for guidance on these standards for business concerns with more than one physical location, except that, for Second Draw PPP Loans, the number of employees per physical location is limited to 300 rather than 500. the material on FederalRegister.gov is accurately displayed, consistent with This summary provides additional information and explains the key terms in the IFR. Except for small government jurisdictions with a population of less than 50,000, neither State nor local governments are small entities.. See subsection (D)(7) of the Consolidated First Draw PPP IFR. Almost $400 billion has been forgiven. 4 . SBA guarantees 100 percent of Second Draw PPP Loans and SBA may forgive up to the full principal loan amount. 5 U.S.C. From Jan. 11 through Jan. 24, SBA approved more than 400,000 loans for $35 billion, according to an agency report. It appears to limit second draw loans to businesses that have no more than 300 employees. At Womply, a. L. 116-260) into law to provide continued assistance to individuals and businesses that have been financially impacted by the ongoing coronavirus pandemic. This aggregation applies for the entire period of measurement, not just the period after the affiliation arose. (9) an entity that has permanently closed. 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. 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). The Second Edition of this best-selling introduction for practitioners uses new 5 U.S.C. This interim final rule is economically significant for the purposes of Executive Orders 12866 and 13563, and the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA) had determined that this is a major rule under the Congressional Review Act (5 U.S.C. [29] 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. This is because the SBA is prioritizing the disbursement of second draw loans. These tools are designed to help you understand the official document SBA will consider these comments and the need for making any revisions as a result of these comments. of the consolidated interim final rule implementing . The intent of the Economic Aid Act is that SBA provide relief to America's small businesses expeditiously. 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. 636(a)(36)(D)(iv), as added by the CARES Act and amended by the Economic Aid Act, waived the affiliation rules contained in 121.103 for (1) any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a NAICS code beginning with 72; (2) any business concern operating as a franchise that is assigned a franchise identifier code by SBA; (3) any business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. Congress designated $137 billion for PPP second draw loans as part of a larger funding and relief package. Learn more here. 20. (ii) Gross receipts of affiliates are calculated as follows: (A) Gross receipts of a borrower with affiliates is calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate. Let's try checking if QuickBooks is up-to-date with our latest payroll release to run the PPP Forgiveness Payroll report for the second draw loans. 804(2)). 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 (. Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans. 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. 612); (5) any person or entity that receives a grant for shuttered venue operators under section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act; (6) any entity in which the President, the Vice President, the head of an Executive department, or a Member of Congress, or the spouse of such person as determined under applicable common law, directly or indirectly holds a controlling interest in the entity, where: (i) controlling interest means owning, controlling, or holding not less than 20 percent, by vote or value, of the outstanding amount of any class of equity interest in an entity; (A) A share in an entity, without regard to whether the share is transferable or classified as stock or anything similar; (B) a capital or profit interest in a limited liability company or partnership; or. The Economic Aid Act authorizes the U.S. Small Business Administration to guarantee additional loans under the temporary Paycheck Protection Program, which was originally established under the Coronavirus Aid, Relief, and Economic Security Act to provide economic relief to small businesses nationwide adversely impacted under the Coronavirus Disease 2019 (COVID-19) Emergency Declaration (COVID-19 Emergency Declaration) issued by President Trump on March 13, 2020. ( PPP . by the Internal Revenue Service the current document as it appeared on Public Inspection on Explore our world of powerful digital transformation solutions & services. No personal guarantees will be required. 5 U.S.C. 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. 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. designed to cover the modelling issues that are relevant to facilitate the construction of robust and readily understandable models. 301 et seq.) L. 116-136, section 1114; and Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, Pub. daily Federal Register on FederalRegister.gov will remain an unofficial Despite earlier moves to streamline . regulatory information on FederalRegister.gov with the objective of 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. 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). If the lender identifies errors in the borrower's calculation or a material lack of substantiation in the borrower's supporting documents, the lender should work with the borrower to remedy the issue. Subsection (c)(2) also adapts the methodology for calculating affiliate receipts from 13 CFR 121.104. The terms and conditions of the Second Draw PPP Loans are subject to the same terms and conditions as First Draw PPP Loans. If you are applying for a second draw PPP loan, you need to make sure each number and name matches the first draw loan application exactly. Until the ACFR grants it official status, the XML New Documents 04/17/2023, 863 These terms and conditions specific to Second Draw PPP Loans are summarized below. Section 322 of the Economic Aid Act. (iii) If a borrower meeting the criteria in subsection (6)(i) of this section has employees, the maximum loan amount is calculated as the lesser of: (1) The sum of (i) the difference between gross income and employee payroll costs of the borrower in 2019 or 2020 (at the election of the borrower), as reported on a Schedule F (IRS Form 1040), that is not more than $100,000, divided by 12, and (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. to formulate solutions to problems. All Second Draw PPP Loans will have the same terms regardless of lender or borrower. Applicability Date: This interim final rule applies to loan applications and applications for loan forgiveness submitted for Paycheck Protection Program Second Draw Loans. (v) For the purpose of determining whether a person has a controlling interest in the entity, the securities owned, controlled, or held by the President, the Vice President, the head of an Executive department, or a Member of Congress, shall be aggregated with the securities held by his or her spouse as determined under applicable common law; (7) any issuer, the securities of which are listed on an exchange registered as a national securities exchange under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. (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. Second Draw PPP Loans generally are guaranteed by SBA under the same terms, conditions, and processes as First Draw PPP Loans. These credits are available to employers (except state and local governments and their instrumentalities and small business who . Given the number of applicants that got shut out when the program. 636(a)(36)). As was the case with the original PPP, actual loan amounts will be based on an applicant's payroll. These methodologies are based on the corresponding methodologies for self-employed individuals and partnerships that are used for First Draw PPP Loans. No collateral will be required. Call Center Representative at 833-572-0502, or the local SBA Field Office; the list of offices can be found at https://www.sba.gov/tools/local-assistance/districtoffices. If a borrower does not submit an application for loan forgiveness, such documentation must be provided upon SBA's request. These markup elements allow the user to see how the document follows the Play was stopped at the World Championship after a protester vandalised table one and a second person tried to attach themselves to table two. (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. 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. 1503 & 1507. informational resource until the Administrative Committee of the Federal See subsections (B)(4)(b) and (B)(4)(e) of the Consolidated First Draw PPP IFR. 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. 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. If you wish to submit confidential business information (CBI) as defined in the User Notice at www.regulations.gov,, please send an email to ppp-ifr@sba.gov. 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 . Subsection (b) also confirms that SBA's Consolidated First Draw PPP IFR, Frequently Asked Questions (FAQs), and other guidance about PPP loans under section 7(a)(36) of the Small Business Act (15 U.S.C. With respect to a lender that relies on such a certification or documentation related to a Second Draw PPP Loan, an enforcement action may not be taken against the lender, and the lender shall not be subject to any penalties relating to loan origination or forgiveness of the Second Draw PPP Loan, if(A) the lender acts in good faith relating to loan origination or forgiveness of the Second Draw PPP Loan based on that reliance; and (B) all other relevant Federal, State, local, and other statutory and regulatory requirements applicable to the lender are satisfied with respect to the Second Draw PPP Loan. 04/17/2023, 149 Rene Moniz, Esq.'s Post Rene Moniz, Esq. Paragraph 7(a)(36)(D)(iii)(I) of the Small Business Act. They have already, or will soon, use the full amount of their first . [4] Eurostat-OECD PPP Programme, including its organisation, the various surveys . 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. that agencies use to create their documents. (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. The agency must, however, publish the certification in the Federal Register at the time of publication of the rule, along with a statement providing the factual basis for such certification. If the agency head has not waived the requirements for a regulatory flexibility analysis in accordance with the RFA's waiver provision, and no other RFA exception applies, the agency must prepare the regulatory flexibility analysis and publish it in the Federal Register at the time of promulgation or, if the rule is promulgated in response to an emergency that makes timely compliance impracticable, within 180 days of publication of the final rule. Only official editions of the 604(a), 608(b). (iii) If the applicant is self-employed and does not have employees, the applicant must provide (a) its 2019 or 2020 (whichever was used to calculate loan amount) Form 1040 Schedule C, (b) a 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record that establishes that the applicant is self-employed; and (c) a 2020 invoice, bank statement, or book of record to establish that the applicant was in operation on or around February 15, 2020. [FR Doc. maturity of five years (i) for a Second Draw PPP Loan of up to (and including) $50,000, in an amount equal to the lesser of: (A) 50 percent of the balance of the financing outstanding at the time of disbursement of the loan; or. A brilliantly original and fascinating story with many . 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