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New Round of PPP: You Have Questions, WBA Has Answers

As the SBA re-opens the Paycheck Protection Program (PPP) loan portal to PPP-eligible lenders with $1 billion or less in assets for both First and Second Draw applications today, WBA continues to update its resources to keep members as up to date as possible. Yesterday, WBA’s Rose Oswald Poels hosted a webinar on PPP to address any pressing questions bankers have as many begin to provide loans once again. A recording of the event is now available for anyone who missed it or attendees who need a recap on the answers provided. Included are just a few of the topics discussed. Email wbaeducation@wisbank.com if you would like to receive the recording.

SAM.gov  

The addition of SAM.gov has created a lot of questions among lenders – SAM.gov is a requirement for banks to register. Individual lenders do not have to be registered, but your bank must be. Notable points are to use your headquarter address to move forward with registration, and that registration is required within 30 days from the first day of your first loan disbursement.  

Eligibility Expansion  

If a business was eligible to receive loans in 2020, the same remains true for 2021. New for this round is the addition of four entities, including:  

  • Certain 501(c)(6) organizations (excluding those that engage in political or lobbying activities and professional sports leagues);  
  • Destination marketing organizations;  
  • Housing cooperatives;  
  • Newspapers, broadcasters, and radio stations. 

Eligibility is limited to businesses that began operation by Feb. 15, 2020 and the business cannot be permanently closed today. Borrowers receiving PPP loans in 2020 cannot receive First Draw Loans during this round of PPP. They may be eligible for a Second Draw Loan, however, which is further discussed in the webinar.  

PPP Loan Increase 

The PPP Loan Increase Option allows current borrowers in 2020 that still have yet to apply for forgiveness to seek a loan increase; if the forgiveness process has already started, they may be unable to get an increase on their existing loan. The increase was added in the new law for scenarios such as a business that didn’t use all their proceeds because they were unable to spend them on eligible purposes due to unexpected closings, limited hours or capacity restrictions. SBA issued detailed procedures for existing PPP borrowers seeking an increase in PPP loan amount. Lenders need carefully review those procedures, which may be found on WBA’s website.  

Forgiveness 

The SBA will also create a simplified forgiveness form for loans totaling $150,000 or less. For those in this range waiting to apply for forgiveness, it is recommended to wait until this becomes available.  

Maximum Loan Amounts  

For First Draw loans, the maximum loan amount formula has not changed, but there are exceptions: farmers who are sole-proprietors, independent contractors, or otherwise self-employed individuals. For farmers, maximum loan amounts are different and are further addressed in the webinar.  

In general, the maximum loan amount for a Second Draw PPP Loan is equal to the lesser of two and half months of the borrower’s average monthly payroll costs or $2 million. Generally, a borrower’s average monthly payroll costs may be based on calendar year 2020, calendar year 2019. Second Draw PPP Loan borrowers who are not self-employed, sole proprietorships, or independent contractors are also permitted to use the precise 1-year period before the date on which the loan is made to calculate payroll costs if they choose not to use 2019 or 2020. 

Opening the Floor 

During the final fifteen minutes of the call, Rose answered member’s pressing questions on PPP. Some of these questions included:  

  • How do you know if a borrower took a PPP loan in Round 1? Is there a specific tax document WBA is suggesting to show the proof of the 25% gross receipts reduction?  
  • Is it possible for someone to get a first draw application loan when the portal opens and also get a second draw loan before the application period ends?  
  • If an entity changed hands during 2019 and 2020, can you still use 2019 numbers even though the new owner was not the owner in 2019?  
  • The answer to these questions are available in the webinar’s recording and will be added to our Q&A on PPP. As more information comes out, WBA will continue to update our resources to reflect the most recent changes.  

To find out more about what this newest round of PPP means for you, a recording of the webinar is available. The portal for banks over $1 billion will open on Tuesday, Jan. 19, and the current application period will end on March 31, 2021. Updated forms, new information, and all previous information are available on WBA’s resource page here

By, Alex Paniagua