross income reported on line 7 of Schedule C (to a maximum of $100,000.00). Your owner monthly payroll would then be $8,333.33 or 1/12 of the amount on line 7 – whichever is less. The maximum forgivable PPP loan amount would be $20,833.33 or 2.5 times that amount. You must upload the copy of your Schedule C tax return and the other documents noted below.

For Schedule C filers that have employees, you need to do the following calculations:

1.) Owner monthly payroll is calculated using gross income reported on Schedule C, line 7, minus the expenses reported on line 14, 19, and 26 of Schedule C. You will then divide by 12 for the monthly amount, which cannot exceed $8,333.33.

2.) You will get your employee payroll amounts from either the 2019 or 2020 IRS Form 941 for each quarter of the year, plus the cost for any healthcare, pension, or other employee benefit that you, as the owner, pay on their behalf. Divide the annual totals by 12 for monthly employee payroll costs.

Add both amounts together in your loan application for the monthly payroll, which will be multiplied by 2.5 to calculate your forgivable PPP loan amount. You will need to upload the Schedule C from your tax return, each of the IRS Form 941 quarterly reports, and any invoices for benefit costs that you are including in your loan amount calculation for us to submit with your application.

Reminder: All applicants are required to provide evidence that they were in business on February 15, 2020, which could be a checking account statement with activity, a certificate of good standing, a paystub, or an invoice demonstrating that you were in operation at the time of the pandemic shutdowns.

For some helpful video tutorials on the subject, please use the following links:

Borrower Tutorial Video - 3508EZ

Borrower Tutorial Video - 3508S

 

March 4, 2021

The Small Business Administration (SBA) issued an interim final rule (IFR) implementing recent changes to the Paycheck Protection Program. The IFR allows individuals who file an IRS Form 1040, Schedule C to calculate their maximum loan amount using gross income. The SBA has issued updated forms for borrowers and lenders reflecting these changes and step-by-step loan amount calculations.

The IFR also stated that this calculation change will apply only to loans approved after the rule’s effective date. Borrowers that have already had their loans approved cannot increase their PPP loan amount based on the new maximum loan formula.

The IFR removes a restriction on business at least 20% owned by an individual who was arrested for or convicted of a felony related to financial assistance fraud in the previous five years or any other felony within the previous year from obtaining PPP loans. It also removes a restriction on businesses at least 20% owned by an individual who is delinquent on student loan from receiving PPP loans.

Read the IFR

 

February 23, 2021

The White House has announced that it is providing an exclusive 14-day window, from Wednesday, February 24, 2021 to Wednesday, March 10, 2021, for businesses and non-profits with fewer than 20 employees to apply for a PPP Loan. During this 14-day window, SBA will reject any new applications from borrowers that have 20 or more employees. Once the exclusivity period ends, the SBA will accept PPP loan applications from all eligible businesses and nonprofits again.

 

January 19, 2021

How to Calculate Revenue Reduction and Maximum Loan Amounts Including What Documentation to Provide

 

January 15, 2021

Pro tips for when you apply for your loan – we're all learning as we go!

  • Make sure you enter your physical address in first address line and your PO Box information in the second address line because you can’t operate a business in a box.
  • There is no need to purchase a certificate of legal existence. Simply go to the Secretary of State's website, do an inquiry, and take a screenshot of your certificate to upload to the portal.
  • The Lenders Cooperative Platform is infinitely better when using Google Chrome or Microsoft Edge.
  • Internet Explorer (IE) is really not supported by Microsoft and the performance is very unreliable. Borrowers or Lenders accessing the Platform using the IE Browser will most likely have an inconsistent experience.

 

January 14, 2021

Reading Cooperative Bank is pleased to participate in the new Paycheck Protection Loan Program which allows for Second Draw PPP loans.

To be eligible for a second PPP forgivable loan, your business must have experienced a reduction in Gross Receipts by 25% or more in 2020 as compared to your gross receipts in 2019. If you have never received a PPP loan, you are also able to apply for your first PPP loan.

If you are ready to apply, please click here and advance to our online portal.

Si solicitó a través de MCCI y necesitas servicios de traducción, contáctelos directamente para ayudarlo.

Please know that this automated system will generate email responses from support@lenderscooperative.com and reference the Affiliate Capital Loan Trading Platform. As always, Reading Cooperative Bank employees are here to help!

Things you should know before applying:

At 9am on Friday, January 15th, the SBA will begin accepting PPP loan applications from community banks. The Reading Cooperative Bank applicant portal will be ready to accept applications at this time.  

This PPP round (for first draw or second draw PPP loans) ends on either March 31, 2021 or on whichever date the funds have been exhausted prior to March 31, 2021.

Documents you will need handy to complete the application:

  • Primary identification, including Driver’s License, State Issued ID, or Passport.
  • Most recent tax returns for 2019 and management prepared financials for 2020.
  • Bank statements or other evidence that you were in business on February 15, 2020. 
  • Documentation sufficient to demonstrate the qualifying payroll amount might include:
  1. Payroll Processor Records
  2. Form 941 for 2019 or 2020
  3. Tax returns
  4. Schedule C for a contractor or sole proprietor
  5. Form 1099-MISC

For loans greater than $150,000, you will need to provide documents demonstrating that your gross receipts declined by 25% or more from 2019 to 2020:

  • It is acceptable to provide a single matching quarter comparison showing that your gross receipts reduced 25% or more to qualify.
  • You can provide year-over-year comparisons.
  • To Qualify for 100% forgiveness, the annual reduction in gross receipts must be 25% or greater.

There is a video you can view in advance of applying that will help you prepare.

Highlights of Second Round PPP Funding Under the Consolidated Appropriations Act, 2021:

  • Second-draw loans will be available for borrowers with 300 or fewer employees, that saw a 25% or greater revenue decline in 2020 compared to 2019 and that have used the full amount of their first-draw PPP loan.
  • The maximum draw will be $2 million with an aggregate of $10 million when combining the first draw with the second draw.
  • You can apply if you are a business, independent contractor, eligible self-employed individual, sole proprietor, non-profit, veteran’s association, tribal business, housing cooperative, AG cooperative, 501c (6), destination marketing organization, or nonprofit news organization.
  • Borrowers that have not received a PPP loan can apply for their first PPP loan.
  • PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs.
  • Businesses that are permanently closed are not eligible for a PPP loan.
  • The SBA requires that your business must have been in operation on February 15, 2020 to be eligible.
  • If the applicant or the owner of the applicant is the debtor in a bankruptcy proceeding, either at the time it submits the application or at any time before the loan is disbursed, the applicant is ineligible to receive a PPP loan.
  • If the applicant has defaulted on a loan guaranteed by the US Small Business Administration, they are ineligible to receive a PPP loan.

The following terms and conditions are the same for both First Draw and Second Draw PPP Loans:

  • Rate is 1.00%.
  • Maximum Term is 5 years.
  • Loan to business, no personal guaranty.
  • SBA guaranty is 100%.
  • All FAQ’s from the original round of PPP loans apply here except as otherwise stated below.

Differing eligibility for Second Draw PPP funding:

  • Must have fewer than 300 employees.
  • Must have had a revenue reduction of 25% or greater in 2020 as compared to 2019
  • 2.5X monthly average payroll costs; 3.5x for businesses with a NAICS code starting with 72 (i.e. restaurants or related).
  • New borrowers can use 2019 or 2020 annual payroll expense for purposes of calculating their maximum loan amount.
  • To apply for a second draw PPP loan, applicant must have received a first PPP loan and used all the funds for eligible expenses prior to receiving a second draw loan.
  • Businesses that have not used all the funds from their initial PPP loan can apply, but the loan will not be funded until after they use all the funds from the first round.

Please contact us with any questions by calling 781.942.5000, emailing commercialloans@readingcoop.com, or by using the messaging feature within the online application portal.

The current approval timeline from the SBA is 3-5 business days after application submission. You will hear from us at that time.

Click Here to Start Your Application

What to expect once you have submitted your loan:

We will review your entire application to make sure that your submission is complete and that you have included all the appropriate documents. If there are any problems or discrepancies, we will send you an email or call you with instructions.

Once the application has been reviewed (and any problems corrected), we will automatically create the SBA 2483/2483SD application form required for PPP Loan applications that includes all your loan information and send this document to you electronically for your final review and electronic signature.

Once signed, we will prepare and transmit your request to the SBA automatically. The SBA will then review and decide on your loan request - they have indicated that the turnaround time will be 3 days.

Upon approval by the SBA, we will prepare your loan closing documents for you for final review and electronic signature. Disbursement of the approved loan amount will take place after we review your signed loan closing documents.

What if I realize that I made a mistake?

Contact your banker or the bank directly. They can unlock the application, which allows you to make changes and resubmit it. If the application has already been accepted by the SBA, it may be too late to affect any changes. Your lender will be able to check on the status of your application for you.

Helpful Documents:

Top Line Overview of Second Draw PPP

Ask the Regulators Presentation 

 

Updated January 11, 2021

We would like to remind those of you who have exhausted your PPP funds and who haven't yet applied for loan forgiveness to please do so by visiting our PPP Forgiveness Application Portal and uploading all of the necessary documentation to the site.

If you would prefer to use a visual guide, we have step-by-step instructions for you to follow as you complete the application process.

And if you haven't yet heard, a new round of PPP has been authorized! We have just begun receiving guidance from the Treasury Department and are awaiting more specific details from the SBA. We will share that with you as soon as we have it.

We are currently in the process of finalizing an automated platform for the third round of PPP loans to make things easier for you to apply and automate the delivery to the SBA.

What we know so far:

There have been over 100 pages of PPP rules already released. We will be sifting through the data as we prepare to launch our application portal later this month. The 100 pages of PPP guidance can be read using the following links:

We will be in touch as soon as new information becomes available.