Second Draw PPP Loans and Updated Federal Support for Businesses
Upstate Entrepreneur Virtual Ecosystem Workshop – February 3, 2021
Speaker Contact Information
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Earl Gregorich, Area Manager & Business Consultant Greenville Area Small Business Development Center 864-326-5504 Kunal Parikh Small Business Policy Advisor Senator Tim Scott |
The workshop focused on the program changes and moving forward activities for business owners to access Paycheck Protection Program 2nd Draw Funds, Economic Injury Disaster Loans and traditional SBA loan payment forgiveness.
Below are the key program changes, important guidelines, links to related websites and a copy of the chat comments and questions with abbreviated answers. The Upstate Entrepreneur Ecosystem and Ten at the Top are not experts on these topics and request that you talk with Earl Gregorich at the SBDC (contact information above) or your accountant to ensure complete understanding and compliance.
For answers to the questions in the chat, please watch the video. You may access the video here.
SBA website with Relief Options: quicksignup.com/small-business-guidance-loan-resources/
Key Program Changes:
- PPP is only available for companies under 300 employees (500 employee limit last time).
- Applications capped at $2,000,000 for 2.5 months of average monthly payroll ($10,000,000 cap last time).
- All PPP 2nd Draw loans will have the same terms, regardless of lender or borrower.
- The list of acceptable expenses expanded.
- Some non-profit organizations are now eligible for PPP support.
- For EIDL, agricultural businesses with 500 or fewer employees are now eligible.
- For businesses with SBA 7(a), 504 and Microloans, excluding PPP loans, debt relief for up to 6 months of principle, interest and related fees is available for all loans approved up to September 27, 2020. They do not have to be fully disbursed as in the past. SBA will make the monthly payments.
- The Shuttered Venue Operators Grant offers up to 45% of gross earned revenue with maximum grants of $10,000,000. Access online FAQ here. The venue or promoter must not have received a PPP loan on or after December 27, 2020 and must have been in operation as of February 29, 2020.
- Some applications have been revised and streamlined.
- Community Development Financial Institutions can now act as PPP lenders.
Important Guidelines
- PPP 2nd Draw loan applications are available here
- PPP Application period is January 13, 2021 to March 31, 2021.
- Organizations are generally eligible if they had any single quarter revenue that was at least 25% less in 2020 than in the same quarter in 2019.
- For EIDL funds, if you are in a low-income community and previously received an EIDL advance of less than $10,000 or were denied due to lack of available program funding, can apply again for up to the full $10,000.
- All PPP applications are for expenses going forward, no prior expense coverage.
- To qualify for PPP, a business must show a minimum 25% reduction in revenue for any single, isolated quarter from 2019 to 2020.
- Shuttered Venue Operators Grant is not accepting applications yet. More information available here.
Links to Websites:
2nd Draw PPP Frequently Asked Questions Document here
Shuttered Venue Operators Grant
LenderMatch can help find a lender to PPP 2nd Draw Loans
Faith-based organizations Frequently Asked Questions
Chat Links
From Earl G – GVL SBDC to Everyone :
Acceptable expanded List of Expenses Qualifying for Forgiveness to include – (40% Cap for non-payroll remains)
- “Operations Expense” – business software, cloud computing, other HR & Accounting needs related to operations
- “Supplier Costs” – payments to a supplier for goods essential to operations of the borrower (pre-PPP or perishable)
- “Worker Protection Expenses” – relative to COVID-19 worker safety
- “Covered Property Damage Costs” – due to public disturbances in 2020 not covered by insurance or other
Local lender:
Connally Bradley
Appalachian Development Corporation
cbradley@adcloans.com
864/382-2358
Fund availability is not only for PPP, but it includes waivers for 504, 7a or any other SBA program, funds remain available until expended.
From Earl G – GVL SBDC to Everyone : Keep docs a minimum of 4 years
Chat Q & A
Q: What if you had a 50% decline in one quarter, but revenue increased in the next quarter are you still eligible? Also, is your amount of the loan based on the quarter that makes you eligible or is it based on current expenses/payroll?
A: It is a year over year comparison by quarter. For example, look at the first quarter of 2019 vs. first quarter of 2020. You just need to show that one quarter’s payroll needs to be down by 25% to be eligible.
A: has to do with payroll, not loss. It’s 2.5 times average
Q: Can you please elaborate on the 7a and 504 loans which are available to business which opened after February 15th?
A: 7A is the SBA flagship loan product. PPP built out from this. 504 are the microloan products. These are separate from PPP and have existed for years before the pandemic. The SBA guarantees these loans. It is a good time to consider expansion loan for your business due to six month payback on principal and interest, fees are being waived, guaranteeing up to 90% on the guarantees (if you are in the position to take on debt).
Q: Concerning a 2nd PPP grant. When calculating if you qualify to apply for a 2nd loan do you add the first PPP loan amount to your revenue for 2020 and then see if the amount is at least a 25% reduction from 2019 to apply for the 2nd PPP grant?
A: No. PPP loans are not considered revenue, so you do not count these loans or grants as revenue in these calculations.
Q: Do independent contractor classifications matter?
A: Look at the quarter. Lender is helpful in working through questions like this.
Q: As far as forgiveness goes are you hearing of any obstacles keeping businesses from having forgiven funding for PPP loans?
A: The forgiveness form was too lengthy initially and was simplified in December to a one page form. There is a high demand right now, so there may be a delay in deliverables. No issues in forgiveness.
Q: What is the current interest rate on the PPP loans now?
A: 1%, two year maturity prior to June 5(?), then raised to five years. Only for part not forgiven. No early repayment penalties.
Q: As a sole proprietorship, what can you use your PPP loan on the first PPP, can I use it toward payroll, supply?
A: Yes, use PPP loan on payroll and other operational items after 60%. The application form lists out all items. Maintain 60/40 split. With 8-24 week period for calculating forgiveness, many can justify 100%. PPP and EIDL were meant to be used together; use PPP for payroll, EIDL for operation expenses, for example.
Q: Employees worked for first eight week period, can they still use 24 weeks of payroll after laying people off after eight weeks?
A: Schedule meeting with Earl to ensure qualifications.
Q: Is the EIDL loan at 1% or 2.5%
A: EIDL is at 3.75% for business 2.75 for non-profit for 30 years.
Q: If you put down a deposit for an event, can you use to cover?
A: PPP loans cannot be used for this purpose. Please see list on borrower application form.
Q: Is there a projection of when PPP funds will run out?
A: No, but when Congress reappropriated PPP has gone well. Should money start running out, there will be additional conversations, but don’t delay!
Q: Does being an independent contractor in 2020 and 2021 qualify you or do you have to be an
LLC or have a payroll system in place as of February 15, 2020 to get PPP?
A: Yes, to pay future payroll. Forgiveness begins when the loan is paid out.
Q: Where does grant go on income statement?
A: Other income for grants, loans different. Consider separate checking account.
Please see 
Ten at the Top is pleased to announce the addition of 14 new board members for the 2021-2023 term. Each new member participated in one of the TATT New Board Member orientation sessions held on January 28 and 29. They join existing members to form the governing board for the 10-county non-profit organization.