The bill, signed into law on Dec. 27, includes a total of $284.5 billion for PPP loans. The same affiliation rules that apply to First Draw PPP Loans apply to Second Draw PPP Loans, except as provided in this IFR. By Adam Sweet, J.D., LL.M. 6. rendition of the daily Federal Register on FederalRegister.gov does not This provision will allow a borrower to provide annual tax return forms to substantiate its revenue reduction. Fund can plus be used to pay interest on mortgages, rent, press utilities . The loan amounts received by borrowers for First Draw PPP Loans and Second Draw PPP Loans will not be aggregated. This document has been published in the Federal Register. The Economic Aid Act included a new payroll cost calculation for farmers and ranchers receiving First Draw PPP Loans. Chapter 35, https://www.federalregister.gov/d/2021-00452, MODS: Government Publishing Office metadata, https://www.sba.gov/tools/local-assistance/districtoffices, section 101 of title 5, United States Code, https://www.sba.gov/sites/default/files/2020-12/Final%20PPP%20FAQs%20%28December%209%202020%29-508.pdf. 605(b). (iv) The amount of any forgiven First Draw PPP Loan shall not be included toward any borrower's gross receipts. (3) On the Second Draw PPP Loan borrower application, an authorized representative of the applicant[38] This PDF is Subsection (j) contains forgiveness provisions specific to Second Draw PPP loans. (E) The Applicant is not a business concern or entity primarily engaged in political or lobbying activities, including any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy or otherwise describes itself as a think tank in any public documents. that agencies use to create their documents. SBA will be revising the FAQs to conform to the Economic Aid Act as quickly as feasible. 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. In addition, section 7(a)(37)(B) provides that the Administrator may guarantee covered loans to eligible entities under the same terms, conditions, and processes as First Draw PPP Loans. 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. Such documentation 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. Section 322 of the Economic Aid Act. 20. (2) Except as otherwise provided in subsection (f)(3) through (f)(7), the maximum amount of a Second Draw PPP Loan is calculated as the lesser of: (A) The average total monthly payment for payroll costs incurred or paid by the borrower during 2019 or 2020 (at the election of the borrower); by. Except for small government jurisdictions with a population of less than 50,000, neither State nor local governments are small entities.. establishing the XML-based Federal Register as an ACFR-sanctioned The deadline of May 31, 2021 is the same for both applications. An unresolved hold issue does not prohibit a borrower from receiving a second draw loan, but it may affect the timing of a second draw funding. An applicant is not eligible for a Second Draw PPP Loan, even if it meets the eligibility requirements of subsection (c) of this section, if the applicant is: (1) Excluded from eligibility under the Consolidated First Draw PPP IFR;[35]. Excluding the forgiveness amount from a borrower's gross receipts is consistent with section 7A(i) of the Small Business Act, which expressly excludes PPP forgiveness amounts from being taxed as income. 681); and (4)(a) any business concern (including any station which broadcasts pursuant to a license granted by the Federal Communications Commission under title III of the Communications Act of 1934 (47 U.S.C. (E) Follow applicable BSA requirements (listed in subsection (C)(3)(d) of the Consolidated First Draw PPP IFR); and. Subsection (g) of this IFR contains the provisions specific to lenders for Second Draw PPP Loans. (1) In general, the maximum loan amount for a Second Draw PPP Loan is equal to the lesser of two and half months of the borrower's average monthly payroll costs or $2 million, except as otherwise specified in this subsection (e). An immediate effective date will give small businesses the maximum amount of time to apply for loans and lenders the maximum amount of time to process applications before the program ends. These applications can be for a completely "new" first draw loan or to "right size" (discussed below) their original loan. documents in the last year, 28 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. without regard for whether such a station is a concern as defined in 13 CFR 121.105, or any successor thereto) that employs not more than 500 employees, or the size standard established by the Administrator for the NAICS code applicable to the business concern, per physical location of such business concern and is majority owned or controlled by a business concern that is assigned a NAICS code beginning with 511110 or 5151; or (b) any nonprofit organization that is assigned a NAICS code beginning with 5151. 636(a)(36); Coronavirus Aid, Relief, and Economic Security Act, Pub. However, if a borrower sold a segregable division during 2020, the gross receipts will continue to include the receipts of the division that was sold. For complete information about, and access to, our official publications This aggregation applies for the entire period of measurement, not just the period after the affiliation arose. Play was stopped at the World Championship after a protester vandalised table one and a second person tried to attach themselves to table two. Register, and does not replace the official print version or the official (4) The maximum amount of a Second Draw PPP Loan to a borrower that did not exist during the 1-year period preceding February 15, 2020, but was in operation on February 15, 2020 (new entity), is calculated as the lesser of: (1) The sum of the total monthly payments by the borrower for payroll costs paid or incurred by the borrower as of the date on which the borrower applies for the Second Draw PPP Loan; by, (2) the number of months in which those payroll costs were paid or incurred; by. (j) Are Second Draw PPP Loans eligible for loan forgiveness? All references to subsections refer to section IV. This post details these changes, as explained by the recent SBA guidance. SOPHIE'S WORLD sets out to draw teenagers into the world of Socrates, Descartes, Spinoza, Hegel and all the great philosophers. 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. Second Draw PPP Loans are subject to SBA's and the Department of the Treasury's (Treasury's) See paragraph 7(a)(37)(O) of the Small Business Act. publication in the future. The Public Inspection page may also Second Draw PPP Loans generally are guaranteed by SBA under the same terms, conditions, and processes as First Draw PPP Loans. 1. A partnership must also include its IRS Form 1065 K-1s. Such documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, quarterly financial statements or bank statements. The Second Draw PPP IFR confirms that the last day to "apply for and receive" a Second Draw PPP loan is March 31, 2021. 78c(a)) (except SBA will not consider whether a news organization that is eligible under subsection (c)(4) is affiliated with an entity, which includes any entity that owns or controls such news organization, that is an issuer); (8) an entity that has previously received a Second Draw PPP Loan; or. Subsection (g) of this IFR includes the application and documentation requirements for Second Draw PPP Loans. Since this rule is exempt from notice and comment, SBA is not required to conduct a regulatory flexibility analysis. (c) Who is eligible for a Second Draw PPP Loan? and all PPP loan program requirements, except as specified in this IFR. 31. However, SBA noted that "lenders that submitted a Second Draw PPP Loan guarantee application before January 27, 2021, that was rejected due to an unresolved issue with the first draw PPP Loan, should resubmit these applications." SBA also issued procedural notices related to various provisions of the most recent COVID-19 relief law. (10) For purposes of calculating a borrower's maximum payroll costs, a borrower may multiply its average monthly payroll costs by 3.5 only if the borrower is in the Accommodation and Food Services sector and has reported a NAICS code beginning with 72 as its business activity code on its most recent IRS income tax return. In calculating a borrower's payroll costs, the borrower must subtract any compensation paid to an employee in excess of $100,000 on an annualized basis, as prorated for the time period during which the payments are made or the obligation to make the payments is incurred. documents in the last year, 655 (Emphasis added). 37. 808(2). Specifically, the RFA normally requires agencies to describe the impact of a rulemaking on small entities by providing a regulatory impact analysis. The end of PPP Millions of other borrowers are in the same position after the $292 billion allocated to the second round of PPP ran out weeks ahead of the May 31 deadline. [11] (Forgiveness not required to apply.) [8] The key differences between First Draw PPP Loans and Second Draw PPP Loans are described in this IFR, which explains the loan terms, eligibility requirements, and application process for Second Draw PPP Loans. 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. If you do go back into your application and make. While every effort has been made to ensure that 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. If the lender identifies errors in the borrower's calculation or a material lack of substantiation in the borrower's supporting documents, the lender should work with the borrower to remedy the issue. See . SBA will consider these comments and the need for making any revisions as a result of these comments. Given the number of applicants that got shut out when the program. (2) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 as defined in subsection (f)(10) at the time of disbursement, 3.5). For those careful and cautious borrowers grappling with the meaning of the necessity certification in the context of PPP2 loans, this guidance provides welcomed clarity. Paragraph 7(a)(37)(A)(iv)(III)(ee) of the Small Business Act. the Built Environment The complexity of public-private partnership (PPP) project procurement requires an effective process for pricing, managing and . The intent of the Economic Aid Act is that SBA provide relief to America's small businesses expeditiously. 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. (3) The maximum amount of a Second Draw PPP Loan to a borrower that is a seasonal employer (meaning an employer that does not operate for more than 7 months in any calendar year or that during the preceding calendar year, had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts of the employer for the other 6 months of that year) is calculated as the lesser of: (A) At the election of the borrower, the average total monthly payments for payroll costs incurred or paid by the borrower for any 12-week period between February 15, 2019 and February 15, 2020; by, (B) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 at the time of disbursement as defined in subsection (f)(10), 3.5); or. The lender may request additional documentation, however, if on further review the lender concludes that it would be useful in conducting the lender's good-faith review of the borrower's loan amount calculation. The Consolidated Appropriations Act, 2021 contained a $900 billion COVID-19 relief package that, among many other initiatives, reauthorizes and modifies the Paycheck Protection Program. Register documents. Section 317 of the Economic Aid Act modified this provision for Second Draw PPP Loans by reducing the limit on employees per physical location to 300. 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. See generally section (B)(2) of the Consolidated First Draw PPP IFR. documents in the last year, 82 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. Undersecretary of Works in Bahrain with primary focus on major infrastructure ,PPP/ affordable housing . Answer 1. Further, although military procurers . Applicability Date: This interim final rule applies to loan applications and applications for loan forgiveness submitted for Paycheck Protection Program Second Draw Loans. Businesses are eligible for a Second Draw loan if: They previously received a First Draw PPP loan. Subsection (e)(9) also prohibits an entity that has permanently closed from receiving a Second Draw PPP Loan because paragraph 7(a)(37)(A)(iv) of the Small Business Act is best understood to describe existing businesses. You may submit comments, identified by number SBA-2021-0002 through the Federal eRulemaking Portal: http://www.regulations.gov. The Economic Aid Act includes terms and conditions, including but not limited to terms relating to eligibility and a borrower's maximum loan amount, that apply only to Second Draw PPP Loans and do not apply to First Draw PPP Loans, regardless of when the First Draw PPP Loan is made. SBA guarantees 100 percent of Second Draw PPP Loans and SBA may forgive up to the full principal loan amount. 28. [4] 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]. 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. 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. Comments and Immediate Effective Date, III. (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. 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. New Documents All Second Draw PPP Loans will have the same terms regardless of lender or borrower. the Federal Register. Comment Date: Comments must be received on or before February 16, 2021. 15 U.S.C. Register (ACFR) issues a regulation granting it official legal status. Paragraph 7(a)(37)(N) of the Small Business Act. As discussed elsewhere in this interim final rule, the last day to apply for and receive a PPP loan is March 31, 2021. 397(11))), has a trade or business that falls under such a code; and (2) makes a good faith certification that proceeds of the loan will be used to support expenses at the component of the organization that produces or distributes locally focused or emergency information. 9005) was redesignated as section 7A, transferred to the Small Business Act (15 U.S.C. documents in the last year, by the Federal Aviation Administration The Public Inspection page Second draw PPP loans are intentionally narrower and smaller in terms of eligibility and amount. This article includes those changes as they affect Second Draw PPP Loans. Almost $400 billion has been forgiven. documents in the last year, 492 SBA will post all comments on www.regulations.gov. 804(2)). [30] 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. 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. 14. This prototype edition of the Subsection (e)(1) ensures that a borrower that received a First Draw PPP Loan despite being ineligible to receive the loan is not eligible to receive a Second Draw PPP Loan. Authority: 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. (2) Frequently Asked Questions and other guidance issued by SBA or by SBA in consultation with the Department of the Treasury with respect to PPP loans under section 7(a)(36) of the Small Business Act (15 U.S.C. Select Download Latest Update. on 636(a)(36)(D)(iv), as added by the CARES Act and amended by the Economic Aid Act, waived the affiliation rules contained in 121.103 for (1) any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a NAICS code beginning with 72; (2) any business concern operating as a franchise that is assigned a franchise identifier code by SBA; (3) any business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. This FAQ applies only to First Draw PPP Loans. 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. 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