See paragraph 7(a)(37)(O) of the Small Business Act. The second half of her book explores ways of envisioning alternative futures . Corporate group has the same meaning as in subsection (B)(4)(f) of the Consolidated First Draw PPP IFR. [4] In addition, the SBA has addressed some issues in their guidance. Borrowers that need assistance or have questions should call (877) 552-2692, Monday - Friday, 8 a.m. - 8 p.m. EST. SBA guarantees 100 percent of Second Draw PPP Loans and SBA may forgive up to the full principal loan amount. 6. 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]. See subsection (D)(7) of the Consolidated First Draw PPP IFR. Play was stopped at the World Championship after a protester vandalised table one and a second person tried to attach themselves to table two. Under section 7(a)(37) of the Small Business Act (15 U.S.C. legal research should verify their results against an official edition of (CRA). Paragraph 7(a)(36)(D)(iv) of the Small Business Act (15 U.S.C. This information collection (IC) consists of SBA Form 2483-SD (Paycheck Protection Program Second Draw Application Form) and SBA Form 2484-SD (Paycheck Protection Program Lender's ApplicationSecond Draw Loan Guaranty. 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. The requirements applicable to PPP lenders are in sections (C) and (D) of the Consolidated First Draw PPP IFR. Official websites use .gov A .gov web belongs to an official government organization in the United States. However, if a concern acquired a segregable division of another business concern during 2020, gross receipts do not include the receipts of the acquired division prior to the acquisition. 35), and the Regulatory Flexibility Act (, Paperwork Reduction Act, 44 U.S.C. Effective Date: This interim final rule is effective January 12, 2021. In addition, the Economic Aid Act provides that a Second Draw PPP Loan may only be made to an eligible borrower that (i) has received a First Draw PPP Loan, and (ii) has used, or will use, the full amount of the First Draw PPP Loan on or before the expected date on which the Second Draw PPP Loan is disbursed to the borrower. At Womply, a. 1. offers a preview of documents scheduled to appear in the next day's Second Draw PPP Loans are eligible for loan forgiveness on the same terms and conditions as First Draw PPP Loans, except that Second Draw PPP Loan borrowers with a principal amount of $150,000 or less are required to provide documentation of revenue reduction if such documentation was not provided at the time of the loan application as specified in subsections (g)(2)(iv) and (v) of this section. Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans, including but not limited to: 100 percent guaranteed by the SBA no collateral no personal guarantees 1 percent interest rate (calculated on a noncompounding, nonadjustable basis). Further, although military procurers . Chapter 35, https://www.federalregister.gov/d/2021-00452, MODS: Government Publishing Office metadata, https://www.sba.gov/tools/local-assistance/districtoffices, section 101 of title 5, United States Code, https://www.sba.gov/sites/default/files/2020-12/Final%20PPP%20FAQs%20%28December%209%202020%29-508.pdf. Subsection (g)(2) of this IFR provides that lenders are subject to the same requirements when making Second Draw PPP Loans as when they are making First Draw PPP Loans. Certain 2020 first draw PPP loans were flagged with hold codes after SBA review. Small Business Administration's Office of Advocacy guide: How to Comply with the Regulatory Flexibility Ac. This feature is not available for this document. (9) an entity that has permanently closed. The same affiliation rules that apply to First Draw PPP Loans apply to Second Draw PPP Loans, except as provided in this IFR. 808(2). documents in the last year, 438 [7] Authority: However, it did not specify how payroll costs should be calculated for Second Draw PPP Loans to farmers and ranchers. (iii) A lender may rely on any certification or documentation submitted by an applicant for a PPP loan or an eligible recipient or eligible entity that (A) is submitted pursuant to all applicable statutory requirements, regulations, and guidance related to a PPP loan, including under sections 7(a)(36) or (37) of the Small Business Act (15 U.S.C. The terms and conditions of the Second Draw PPP Loans are subject to the same terms and conditions as First Draw PPP Loans. SBA will resolve issues related to unresolved borrowers expeditiously. 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. regulatory information on FederalRegister.gov with the objective of In some cases, an applicant may receive a second draw typically equal to the first. 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. Moreover, this definition will enhance the administrability of Second Draw PPP Loans because it is a definition already used by the Administration and many small businesses. or as otherwise specified in subsections (f)(2) through (f)(9) of this section. Like First Draw PPP Loans, Second Draw PPP Loans are intended to provide expeditious relief to America's small Start Printed Page 3713businesses. Two distinct Paycheck Protection Programs (PPP) opened on January 19, 2021. are not part of the published document itself. [13] ), that has more than one physical location and that employs not more than 300 employees per physical location is eligible to receive a Second Draw PPP Loan if it meets the eligibility criteria in subsection (c)(1) and: (1) Is majority owned or controlled by a business concern that is assigned a NAICS code beginning with 511110 or 5151 or, with respect to a public broadcasting entity (as defined in section 397(11) of the Communications Act of 1934 (47 U.S.C. in terms of organisations or incentives for innovation (Walker, 1994). Since most borrowers will use 2019 or 2020 the rule text refers only to 2019 or 2020 for simplicity and readability. electronic version on GPOs govinfo.gov. These can be useful For those careful and cautious borrowers grappling with the meaning of the necessity certification in the context of PPP2 loans, this guidance provides welcomed clarity. 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. Under the CARES Act, any single business entity that is assigned a NAICS code beginning with 72 (including hotels and restaurants) and employs not more than 500 employees per physical location is eligible to receive a First Draw PPP Loan. 636) in section 304(b) of the Economic Aid Act. These methodologies have been adjusted to eliminate the provision for refinancing of an EIDL loan, which does not apply to Second Draw PPP loans and to apply the choice of time period for calculating payroll costs, consistent with other Second Draw PPP loans. [10] Register documents. 7. The intent of the Economic Aid Act is that SBA provide relief to America's small businesses expeditiously. (C) was in business as of February 15, 2020; is calculated according to (ii) or (iii) of this subsection(e)(6), depending on whether the borrower has employees. 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. documents in the last year, 29 (B) The Applicant received a First Draw Paycheck Protection Program Loan and, before the Second Draw Paycheck Protection Program Loan is disbursed, will have used the full loan amount (including any increase) of the First Draw Paycheck Protection Program Loan only for eligible expenses. 5. 5 U.S.C. Which program provides small businesses with funds in pay up to 8 weeks of payroll costs including benefits. The Consolidated First Draw PPP IFR titled Business Loan Program Temporary Changes: Extension of and Changes to Paycheck Protection Program restates existing regulatory provisions to provide lenders and new PPP borrowers a single regulation to consult on borrower eligibility, lender eligibility, and loan application and origination requirements issues for new First Draw PPP loans, as well as general rules relating to First Draw PPP Loan increases and loan forgiveness. 27. The Economic Aid Act also prohibits several additional categories of borrowers from receiving a Second Draw PPP Loan under section 7(a)(37) of the Small Business Act. Specifically, the RFA normally requires agencies to describe the impact of a rulemaking on small entities by providing a regulatory impact analysis. 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. 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. Businesses are eligible for a Second Draw loan if: They previously received a First Draw PPP loan. If a borrower does not submit an application for loan forgiveness, such documentation must be provided upon SBA's request. SBA also adopted a religious exemption to the affiliation rules by regulation,[19] (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. A business concern or entity primarily engaged in political activities 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 that describes itself as a think tank in any public documents; certain entities organized under the laws of the People's Republic of China or the Special Administrative Region of Hong Kong, or with other specified ties to the People's Republic of China or the Special Administrative Region of Hong Kong; any person required to submit a registration statement under section 2 of the Foreign Agents Registration Act of 1938 (. Additional resources pertaining to the Economic Aid Act and PPP - including application forms, Lender guidance, and PPP program rules - can be found on . More information and documentation can be found in our 04/17/2023, 209 The Economic Aid Act provides that, to be eligible for a Second Draw PPP Loan, the borrower must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019. Subsection (c)(1)(iv)(A) of the IFR reflects this methodology. 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. Per the SBA's Jan. 14, 2021, Interim Final Ruling (IFR) Protection Program (PPP) Second Draw Loans, if a first draw PPP loan has an unresolved issue, which may be due to hold codes or compliance . In such cases, additional documentation is not required because the lender already has the relevant documentation supporting the borrower's payroll costs. See . A borrower's average monthly payroll costs may be based on calendar year 2020, calendar year 2019,[36] Procedures for Addressing Unresolved Issues on Borrower First Draw PPP Loans CONTROL NO. Until the ACFR grants it official status, the XML (2) At the time an applicant submits its loan application form, it must submit the following unless the documentation was submitted to the lender for the First Draw PPP Loan (i.e., the applicant used calendar year 2019 figures to determine both its First Draw PPP Loan amount and its Second Draw PPP Loan amount, and 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): (i) If the applicant is not self-employed, the applicant's Form 941 (or other tax forms containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever was used to calculate payroll), as applicable, or equivalent payroll processor records, along with evidence of any retirement and employee group health, life, disability, vision and dental insurance contributions, must be provided. Eligible employers can claim a tax credit equal to 50% of qualifying wages (defined as wages plus the cost of employer-provided healthcare up to $10,000 per employee) paid between March 13, 2020, and December 31, 2020. Loan forgiveness of Second Draw PPP Loans and the loan review process for Second Draw PPP Loans are generally subject to the interim final rules regarding Loan Forgiveness and SBA Loan Review Procedures and Related Borrower and Lender Responsibilities, as modified to conform to the Economic Aid Act by the Consolidated First Draw PPP IFR, which is being published concurrently with this IFR. Except for small government jurisdictions with a population of less than 50,000, neither State nor local governments are small entities.. (ii) For a borrower that has income from self-employment and has employees, the maximum loan amount is the lesser of: (1) The sum of (i) the net profit of the borrower in 2019 or 2020 (at the election of the borrower), as reported on IRS Form 1040 Schedule C, that is not more than $100,000, divided by 12; (ii) the average total monthly payment for employee payroll costs incurred or paid by the borrower during the same year elected by the borrower; by, (2) 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. Eurostat-OECD PPP Programme, including its organisation, the various surveys . 23. (iv) The amount of any forgiven First Draw PPP Loan shall not be included toward any borrower's gross receipts. The documentation required to substantiate an applicant's payroll cost calculations is generally the same as documentation required for First Draw PPP Loans. 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