The U.S. Small Business Administration and Treasury released loan application forms Friday night for the resumed Paycheck Protection Program (PPP), which launches Monday, initially for select lenders and borrowers before a wider opening takes place a few days later.
The forms are form 2483 – Application form for borrower protection program and form 2483-SD – Application form for second draw borrower. Form 2483 is updated from previous iterations that started with the original PPP program. Form 2483-SD is a new form for qualified PPP lenders to seek a second draw of a forfeited loan while trying to navigate the economic seas moving through the COVID-19 pandemic.
The SBA and the Treasury also published summaries of the first draw and second draw PPP loans and some procedural notices.
The document was released after the SBA and Treasury announced earlier Friday that the $ 284 billion application window for PPP-lending loans would initially reopen Monday for financial institutions (CFIs) that serve businesses in minorities and women to lend. Specifically, CFIs could start lending to first-time PPP lenders and second-time PPP lenders on Monday.
The SBA and the Treasury said the PPP would open single lenders to all lenders after the opening of CFIs, but they did not set a date.
Congress has revived the PPP as part of the $ 900 billion COVID-19 bill signed on December 27. The original PPP provided $ 525 billion in forgettable loans for more than five months before ceasing to accept applications in August. The new PPP has $ 284.5 billion available, including $ 35 billion for first loans and $ 15 billion set aside for community financial institutions.
The SBA and the Treasury issued guidance late Wednesday night for the new PPP, which shares many of the same rules as the old PPP, but also has some significant differences. The guidance came in the form of three documents:
- An 82-page interim final rule (IFR) called “Temporary Changes for Business Loan Programs; Salary Protection Program as Amended by the Economic Assistance Act”, which consolidates eight-month rules for PPP-eligible first-time loans lenders, and contains amendments made by the Financial Aid to Heavily Affected Small Businesses, Non-Profit Organizations, and the Local Act, PL 116 -260.
- A 42-page IFR called the Business Loan Program Temporary Changes; Program for Paycheck Protection Second Second Loans, which sets guidelines for new OBP loans to businesses that have previously received an OVP loan.
- A three-page document entitled “Guidelines for Access to Capital for Women’s Minority, Underemployed, Veterans and Business Concerns”, containing a commitment by the SBA to open only the first two days of the PPP application window make for applications from community financial institutions.
Quick overview of PPP borrower application forms
The PPP loan application forms released on Friday contain instructions on how to calculate the wage cost in line with the guidance given on Wednesday. Generally, first and second time PPP lenders can receive a loan amount of up to 2.5 times their average monthly wage cost (with a per capita employee of $ 100,000 on an annual basis) in 2019, 2020, or the year before the loan. PPP lenders with North American Industry Classification System (NAICS) codes starting with 72 (such as hotels and restaurants) can receive up to 3.5 times their average monthly wage cost on second withdrawals.
The forms also provide adjustments to the calculations for seasonal businesses, new businesses, farmers and farmers, and partnerships.
The maximum loan amount is $ 10 million for first time lenders and $ 2 million for second time PPP lenders.
PPP lenders can forgive their first and second withdrawal loans if the funds are used for the following eligible costs: payroll, rent, covered mortgage interest and utilities, covered worker protection and expenses for adjustment of facilities, covered damage to property damage, covered payments to suppliers and payments for business software or cloud computing services that facilitate business operations, product or service delivery, and a number of back office functions, including accounting.
To be eligible for full loan forgiveness, PPP lenders must spend no less than 60% of the funds on payroll during a covered period of their choice between eight and 24 weeks.
The first time that PPP loans are available to borrowers that were in operation on 15 February 2020 and come from one of the following groups:
- Businesses with 500 employees or less who are eligible for other SBA 7 (a) loans.
- Sole proprietorships, independent contractors and eligible individuals.
- Non-profit, including churches.
- Accommodation and food service operations with NAICS codes starting with 72 having less than 500 employees per physical location.
- Dept. 501 (c) (6) business leagues, such as business chambers, visitor agencies, etc., and ‘destination marketing organizations’ having 300 or fewer employees and not receiving more than 15% of the receipts from lobbying. The lobbying activities may not exceed 15% of the organization’s total activities and did not cost more than $ 1 million during the last tax year ending before 15 February 2020. Sports leagues are not eligible.
- Majority organizations owned or controlled by a NAICS code 511110 or 5151 enterprise or non-profit public service broadcasting with an industry or business under NAICS code 511110 or 5151. The size limit for this category is not more than 500 employees per place.
Borrowers are eligible for a second draw PPP loan of up to $ 2 million, provided they:
- 300 or fewer employees.
- Use or use the full amount of their first OBK loan before or on the expected date for the disbursement of the second OBK loan to the borrower. The IFR also states that the borrower had to spend the full amount of the first PPP loan on eligible expenses.
- Experience a revenue reduction of 25% or more in all or part of 2020 compared to all or part of 2019. This is calculated by comparing the gross income in any 2020 quarter with an appropriate quarter in 2019, or in a provision added to the IFR. , a borrower who has been employed during all four quarters of 2019 can submit copies of the annual tax forms showing a decrease in annual receipts of 25% or more in 2020 compared to 2019.
AICPA experts discuss the latest on the PPP and other small business utilities during a bi-weekly virtual city hall. The webcasts, which provide CPE credit, are free to AICPA members. Go to the AICPA City Hall Series website for more information and to register.
The AICPA Paycheck Protection Program Resource Page contains resources and tools manufactured by the AICPA to address the economic impact of the coronavirus.
For more news and coverage on the coronavirus and how CPAs can handle outbreak challenges, visit the JofAsay Coronavirus Resource Page or subscribe to our email alerts for the publication of PPP news.
– Jeff Drew ([email protected]) is a JofA senior editor.