COVID-19 > Federal Programs
Paycheck Protection Program (PPP)
Choice Bank is now accepting applications for First Draw and Second Draw loans.
On 1/8/2021, the US Small Business Administration announced that the Paycheck Protection Program (PPP) will reopen. Borrowers will be able to request an original PPP loan (known as a first draw loan), an increase to their original PPP loan, or a second PPP loan (knows as a second draw loan). Find more information below.
PPP First Draw Loans
If you received a PPP loan in 2020, you are not eligible to receive another First Draw PPP Loan, but may be eligible for a second draw PPP loan. The only exceptions:
- If a borrower received a loan in 2020 and returned all the PPP loan they may be eligible under PPP First Draw.
- If a borrower received a loan in 2020 and returned part of the PPP loan, they may reapply for an amount equal to the difference between the amount retained and the amount previously approved.
- If a borrower did not accept the full amount of a PPP loan which was approved, the borrower may request an increase in the amount of the PPP loan up to the amount previously approved. (SBA will issue additional guidance on this.)
To view application requirements or if you’re ready to apply, click here.
- 100% guaranteed SBA 7a loans
- Delivered by SBA 7a preferred lenders such as Choice Bank
- 1% maximum interest rate
- Payments will be deferred until SBA remits forgiveness payment. Borrower must begin making payments on their PPP loan if they have not applied for forgiveness 10 months after the end of their covered period
- Loans may be made until March 31, 2021
- A portion of the loan may be forgiven by SBA if used for eligible expenses
- The forgiven portion will be paid to the lender to reduce the loan
- The remaining loan amount after loan forgiveness will be repaid by the business over 5 years
- No collateral
- No personal guarantees
Who May Apply?
- Any business with 500 or fewer employees or those that meet SBA’s current size standards
- Self-employed Individuals
- Eligible entities include: Business entities, Sole proprietors, independent contractors, and self-employed individuals, 501(c)3s, 501(c)9s, tribal business and certain news organizations
- Housing cooperatives, 501(c)6s, or destination marketing organizations with less than 300 employees
- Entities with more than 500 employees in certain industries that meet SBA’s alternative size standard or SBA’s size standards for those particular industries can also apply.
- Applicants in NAICS code 72 (Accommodation and Food Service) may apply if they have 500 or few employees per physical location
- Franchises that are assigned a franchise identifier code by SBA. More Info Here
- A borrower may have both an EIDL loan and a PPP loan if each was used for different purposes
- See side by side comparison of the programs to help you decide which program(s) are right for you
Loan Amount and Uses
- Up to $10 million to a borrower and affiliates
- Maximum loan size to a borrower is 2.5 times the average monthly payroll
- PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations
- Economic Injury Disaster Loan (EIDL) may be rolled into the PPP loan
Eligibility and Terms
- The borrower must have been in business on 2/15/2020
- The borrower must certify:
- The loan is needed to support ongoing operations
- Funds will be used to retain workers, pay payroll expenses and pay overhead expenses
- They have not applied for or received an SBA 7a loan for similar purposes or duplicative amounts
- See the Borrower Application for a full list of certifications
- PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained
- The loan proceeds are spent on payroll costs and other eligible expenses: and
- At last 60% of the proceeds are spent on payroll costs
- An entity not in business on 2/15/2020
- A publicly traded entity (exemptions for certain news organizations)
- Any entity that has or will receive a Shuttered Venue Operator Grant
- Entity in which a controlling interest is held by the President, Vice President, head of an Executive Department or a Member of Congress or the spouse of any of them
- An entity engaged in an activity that is illegal under Federal, State or local law
- Household employer (e.g. nanny or housekeeper)
- Entity with an owner that is subject to any of the criminality-related situations specified in the PPP IFR published on 1/8/2021 (pages 24-25). Click here
- Entity or owner that has delinquent federal debt or has defaulted on a federal debt in the last 7 years causing a loss to the government
What is the process and when will I get funds?
- Bank/borrower will be in control of when funds are delivered based on how quickly they can provide the required information
- SBA has incorporated a secondary due diligence check after a Lender submits an application to their portal. It’s expected that Lender’s will not receive an SBA loan number the same day they submit an application.
- As a SBA Preferred Lender (PLP) Choice Bank has the capacity to turn loans quickly
- Be aware of deceitful lenders. The Federal Trade Commission has shared information regarding this practice and how you can check your lender here
PPP Second Draw Loans
The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan of up to $2 million with the same general loan terms as their First Draw PPP Loan. Refer to “PPP First Draw” for other terms not identified here.
To view application requirements or if you’re ready to apply, click here.
Who May Apply?
- 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; or if NAICS 72, employs no more than 300 employees per physical location (also applies to applicants owned or controlled by a NAICS 511110 or 5151 business or nonprofit public broadcasting entity within these NAICS codes); and
- Can demonstrate at least a 25% reduction in gross receipts between comparable calendar quarters in 2019 and 2020.
- A borrower that was in operation for all 4 quarters of 2019 will be found to meet the required reduction IF:
- It experienced a reduction in annual receipts of 25% or more in 2020 compared to 2019 AND
- Borrower submits copies of tax returns showing reduction
- Up to $2 million.
- Businesses that are part of a single corporate group shall in no event receive more than $4 million of Second Draw PPP loans in aggregate.
- For most borrowers, the maximum loan amount of a PPP Second Draw Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million.
- For borrowers in the Accommodation and Food Services sector (NAICS 72), the maximum loan amount for a PPP Second Draw Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.
- Any entity that was ineligible for a First Draw PPP loan – even if the entity received a loan despite ineligibility
- An entity primarily engaged in political or lobbying activities
- 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 China or Hong Kong
- Any person required to submit registration statement under the Foreign Agents Registration Act
- A person or entity that receives a grant for shuttered venue operators
- Entities in which the President, Vice President, head of an Executive department or Member of Congress, or the spouse of any of them, hold at least 20% ownership stake
- A publicly traded company
- Borrowers that already received a Second Draw loan
- An entity that has permanently closed
First Draw Increases
To Request an Increase:
- Fill out the web form here.
- Our team will review your request and follow up directly with next steps or for additional information needed to process your request.
- Review the additional documentation that may be needed below.
There are narrow circumstances when PPP first draw loans can be increased. The rules apply to PPP loans approved on or before August 8 and those that have not been issued a forgiveness payment. Increases may only be made by the Lender that made the first PPP Loan.
- Certain borrowers may reapply or request an increase in their PPP Loan amount, as follows –
- A borrower that returned all of a PPP loan on or before December 27, 2020 may reapply for a loan in an amount the borrower is eligible for under current PPP rules
- A borrower that returned part of a PPP loan on or before December 27, 2020 may reapply for an amount equal to the difference between the amount retained and the original approval amount
- A borrower that did not accept the full amount of a PPP loan for which it was approved on or before December 27, 2020, may request a PPP loan increase in an amount up to the original approval amount
- If a partnership received a First Draw PPP loan that did not include partner compensation in its original loan calculation.
- Seasonal Employers
- Those that received a First Draw PPP loan may apply for an increase using new methodology using a different 12-week period between 2/15/2019 – 2/15/2020.
- Farmers and Ranchers
- Those that received a First Draw PPP loan using net income for its loan calculation may request an increase based on the new methodology using gross income
Required Documentation to Support the Increased Loan Amount
Most required documentation should already be on file with us from your First Draw PPP loan. Visit our website, here, to view these requirements. Below are the documents that will be used to specifically support the increase in loan amount.
- Partnerships: Documentation that supports missing partner compensation
- Seasonal: Documentation that supports the newly selected 12-week payroll period beginning 2/15/2019 and ending 2/15/2020 and revised calculation of loan amount
- Farmers & Ranchers: Documentation that supports the revised calculation of loan amount (using gross income instead of net income)
More information on calculating your loan amount can be found here.
SBA Product Comparison
Use this comparison chart to help you decide which loan to apply for:
|Economic Injury Disaster Loan (EIDL)||Paycheck Protection Program (PPP)||Paycheck Protection Program (PPP) – Draw 2|
|A direct loan made by SBA||Preferred SBA lenders (PLP), such as Choice Bank, make the loans||Preferred SBA lenders (PLP), such as Choice Bank, make the loans|
|A maximum interest rate of 3.75%||A maximum interest rate of 1%||A maximum interest rate of 1%|
|For working capital, fixed debt obligations, pay bridge loans, credit cards if for COVID-19 purposes||For eligible working capital and payroll expenses, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations||For eligible working capital and payroll expenses, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations|
|No set maximum loan size||Maximum loan size is 2.5 times your average monthly payroll up to a maximum loan amount of $10,000,000||Maximum loan size is 2.5 times your average monthly payroll or 3.5 times your average monthly payroll for certain borrowers in Accommodation and Food Service up to a maximum loan amount of $2,000,000|
|No forgiveness||500 or few employees||300 or fewer employees|
|30-year term||Funds may be forgiven after 8 - 24 weeks by showing funds were used for eligible expenses. At least 60% must have been spent on eligible payroll||Funds may be forgiven after 8 - 24 weeks by showing funds were used for eligible expenses. At least 60% must have been spent on eligible payroll|
|Collateral and Personal Guarantees required||Balances not forgiven will be repaid over a 2-year term or a 5 year term depending on the date of your loan||Balances not forgiven will be repaid over a 5 year term|
|No collateral and no personal guarantees required||No collateral and no personal guarantees required|
|Funds are available through 3/31/2021||Borrower must have previously received a first draw PPP loan and will or has used the full amount for authorized uses prior to disbursement of draw 2 loan|
|Funds are available through 3/31/2021|
Program Fact Sheet
- PPP Interim Final Rule governing borrower eligibility and PPP application and origination requirements for new PPP loans. Additionally, addressing increases and forgivenessClick Here ›
- PPP Interim Final Rule for second draw loansClick Here ›
- Top Line Overview of PPP First DrawClick Here ›
- Top Line Overview of PPP Second DrawClick Here ›
- First Draw PPP Loan Increases – SBA Procedural NoticeClick Here ›
We are here to help! If you have questions regarding the Paycheck Protection Program or other SBA Programs that might be available to you, contact us by email or phone. Due to a high volume of inquiries, please allow up to 24 hours for a response.