How to Calculate Maximum Loan Amounts For First Draw PPP Loans and Second Draw PPP Loans and What Documentation to Provide – By Business Type
The SBA issued guidance so the following business types may more accurately calculate their maximum loan amounts for First Draw PPP Loans and Second Draw PPP Loans:
- Self-employed, no employees
- Self-employed, with employees
- Self-employed farmer or rancher
- Partnerships
- S Corporations and C Corporations
- Nonprofit Organizations
- Nonprofit Religious Institutions, Veterans Organizations and Tribal Businesses
- LLC Owners
- Corporations and Nonprofits in operation on February 15, 2020, but not in operation between February 15, 2019, and June 30, 2019
- Self-employed or Partnerships in operation on February 15, 2020, but not in operation between February 15, 2019, and June 30, 2019
The SBA Guidance also provides information on the following:
- What documentation is needed for the purpose of substantiating payroll costs
- In addition to pre-tax employee contributions for health insurance, what other pre-tax employee contributions for fringe benefits that may have been excluded from IRS Form 941 Taxable Medicare wages & tips that is part of employee gross pay
- How to account for federal taxes when determining payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven
- Is there a limit on the dollar amount of First Draw PPP Loans a corporate group can receive
- What are gross receipts for the purpose of determining eligibility for a Second Draw PPP Loan and is not included in gross receipts
- What reference periods can be used to determine whether the applicant can demonstrate at least a 25 percent gross receipts reduction in order to qualify for a Second Draw PPP Loan
- What documentation is needed to show the reduction in gross receipts for Second Draw PPP Loans (for loans greater than $150,000 or for loans less than $150,000) and when do I have to provide the documentation
- Whether or not payroll costs from the prior 12 months when computing a First Draw PPP Loan amount, can be used to compute a Second Draw PPP Loan amount
- Is there a limit on the dollar amount of Second Draw PPP Loans a corporate group can receive
Here is a link to the SBA Guidance on First Draw PPP Loans: https://home.treasury.gov/system/files/136/PPP--How-to-Calculate-Maximum-Loan-Amounts-for-First-Draw-PPP-Loans-and-What-Documentation-to-Provide-By-Business-Type.pdf
Here is a link to the SBA Guidance on Second Draw PPP Loans: https://home.treasury.gov/system/files/136/Second-Draw-PPP-Loans--How-Calculate-Revenue-Reduction-Maximum-Loan-Amounts-Including-Documentation-Provide1192021.pdf
Targeted EIDL Advances. The SBA is preparing to offer Targeted EIDL Advances and here is a link which identifies some general guidelines for eligibility:
Revised PPP Loan Forgiveness Forms. On January 19, 2021, PPP Loan Forgiveness Applications were revised. Here are links to the most recent versions:
- Revised PPP – Loan Forgiveness Application and Instructions – Form 3508S (now for PPP Loans of $150,000 or less):
- Revised PPP – Loan Forgiveness Application and Instructions – Form 3508EZ: https://home.treasury.gov/system/files/136/PPP--Loan-Forgiveness-Application-Instructions--Form3508EZ-1192021.pdf
- Revised PPP – Loan Forgiveness Application and Instructions – Form 3508: https://home.treasury.gov/system/files/136/PPP--Loan-Forgiveness-Application-and-Instructions--Form-3508-1192021.pdf
PPP – Borrower’s Disclosure of Certain Controlling Interests:
Interim Final Rule on Loan Forgiveness Requirements and Loan Review Procedures as Amended by Economic Aid Act: This includes an update on Paycheck Protection Program Loan Forgiveness Requirements and Paycheck Protection Program SBA Loan Review Procedures and Related Borrower and Lender Responsibilities.
The Attorneys at Levene Gouldin & Thompson, LLP are available to provide advice and counsel concerning these new statutory obligations and other matters related to COVID-19.