12/4/2023 0 Comments Monthly gross receipts example sba![]() ![]() The Employee Threshold for Second Draw Loans is discussed below. (The maximum number of employees an organization can have and still be eligible for a loan is referred to throughout as the Employee Threshold). Housing cooperatives, eligible 501(c)(6) organizations, and eligible destination marketing organizations qualify if they employ 300 or fewer employees. Accommodation and food services businesses that employ 500 or fewer employees per physical location can apply for loans under the original PPP rules as modified by the PPP Flexibility Act passed in June 2020 and Economic Aid Act (First Draw Loans). ![]() Small businesses with 500 employees or fewer, including sole proprietorships, independent contractors and self-employed persons, nonprofits under 501(c) of the Internal Revenue Code other than 501(c)(4), and certain news organizations may apply for a covered loan. With the rules applicable to the program changing regularly, it is important always to confirm the latest guidance before moving forward with any decisions about participation in the program or use of the proceeds.įirst Draw Loans. With the passage of the ARPA, the SBA issued an Interim Final Rule on the PPP as amended by the ARPA. Thereafter, the SBA modified the formula for calculating loan amounts for certain borrowers, discussed below, and eased some of the restrictions on borrowers with past criminal convictions or student loan defaults through an Interim Final Rule on Loan Calculation Amount and Eligibility (Amended Eligibility Regulations). ![]() The SBA has now issued an Interim Final Rule - Loan Forgiveness and Loan Review Procedures as Amended by the Economic Aid Act (Forgiveness Rule) to provide a single point of reference governing all aspects of loan forgiveness and loan review. The SBA separately published an Interim Final Rule - Business Loan Program Temporary Changes, Paycheck Protection Program Second Draw Loans (Second Draw Loan Rules) establishing the rules for second draws. The SBA released an Interim Final Rule - Paycheck Protection Program as Amended by Economic Aid Act (Economic Aid Act Rules) which outlines the key provisions of the PPP related to eligibility of applicants for PPP loans, which lenders are authorized to make PPP loans, the process for making PPP loans, loan increases, and loan forgiveness. The American Rescue Plan Act (ARPA) made additional modifications to the program, including expanding the types of non-profits that are eligible to participate. The Economic Aid to Hard-Hit Small Business, Non-Profits, and Venues Act (Economic Aid Act) authorized this second round of funding, and revises aspects of the covered period, allows forgiveness for additional expenses, adds coverage for more organizations, allows some businesses to receive a second loan (Second Draw Loan), and provides greater flexibility for businesses with seasonal employees. A bill has passed the House of Representatives with bipartisan support to extend the deadline to May 31, 2021. On January 11, 2021, the program reopened for a second round of funding, which is now open until March 31, 2021. The first round of the program closed on August 8, 2020. The use of loan proceeds, as well as whether the loan was necessary, is subject to audit by the Small Business Administration (SBA). Additional certifications are required to apply for loan forgiveness. To apply for the loans, employers must make a number of certifications, including that economic uncertainty due to COVID-19 makes the loan necessary to support ongoing business operations. The loans are forgivable under Section 1106 of the CARES Act if the loan is used for permitted payroll, rent, mortgage interest, and utilities expenses and certain workforce and salary maintenance thresholds are met. Section 1102 of the CARES Act created the Paycheck Protection Program (PPP), which is intended to provide funds for small businesses affected by COVID-19 to maintain their workforce.
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