Federal SBA Program Update: PPP round two, EIDL Advance Forgiveness

January 12, 2021

Paycheck Protection Program (PPP)

The U.S. Small Business Administration (SBA), in consultation with the Department of Treasury, re-opened the Paycheck Protection Program (PPP) loan process on Monday, January 11, 2021, for new borrowers and certain existing PPP borrowers. Read full press release
 

Eligibility for a PPP loan now includes all of the following organizations:

  • Small businesses
  • Tribal businesses
  • Self-employed individuals
  • Independent contractors
  • Sole proprietorships
  • 501(c)(3) nonprofit organizations
  • 501(c)(6) organizations (with certain lobbying restrictions applying)
  • 501(c) and quasi-governmental DMOs (with certain lobbying restrictions applying)

About the new version of PPP

The following provides detailed information for each corresponding element of the federal stimulus:

Key PPP updates

  • PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
  • PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
  • The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
  • The PPP provides greater flexibility for seasonal employees;
  • Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
  • Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan. 
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
  • Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
  • Has no more than 300 employees; and 
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

PPP Resources

Visit U.S. Small Business Administration (SBA) website for additional details about the PPP and EIDL programs

Currently released guidance:

PPP Preparation form [PDF]

OEDIT COVID-19 Business and Nonprofit Resources (includes a varied of funding opportunities) 

EIDL Advance Forgiveness

Many businesses who applied and received both the PPP and the EIDL Advance found a wrinkle in the program when they applied for PPP Forgiveness. This issue has now been fixed. Read the details below from the Northwest SBDC,

Repeal of EIDL Advance Deduction Requirement for SBA Loan Forgiveness

Section 1110(e)(6) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) required SBA to deduct the amount of any Economic Injury Disaster Loan (EIDL) Advance received by a PPP borrower from the PPP forgiveness payment remitted by SBA to the PPP lender. On October 2, 2020, SBA began remitting forgiveness payments to PPP lenders, with the required EIDL Advance deductions. On December 27, 2020, the President signed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act), which repealed Section 1110(e)(6) of the CARES Act.1
 
In order to implement the repeal, the lender Forgiveness Platform has been updated and, effective immediately, SBA will no longer deduct EIDL Advances from forgiveness payments remitted to PPP lenders. This change will be applied to SBA forgiveness payments with a status of “Payment Confirmed” dated December 29, 2020 or later.
 
For those loans where SBA remitted a forgiveness payment to a PPP lender that was reduced by an EIDL Advance, SBA will automatically remit a reconciliation payment to the PPP lender for the previously-deducted EIDL Advance amount, plus interest through the remittance date. PPP lenders are not required to request remittance of the reconciliation payment.
 
SBA will identify forgiveness payments that were reduced by EIDL Advances and automatically remit a reconciliation payment to the ACH account identified by the PPP lender in the Forgiveness Platform. Upon confirmation that the payment has been accepted by the PPP lender, SBA will generate a Notice of Paycheck Protection Program Reconciliation Payment that will be available in the Forgiveness Platform.
 
The PPP lender is responsible for notifying the borrower of the reconciliation payment. The PPP lender is also responsible for re-amortizing the loan and notifying the borrower of the amount of the next payment due, or advising the borrower that the loan has been paid in full, whichever is applicable. If the amount remitted by SBA to the PPP lender exceeds the remaining principal balance of the PPP loan (because the borrower made a payment on the loan), the PPP lender must remit the excess amount, including accrued interest paid by the borrower, to the borrower. Questions concerning this Notice may be directed to the Lender Relations Specialist in the local SBA Field Office. Local SBA Field Offices can be found at  https://www.sba.gov/tools/localassistance/districtoffices