(2)(i) Gross receipts includes all revenue in whatever form received or accrued (in accordance with the entity's accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. [9] The terms and conditions of the Second Draw PPP Loans are subject to the same terms and conditions as First Draw PPP Loans. 601(3)-(6). 605(b). (4) A lender must submit SBA Form 2484-SD (Paycheck Protection Program Lender's ApplicationSecond Draw Loan Guaranty) electronically in accordance with program requirements and maintain the forms and supporting documentation in its files. It was viewed 67 times while on Public Inspection. Additional resources pertaining to the Economic Aid Act and PPP - including application forms, Lender guidance, and PPP program rules - can be found on . (1) Eligibility for Second Draw PPP Loans is governed by the same affiliations rules (and waivers) as First Draw PPP Loans, except as described in subsection (d)(2). 301 et seq.) Comments and Immediate Effective Date, III. 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. [14] Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans. 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. Subsections (f)(7) and (f)(8) of the IFR include tailored calculation methodologies for self-employed individuals and partnerships. This rule's designation under Executive Order 13771 will be informed by public comment. has no substantive legal effect. --From publisher's description. Paragraph 7(a)(37)(A)(iv)(III)(ee) of the Small Business Act. (ii) for a Second Draw PPP Loan of more than $50,000, in an amount that is: (A) 5 percent of the balance of the financing outstanding at the time of disbursement of the loan for a loan up to (and including) $350,000; and. documents in the last year, 655 regulatory information on FederalRegister.gov with the objective of (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. (2) If the lender receives notification that the Applicant for a Second Draw PPP Loan is an unresolved borrower, the lender will not receive an SBA loan number. Subsection (B)(11) of the Consolidated First Draw PPP IFR specifies that the proceeds of a PPP loan may be spent only on certain eligible expenses. The platform runs on top. the official SGML-based PDF version on govinfo.gov, those relying on it for In general, section 307 of the Economic Aid Act provides that 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. (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. Paragraph 7(a)(36)(D)(iii)(I) of the Small Business Act. the material on FederalRegister.gov is accurately displayed, consistent with 01/12/2021 at 4:15 pm. Subsection (e)(1) ensures that a borrower that received a First Draw PPP Loan despite being ineligible to receive the loan is not eligible to receive a Second Draw PPP Loan. See paragraph 7(a)(37)(I)(i) of the Small Business Act. This article summarizes which businesses are not eligible for First Draw PPP Loans and Second Draw PPP Loans. 16. in terms of organisations or incentives for innovation (Walker, 1994). Second Draw PPP Loans generally are guaranteed by SBA under the same terms, conditions, and processes as First Draw PPP Loans. On January 6, 2020, the SBA published its 26 th Interim Final Rule (the First Draw PPP IFR) and 27 th Interim Final Rule (the Second Draw PPP IFR) with respect to the Paycheck Protection Program (PPP), as reauthorized and modified under Title III (cited as the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act)) of Division N of the Consolidated . documents in the last year, 438 (iii) For an eligible nonprofit organization, a veterans organization, an eligible nonprofit news organization, an eligible 501(c)(6) organization, or eligible destination marketing organization, gross receipts means gross receipts within the meaning of section 6033 of the Internal Revenue Code of 1986. These procedures are designed to promote compliance with the eligibility requirements for Second Draw PPP Loans by preventing additional loans from being made to borrowers that were not eligible for a First Draw PPP Loan or received an impermissible loan amount. Under section 801(3) of the CRA, a major rule takes effect 60 days after the rule is published in the Federal Register. (10) For purposes of calculating a borrower's maximum payroll costs, a borrower may multiply its average monthly payroll costs by 3.5 only if the borrower is in the Accommodation and Food Services sector and has reported a NAICS code beginning with 72 as its business activity code on its most recent IRS income tax return. 15. that agencies use to create their documents. 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. 22. 9005) was redesignated as section 7A, transferred to the Small Business Act (15 U.S.C. The key differences between First Draw PPP Loans and Second Draw PPP Loans are described in this IFR, which explains the loan terms, eligibility requirements, and application process for Second Draw PPP Loans. documents in the last year, 945 If a borrower's First Draw PPP loan is under review by SBA and/or information in SBA's possession indicates that the borrower may have been ineligible for the First Start Printed Page 3717Draw PPP Loan it received or for the loan amount it received, the lender will receive notification from SBA when the lender submits an application for a guaranty of a Second Draw PPP Loan and will not receive an SBA loan number until the issue related to the unresolved borrower's First Draw PPP Loan is resolved. These applications can be for a completely "new" first draw loan or to "right size" (discussed below) their original loan. 397(11))), has a trade or business that falls under such a code; and (2) makes a good faith certification that proceeds of the loan will be used to support expenses at the component of the organization that produces or distributes locally focused or emergency information. Therefore, SBA has determined that this rule has no federalism implications warranting preparation of a federalism assessment. 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. Fund can plus be used to pay interest on mortgages, rent, press utilities . (b) What requirements apply to Second Draw PPP Loans? This document has been published in the Federal Register. 4 . 04/17/2023, 272 If a borrower has not submitted new payroll documentation with its Second Draw PPP Loan application because it previously submitted 2019 payroll information to the same lender when it applied for its First Draw PPP Loan, then the lender must confirm the borrower's average monthly payroll costs based on that prior documentation. 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 Two distinct Paycheck Protection Programs (PPP) opened on January 19, 2021. 23. 33. The interest rate will be 100 basis points or one percent, calculated on a non-compounding, non-adjustable basis. (iv) The interest rate will be 100 basis points or one percent, calculated on a non-compounding, non-adjustable basis. Federal Register. These credits are available to employers (except state and local governments and their instrumentalities and small business who . Let me show you how: In the top menu bar, go to Employees. Subsection (c)(2) also adapts the methodology for calculating affiliate receipts from 13 CFR 121.104. Register, and does not replace the official print version or the official on If you have an unresolved issue on your first draw PPP loan, move quickly to identify the additional documents requested and supply them to your lender. documents in the last year. 35. legal research should verify their results against an official edition of L. 116-260, section 303. (vi) All loans will be processed by all lenders under delegated authority and lenders will be permitted to rely on certifications of the borrower in order to determine eligibility of the borrower and the use of loan proceeds. Choose Get Payroll Updates. partnerships between a public agency and one or several private firms, was excluded. (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. Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans. (c) Who is eligible for a Second Draw PPP Loan? Moreover, this approach is appropriate because, if annual filings show a 25 percent revenue reduction, then at least one quarter in 2020 would have had at least a 25 percent revenue reduction. 35), and the Regulatory Flexibility Act (, Paperwork Reduction Act, 44 U.S.C. For a loan of $150,000 or less where the borrower does not provide documentation of revenue reduction with its application, the lender shall perform this review when the borrower provides such documentation. 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. [30] rendition of the daily Federal Register on FederalRegister.gov does not publication in the future. 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. documents in the last year, by the Animal and Plant Health Inspection Service This treatment follows the computation of self-employment tax from IRS Form 1040 Schedule SE Section A line 4 and removes the employer share of self-employment tax, consistent with how payroll costs for employees in the partnership are determined. Military procurement has also been omitted, mainly because military procurement contrasts with civic public procurement e.g. 10. Play was stopped at the World Championship after a protester vandalised table one and a second person tried to attach themselves to table two. [27] [10] 1H NMR 1H 2H JI 2H 2H 2HII 3H 10 6 8 (ppm) 4 2 O 13C NMR 220 200 180 160 140 120 100 80 60 40 20 0 8 (ppm) Deduce the structure from the spectra. Preserving funds for such businesses is necessary because only businesses that are still in operation will retain employees, which is a primary purpose of the PPP. SBA has requested emergency approval for the IC required to implement the Second Draw PPP Program described above. Key insights. must make the certifications listed in subsection (B)(12) of the Consolidated First Draw PPP IFR, except: (i) Instead of the certification in subsection (B)(12)(v) of the Consolidated First Draw PPP IFR, the applicant must certify that the applicant has not and will not receive another Second Draw Paycheck Protection Program Loan; and. New Documents (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. Subsection (c)(1)(ii) of the IFR clarifies that the full amount of the borrower's First Draw PPP Loan includes the amount of any increase on such First Draw PPP Loan made pursuant to the Economic Aid Act. In some cases, an applicant may receive a second draw typically equal to the first. documents in the last year, 1413 2nd draw PPP loans In December, Congress funded an additional $284.45 billion (Division N, Title III, Section 323) for a second-round (or "2nd draw") of PPP for businesses with 300 employees or less with a final covered period date of March 31, 2021 (Division N, Title III, Section 343). The requirements applicable to PPP lenders are in sections (C) and (D) of the Consolidated First Draw PPP IFR. With an additional $284 billion allocated to the PPP, the Small Business Administration has released initial guidance related to first draw and second draw PPP loans. For second draw loans, the bill appears to exclude from eligibility borrowers that previously qualified as a "small business concern" under the "alternative size standard" or the borrower's NAICS Code. This interim final rule announces the implementation of section 311 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act). Summary of Key Terms of PPP Second Draw Loans, 3. Business Concerns With More Than One Physical Location, E. Second Draw PPP Loan Application and Documentation Requirements, G. Loans to Borrowers With Unresolved First Draw PPP Loans, IV. An updated PPP application form has been issued by the SBA, together with an application for the new Second Draw Loan program. A borrower that did not experience a 25 percent annual decline in revenues, or that was not in operation in all four quarters of 2019, may still meet the revenue reduction requirement under one of the quarterly measurements described above. See section (B)(3)(c) of the Consolidated First Draw PPP IFR. Cooper called the budget situation "the worst in Metro's history.". While every effort has been made to ensure that The Small Business Administration ("SBA") and the Department of the Treasury have begun releasing guidance for the reopened Paycheck Protection Program ("PPP") for "First Draw" PPP loans and for the new "Second Draw" PPP loans, both provided for under the recently enacted COVID 19 relief package (the "Act").This alert summarizes the SBA's top-line overview of the First and . Under section 7(a)(37) of the Small Business Act (15 U.S.C. Subsection (e)(9) also prohibits an entity that has permanently closed from receiving a Second Draw PPP Loan because paragraph 7(a)(37)(A)(iv) of the Small Business Act is best understood to describe existing businesses. Subsection (e)(1) of the IFR implements this restriction. 04/17/2023, 149 These calculations are reflected in subsection (f) of this IFR. 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