PPP Applications and Guidance

The U.S. Small Business Administration (SBA)  and Treasury have been busy preparing for both the new round of PPP loans (called 2nd Draw), and allowing borrowers to amend/increase their first PPP borrowing amount, if applicable.

The following applications have been released:

· Form 2483 – Paycheck Protection Program Borrower Application Form – use this application if you did not receive a PPP loan in the first round.

·  Form 2483-SD – PPP Second Draw Borrower Application Form – use this application form to apply for a second draw on an existing PPP Loan.

The SBA also released a procedural notice that provides guidance on requesting an increase to an existing PPP loan.  Essentially, a borrower can obtain an increase in original PPP funding if the regulations/guidance changed after they originally applied for their loan.  The new regulations made them eligible for additional PPP funds, but because their application was already submitted, they were unable to get the full amount of PPP loan they were eligible for.  Those borrowers are now able to go to their lender and request the full funding amount. 

The PPP, which reopened for community financial institutions (CFIs) earlier this week, will open for lenders with $1 billion or less in assets on Friday, January 15, and for all lenders on January 19.

Requirements to reapply for a PPP loan or request a loan increase

·  Loan increases or reapplications are only allowed if the borrower hasn't received forgiveness for their original PPP loan.

·  Increases to first-draw PPP loans can be made only by the lender who made the original PPP loan.

·  Borrowers that returned or repaid a first-draw PPP loan are eligible to reapply for that loan under certain circumstances.

·  Borrowers that returned or repaid part of a first-draw PPP loan may request a loan increase equal to the difference between the amount not paid back by the borrower and the amount previously approved

·  Borrowers that did not accept the full amount of a first-draw PPP loan for which they were approved can apply for an increase in the loan up to the amount previously approved.

Second Draw PPP eligibility

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

·  Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;

·  Has no more than 300 employees; and

·  Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector, the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.

Give us a call if you have specific questions regarding the new PPP loan rules.  If you think your business qualifies for a Second Draw, or to increase your original PPP loan, or aren't sure if you qualify, give us a call.  As with the first round of PPP lending, the SBA anticipates that there will be many early applicants.