The Treasury and U.S. Small Business Administration are currently working to solidify guidance specific to the next round of funding.
Paycheck Protection Program Round 2
As we begin to prepare for PPP Round 2.0, we wish to provide you with an overview of the program highlights and criteria for what to expect. Rest assured in knowing that PVNB is monitoring these developments, and we will stand ready in our preparation to facilitate the impending funding.
The covered period for all first draws is extended to March 31, 2021, and will be retroactive to the start of the CARES Act.
Second Draw Borrowers:
Small business with < 300 or fewer employees whom have sustained a minimum of a 25% reduction in revenue in any one quarter of 2020 when compared to the same quarter in 2019 will have the ability to apply for funds from the PPP Round 2.0 Program.
*A business must use or must have used the full amount of their first PPP Loan before applying for Round 2.0, with the maximum loan amount not to exceed $2 million.
Choosing a Covered Period:
Each borrowing entity, whether advancing a first draw or second draw of PPP Funds, will have the choice to select either an 8-week or 24-week covered period.
Loan Interest Rate & Term:
The interest rate for all PPP Loans will remain at 1.0% fixed for a 5-year term.
Use of Funds:
Only the following uses of loan funds will be eligible:
- Payroll– Salary, Wage, Vacation, Parental, Family, Medical, or Sick Leave, Health Benefits;
- Business Mortgage Interest– as long as the mortgage was signed before February 15, 2020;
- Business Rent– as long as the agreement was in effect before February 15, 2020;
- Business Utilities– as long as the service began before February 15, 2020;
- Software & Cloud Computing;
- Human Resource & Accounting needs;
- PPE Expenses (Covered worker protection);
- Covered Supplier Costs
For Full Forgiveness, at least 60% of loan proceeds must be used for payroll costs. This means that no more than 40% of loan proceeds may be used for the other permissible purposes.
For Loans <$150,000, a simplified forgiveness application will be created whereby the borrower signs and submits a 1-page certification to the lender. The form will require the borrower to list the loan amount, the # of employees retained, and the estimated total amount of the loan spent on payroll costs. The borrower will be required to attest to have accurately supplied the required certification and followed relevant requirements in the program.
EIDL (Economic Injury Disaster Loan) Advance Program:
Repeals to section 1110(e) (6) of the CARES Act, which requires PPP Borrowers to deduct the amount of their EIDL Advance from their PPP Forgiveness amount. This change will be retroactive to the start of the CARES Act. The SBA will be required to make whole borrowers whom may have already received forgiveness and the EIDL Advance was deducted from that amount.
Please be alert to future communications and updates over the course of the coming days. As soon as we are notified of any updates, we will make the information available to you.