All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer's request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts. (g) How do I submit an application for a Second Draw PPP Loan and what documentation must I provide to demonstrate eligibility? On December 27, 2020, President Trump signed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act) (Pub. 808(2). ). Section 317 of the Economic Aid Act modified this provision for Second Draw PPP Loans by reducing the limit on employees per physical location to 300. The average loan size is $87,000. Economic Aid Act Provides Second Draw PPP Loans, Jan. 15, 2021 SBA to Require PPP Borrowers of $2 Million-Plus to Complete Loan Necessity Questionnaires, November 24, 2020 SBA Issues Much-Anticipated Guidance Regarding Changes of Ownership in PPP Loans, October 8, 2020 All terms in this subsection have the same definitions as in sections 7(a)(36) and (37) of the Small Business Act and the Consolidated First Draw PPP IFR, as applicable. This summary provides additional information and explains the key terms in the IFR. subsections B.1.g.v., B.1.g.vii., and B.1.g.viii. partnerships between a public agency and one or several private firms, was excluded. Given the short duration of this program, and the urgent need to issue loans quickly, the Administrator in consultation with the Secretary has determined that it is impractical and not in the public interest to provide a delayed effective date. [9] Learn more here. the material on FederalRegister.gov is accurately displayed, consistent with However, the rule notes that Second Draw PPP Loan borrowers who are not self-employed (including sole proprietorships and 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 to calculate payroll costs. However, we lack data to estimate the effects of this rule. (4) The maximum amount of a Second Draw PPP Loan to a borrower that did not exist during the 1-year period preceding February 15, 2020, but was in operation on February 15, 2020 (new entity), is calculated as the lesser of: (1) The sum of the total monthly payments by the borrower for payroll costs paid or incurred by the borrower as of the date on which the borrower applies for the Second Draw PPP Loan; by, (2) the number of months in which those payroll costs were paid or incurred; by. (D) The Applicant is not required to submit a registration statement under section 2 of the Foreign Agents Registration Act of 1938 (22 U.S.C. This IFR clarifies that the same general calculation for farmers and ranchers applicable to First Draw PPP Loans applies to Second Draw PPP Loans, with adjustments that (i) eliminate the provision for refinancing of an Economic Injury Disaster Loan (EIDL), which does not apply to Second Draw PPP Loans, and (ii) apply the choice of time period for calculating a farmer's or rancher's payroll costs for Second Draw PPP Loans, consistent with other Second Draw PPP Loans. mobile apps Since most borrowers will use 2019 or 2020 the rule text refers only to 2019 or 2020 for simplicity and readability. The Second Draw PPP IFR confirms that the last day to "apply for and receive" a Second Draw PPP loan is March 31, 2021. A borrower's average monthly payroll costs may be based on calendar year 2020, calendar year 2019,[36] (3) SBA will pay lenders fees for processing Second Draw PPP Loans in the following amounts:Start Printed Page 3722. The PPP reopened Jan. 11 with $284 billion in funding for forgivable loans. In this Issue, Documents No personal guarantees will be required. or as otherwise specified in subsections (f)(2) through (f)(9) of this section. Procedures for Addressing Unresolved Issues on Borrower First Draw PPP Loans CONTROL NO. [5] (iv) (A) experienced a reduction in revenue in calendar year 2020, measured as follows: (1) the applicant had gross receipts during the first, second, third, or fourth quarter in 2020 that demonstrate at least a 25 percent reduction from the applicant's gross receipts during the same quarter in 2019 (for example, an applicant that had gross receipts of $50,000 in the second quarter of 2019 and had gross receipts of $30,000 in the second quarter of 2020 experienced a 40 percent revenue reduction between these two quarters); (2) if the applicant was not in business during the first or second quarter of 2019, but was in business during the third and fourth quarters of 2019, the applicant had gross receipts during the first, second, third, or fourth quarter of 2020 that demonstrate at least a 25 percent reduction from the applicant's gross receipts during the third or fourth quarter of 2019 (for example, an applicant that had gross receipts of $50,000 in the third quarter of 2019 and had gross receipts of $30,000 in the third quarter of 2020-demonstrating a reduction of 40 percent from the applicant's gross receipts during the third quarter in 2019); (3) if the applicant was not in business during the first, second, or third quarter of 2019, but was in business during the fourth quarter of 2019, the applicant had gross receipts Start Printed Page 3718during the first, second, third, or fourth quarter of 2020 that demonstrate at least a 25 percent reduction from the fourth quarter of 2019 (for example, an applicant that had gross receipts of $50,000 in the fourth quarter of 2019 and had gross receipts of $30,000 in the fourth quarter of 2020-demonstrating a reduction of 40 percent from the applicant's gross receipts during the fourth quarter in 2019); or. rendition of the daily Federal Register on FederalRegister.gov does not SBA will set aside available appropriations to fund Second Draw PPP Loans applied for by unresolved borrowers in the event they are approved. (C) The Applicant is not a business concern or entity (a) for which an entity created in or organized under the laws of the People's Republic of China or the Special Administrative Region of Hong Kong, or that has significant operations in the People's Republic of China or the Special Administrative Region of Hong Kong, owns or holds, directly or indirectly, not less than 20 percent of the economic interest of the business concern or entity, including as equity shares or a capital or profit interest in a limited liability company or partnership; or (b) that retains, as a member of the board of directors of the business concern, a person who is a resident of the People's Republic of China. (2) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 as defined in subsection (f)(10) at the time of disbursement, 3.5). 78f), where the terms exchange, issuer, and security have the meanings given those terms in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. The agency must, however, publish the certification in the Federal Register at the time of publication of the rule, along with a statement providing the factual basis for such certification. If the agency head has not waived the requirements for a regulatory flexibility analysis in accordance with the RFA's waiver provision, and no other RFA exception applies, the agency must prepare the regulatory flexibility analysis and publish it in the Federal Register at the time of promulgation or, if the rule is promulgated in response to an emergency that makes timely compliance impracticable, within 180 days of publication of the final rule. Generally, receipts are considered total income (or in the case of a sole proprietorship, independent contractor, or self-employed individual gross income) plus cost of goods sold, and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms. The PPP provided more than 11.7 million forgivable loans totaling nearly $800 billion to small businesses and other eligible entities hurt by the economic impacts of the COVID-19 pandemic. Such documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicant's quarterly income statements or bank statements. 5 U.S.C. (1) A lender approved to make First Draw PPP Loans may make Second Draw PPP Loans under the same terms and conditions applicable to First Draw PPP Loans, including all requirements under sections (C) and (D) of the Consolidated First Draw PPP IFR, except as otherwise provided in this section. Borrowers that need assistance or have questions should call (877) 552-2692, Monday - Friday, 8 a.m. - 8 p.m. EST. (iv) For loans with a principal amount greater than $150,000, documentation sufficient to establish that the applicant experienced a reduction in revenue, as provided in subsection(c)(1)(iv), must be Start Printed Page 3721provided at the time of application, which may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicant's quarterly income statements or bank statements. 14. [FR Doc. L. 116-260, section 303. In calculating a borrower's payroll costs, the borrower must subtract any compensation paid to an employee in excess of $100,000 on an annualized basis, as prorated for the time period during which the payments are made or the obligation to make the payments is incurred. Play was stopped at the World Championship after a protester vandalised table one and a second person tried to attach themselves to table two. 04/17/2023, 35 (E) The Applicant is not a business concern or entity primarily engaged in political or lobbying activities, including any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy or otherwise describes itself as a think tank in any public documents. implementing updates to the PPP. informational resource until the Administrative Committee of the Federal Under section 801(3) of the CRA, a major rule takes effect 60 days after the rule is published in the Federal Register. These comments must be submitted on or before February 16, 2021. 38. Software Development. Subsection (g) of this IFR contains the provisions specific to lenders for Second Draw PPP Loans. The OFR/GPO partnership is committed to presenting accurate and reliable The Administrator, in consultation with the Secretary of the Treasury (Secretary), has determined that this is necessary to improve administrability of Second Draw PPP Loans by providing borrowers an additional verifiable method for substantiating their revenue reduction. documents in the last year, 655 For loans with a principal amount of $150,000 or less, such documentation is not required at the time the borrower submits its application for a loan, but must be submitted on or before the date the borrower applies for loan forgiveness, as required under the Economic Aid Act. Second Draw PPP Loans generally are guaranteed by SBA under the same terms, conditions, and processes as First Draw PPP Loans. the official SGML-based PDF version on govinfo.gov, those relying on it for are not part of the published document itself. Effective Date: This interim final rule is effective January 12, 2021. If the lender identifies errors in the borrower's calculation or a material lack of substantiation in the borrower's supporting documents, the lender should work with the borrower to remedy the issue. As described in SBA's interim final rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities, SBA may review any PPP loan, as the Administrator deems appropriate. The Public Inspection page may also without regard for whether such a station is a concern as defined in 13 CFR 121.105, or any successor thereto) that employs not more than 300 employees, per physical location of such business concern and is majority owned or controlled by a business concern that is assigned a NAICS code beginning with 511110 or 5151; or. The second draw loan program, which closes March 31, 2021, contains stricter eligibility requirements and a lower loan limit, but it retains many of the original terms and conditions of the PPP program. 23. Subsection (e)(1) of the IFR implements this restriction. 636(a)(36)(D)(iv), as added by the CARES Act and amended by the Economic Aid Act, waived the affiliation rules contained in 121.103 for (1) any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a NAICS code beginning with 72; (2) any business concern operating as a franchise that is assigned a franchise identifier code by SBA; (3) any business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. Further, although military procurers . If the lender identifies errors in the borrower's calculation or material lack of substantiation in the borrower's supporting documents, the lender should work with the borrower to remedy the issue. As with First Draw PPP Loans, in most cases, a borrower is considered together with its affiliates to determine eligibility for the PPP. Let me show you how: In the top menu bar, go to Employees. A borrower must calculate this revenue reduction by comparing the borrower's quarterly gross receipts for one quarter in 2020 with the borrower's gross receipts for the corresponding quarter of 2019. The Act also provided tailored methodologies for certain categories of borrowers. documents in the last year, 29 It was viewed 67 times while on Public Inspection. Principally, the Economic Aid Act authorizes further PPP funding and allows prior PPP borrowers to pursue second draw PPP loans. Like means that borrowers receiving PPP loans in the initial tranched for early- to mid-April 2020 leave got due dates beginning in July 2021. It appears to limit second draw loans to businesses that have no more than 300 employees. [27] Second draw PPP loans now available If your business received a PPP loan in 2020 and have already exhausted that funding, you may be able to apply for second PPP loan if: Your business has fewer than 300 employees You have exhausted all funds obtained from a previous PPP loan. Paragraph 7(a)(37)(A)(iv)(III)(bb) of the Small Business Act. Call Center Representative at 833-572-0502, or the local SBA Field Office; the list of offices can be found at https://www.sba.gov/tools/local-assistance/districtoffices. (5) The maximum amount of a Second Draw PPP Loan made to a borrower assigned a NAICS code beginning with 72 at the time of disbursement as defined in subsection (f)(10) (that is not a seasonal employer or new entity addressed in subsection (f)(3) or (f)(4) or a borrower with self-employment income or a partnership addressed in subsection (f)(7) or (f)(8) of this section) is calculated as the lesser of: (A) The average total monthly payment for payroll costs incurred or paid by the borrower during either 2019 or 2020 (at the borrower's election) by, (6) (i) The maximum amount of a Second Draw PPP Loan to a farmer or rancher that:Start Printed Page 3720. (3) The maximum amount of a Second Draw PPP Loan to a borrower that is a seasonal employer (meaning an employer that does not operate for more than 7 months in any calendar year or that during the preceding calendar year, had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts of the employer for the other 6 months of that year) is calculated as the lesser of: (A) At the election of the borrower, the average total monthly payments for payroll costs incurred or paid by the borrower for any 12-week period between February 15, 2019 and February 15, 2020; by, (B) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 at the time of disbursement as defined in subsection (f)(10), 3.5); or. 601(3)-(6). At the same time, these procedures do not disqualify an eligible unresolved borrower from receiving a Second Draw PPP Loan, in recognition that many flags will be resolved in the borrower's favor. Ch. . (7) The maximum amount of a Second Draw PPP Loan to a borrower that has income from self-employment and files a Form 1040, Schedule C, is calculated as follows, depending on whether the borrower has employees: (i) For a borrower that has income from self-employment and does not have any employees, the maximum loan amount is the lesser of: (1) The net profit of the borrower in 2019 or 2020, as reported on IRS Form 1040 Schedule C, that is not more than $100,000, divided by 12; and. Key insights. This table of contents is a navigational tool, processed from the Two distinct Paycheck Protection Programs (PPP) opened on January 19, 2021. The Second Draw PPP Loan is limited to the lesser of 2.5 times your average monthly payroll or $2,000,000. Tick your Download Entire Update checkbox. For example, a borrower with gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020 has experienced a revenue reduction of 40 percent between the quarters, and is therefore eligible for a Second Draw PPP loan (assuming all other eligibility criteria are met). developer tools pages. Small Business Administration's Office of Advocacy guide: How to Comply with the Regulatory Flexibility Ac. designed to cover the modelling issues that are relevant to facilitate the construction of robust and readily understandable models. 16. Specifically, the RFA normally requires agencies to describe the impact of a rulemaking on small entities by providing a regulatory impact analysis. The maximum for "second draw" PPP loans is $2 million, less than the $10 million cap for PPP's first round. See paragraph 7(a)(37)(I)(i) of the Small Business Act. (30) days from the date of the first disbursement of a First Draw PPP Loan or Second Draw PPP Loan . As a result, if each hotel or restaurant location owned by a parent business is a separate legal business entity and employs not more than 500 employees, each hotel or restaurant location is permitted to apply for a separate PPP loan provided it uses its unique EIN. (iii) If the applicant is self-employed and does not have employees, the applicant must provide (a) its 2019 or 2020 (whichever was used to calculate loan amount) Form 1040 Schedule C, (b) a 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record that establishes that the applicant is self-employed; and (c) a 2020 invoice, bank statement, or book of record to establish that the applicant was in operation on or around February 15, 2020. See PPP FAQ #24 (posted April 13, 2020), available at https://www.sba.gov/sites/default/files/2020-12/Final%20PPP%20FAQs%20%28December%209%202020%29-508.pdf. maturity of five years 9. The President of the United States manages the operations of the Executive branch of Government through Executive orders. Eurostat-OECD PPP Programme, including its organisation, the various surveys . These categories of prohibited borrowers are listed in subsection (e) of the IFR: In addition, subsection (e)(9) of this IFR provides that an entity that has previously received a Second Draw PPP Loan may not receive another Second Draw PPP Loan, as required by the Economic Aid Act. A brilliantly original and fascinating story with many . 5. This post details these changes, as explained by the recent SBA guidance. documents in the last year, 296 5 U.S.C. These markup elements allow the user to see how the document follows the Edited by Akintoye & Beck 978 14051 7791 7 Strategic Issues in Public-Private Partnerships, 2nd Edition Dewulf, Blanken & Bult-Spiering 978 0 470 65635 8 THE NONPROFIT RISK BOOK - Jesse . on These include, but are not limited to the following terms: The guarantee percentage is 100 percent. No collateral will be required. The guidance, however, does not clarify what is intended by "receive a . [20] The local SBA Field Office may be found at https://www.sba.gov/tools/local-assistance/districtoffices. 33. (ii) that retains, as a member of the board of directors of the business concern, a person who is a resident of the People's Republic of China; (4) any person required to submit a registration statement under section 2 of the Foreign Agents Registration Act of 1938 (22 U.S.C. You may submit comments, identified by number SBA-2021-0002 through the Federal eRulemaking Portal: http://www.regulations.gov. for better understanding how a document is structured but These include, but are not limited to the following terms: The guarantee percentage is 100 percent. before SBA issues a loan number for the loan, the Applicant is ineligible for the loan and acceptance of any loan proceeds will be considered an unauthorized use; (2) the President, the Vice President, the head of an Executive department, or a . However, no additional documentation to substantiate payroll costs will be required if the applicant (i) used calendar year 2019 figures to determine its First Draw PPP Loan amount, (ii) used calendar year 2019 figures to determine its Second Draw PPP Loan amount (instead of calendar year 2020), and (iii) the lender for the applicant's Second Draw PPP Loan is the same as the lender that made the applicant's First Draw PPP Loan. which applies to Second Draw PPP loans. 8. Paragraph 7(a)(36)(D)(iii)(II) of the Small Business Act. Handbook on Battery Energy Storage System - Asian Development Bank 2018-12-01 . (A) Operates as a sole proprietorship or as an independent contractor, or is an eligible self-employed individual; (B) reports farm income or expenses on a Schedule F (IRS Form 1040); and. documents in the last year, 18 The Regulatory Flexibility Act (RFA) generally requires that when an agency issues a proposed rule, or a final rule pursuant to section 553(b) of the APA or another law, the agency must prepare a regulatory flexibility analysis that meets the requirements of the RFA and publish such analysis in the Federal Register. 18. The loan amounts received by borrowers for First Draw PPP Loans and Second Draw PPP Loans will not be aggregated. (d) How do SBA's affiliation rules affect an applicant's eligibility for a Second Draw PPP Loan? These applications can be for a completely "new" first draw loan or to "right size" (discussed below) their original loan. See . 78c(a)) (except SBA will not consider whether a news organization that is eligible under subsection (c)(4) is affiliated with an entity, which includes any entity that owns or controls such news organization, that is an issuer); (8) an entity that has previously received a Second Draw PPP Loan; or. Paragraph 7(a)(36)(D)(iv) of the Small Business Act (15 U.S.C. This document has been published in the Federal Register. Open for Comment, Economic Sanctions & Foreign Assets Control, Tool Chests and Cabinets From China and Vietnam, Experimental Permits for Reusable Suborbital Rockets, Animal and Plant Health Inspection Service, Medicaid and Children's Health Insurance Program, Prohibition on Use by the United States Government of Commercial Spyware That Poses Risks to National Security, II. Paragraph 7(a)(36)(D)(iv) of the Small Business Act. (e) Who is not eligible for a Second Draw PPP Loan? 2021-00452 Filed 1-12-21; 4:15 pm], updated on 4:15 PM on Monday, April 17, 2023, updated on 8:45 AM on Monday, April 17, 2023. An applicant is not eligible for a Second Draw PPP Loan, even if it meets the eligibility requirements of subsection (c) of this section, if the applicant is: (1) Excluded from eligibility under the Consolidated First Draw PPP IFR;[35]. SBA will resolve issues related to unresolved borrowers expeditiously. By Adam Sweet, J.D., LL.M. Subsection (c)(2) of the IFR defines gross receipts consistent with the definition of receipts in 13 CFR 121.104 of SBA's size regulations because this definition appropriately captures the type of income that is typically included in a small business's gross receipts. Small Business Paycheck Protection Program Which Paycheck Protection Software fixed by the CARES Act, is implemented by aforementioned Small Business Administration in support from the Department off an Treasury. In order to be eligible, businesses must be able to demonstrate that they experienced a 25 percent reduction in gross receipts in a 2020 calendar quarter compared to the same quarter in 2019. (D) All terms in this subsection shall have the meaning attributed to them by the IRS. Military procurement has also been omitted, mainly because military procurement contrasts with civic public procurement e.g. Paragraph 7(a)(37)(A)(iv)(III)(cc) of the Small Business Act. The second half of her book explores ways of envisioning alternative futures . Register (ACFR) issues a regulation granting it official legal status. Ch.1. This furthers the purpose of the second draw loan provisions, which is to deliver additional aid to small businesses that previously received a First Draw PPP Loan. Subsections (c)(3) and (c)(4) of the IFR implement these statutory provisions. SBA guarantees 100 percent of Second Draw PPP Loans and SBA may forgive up to the full principal loan amount. The IFR specifies that any forgiveness amount of a First Draw PPP Loan that a borrower received in calendar year 2020 is excluded from a borrower's gross receipts. Gross receipts do not include the following: Taxes collected for and remitted to a taxing authority if included in gross or total income (such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees); proceeds from transactions between a concern and its domestic or foreign affiliates; and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker. Paragraph 7(a)(37)(E) of the Small Business Act. (B) If a borrower has acquired an affiliate or been acquired as an affiliate during 2020, gross receipts includes the receipts of the acquired or acquiring concern. Second Draw PPP Loans are subject to SBA's and the Department of the Treasury's (Treasury's) consolidated interim final rules implementing updates to the Paycheck Protection Program for First Draw PPP Loans (Consolidated First Draw PPP IFR) issued concurrently with this interim final rule (IFR)[1] (A) Confirm receipt of borrower certifications contained in Paycheck Protection Program Second Draw Borrower Application Form (SBA Form 2483-SD) or lender's equivalent; (B) Confirm receipt of information demonstrating that a borrower was either an eligible self-employed individual, independent contractor, or sole proprietorship with no employees or had employees for whom the borrower paid salaries and payroll taxes on or around February 15, 2020; (C) Confirm the dollar amount of average monthly payroll costs for 2019 or 2020 (whichever was used to calculate loan amount) by reviewing the payroll documentation submitted with the borrower's application; (D) For a Second Draw PPP Loan greater than $150,000 or a loan of $150,000 or less where the borrower provides documentation of revenue reduction, confirm the dollar amount and percentage of the borrower's revenue reduction by performing a good faith review, in a reasonable time, of the borrower's calculations and supporting documents concerning the borrower's revenue reduction. 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