SBA Loans: Paycheck Protection Program

January 11, 2021 Update

WE ARE NOW ACCEPTING APPLICATIONS FOR PPP LOANS!!

The Economic Aid Act was signed into law and begins implementation this week. To begin on January 11, only certain Community Financial Institutions (CFI’s) will be allowed to accept applications and obtain SBA commitments for First Time PPP Borrowers, and most bank/credit unions are not considered CFI’s. On January 13, the SBA portal will open for CFI’s to begin submitting commitments for Second Draw PPP loan requests but only exclusive to CFI’s. The guidance published over the weekend only explains that bank/credit unions will be notified once available to submit to the SBA for PPP commitments. There are two revised application forms published as of January 8 which cover First Draw and Second Draw requests. The First Draw is reserved for those small businesses that have not previously received PPP funds and the Second Draw is reserved for those seeking a second round of PPP funds. Please review in full along with the included instructions (links attached below) and remember these are subject to changes/revisions. We will continue to accept handwritten initial versions to start but require an eSigned version on or before closing/funding. At this time, even though the SBA Portal for obtaining commitments is not open we are not aware of any provision that prohibits us from beginning to accept applications.

Brief Highlights:

• Second Draw Loan Terms:
• 1.00% rate
• 5-year maturity
• No collateral or personal guarantees
• The business or organization must have been in operation as of February 15, 2020
• The last day to apply for and receive a PPP loan is March 31, 2021
• For Second Draw applicants, the borrower must have used or will use the full amount of the initial PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw loan
• Biggest Qualification – the business must demonstrate gross revenue reduction not less than 25% from the same period in 2019; meaning showing at least one corresponding quarter from 2019 to 2020 with a 25% reduction in gross revenues
• Typically done using 2020 tax forms, quarterly financial statements or bank statements
• The same calculation for maximum loan amount (max of $2,000,000):
• Average total monthly payroll during the prior 1-year period (or 2019) multiplied by 2.5x
• Maximum of 300 employees
• Expanded allowable use of funds to qualify for forgiveness
• Loans of $150,000 and less will not require any additional supporting documentation other than what was previously submitted to Vibrant Credit Union/Northpoint Commercial Credit other than the application and certifications, but documentation must be provided prior to applying for forgiveness