A new round of PPP is here

The PPP is a relief program managed by the SBA and created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The program aims to help small businesses affected by the COVID-19 crisis with relief funds by way of federally guaranteed loans. The SBA delegated authority to private lenders so that there is no separate SBA approval, which should result in faster application processing and approvals.

These loans were created to help small businesses retain employees and cover operational costs.

In addition to the businesses that were eligible in the initial round of PPP (including but not limited to small businesses, nonprofit organizations, veterans organizations, Tribal business concerns, small agricultural cooperatives that meet the SBA size standards, sole proprietors, self-employed individuals or independent contractors), during this round the program includes entities that are 501(c)(6)s, destination marketing organizations (DMOs), housing cooperatives, newspapers, broadcasters, and radio stations. Additionally, for first-time borrowers to qualify for eligibility, the entity may employ no more than 500 employees.

Yes, providing the requested information and filling out the first two pages of the application will assist in streamlining the application process ahead of time. By beginning to submit basic information for the application now, applicants will have more time to prepare for and focus on other steps of the application process prior to the launch of the PPP.

Upon completing the initial two pages, applicants will receive an email confirmation along with a unique link to their application to pick up right where they left off when the SBA officially launches the program.

No, submitting the requested information does not automatically approve an applicant's PPP Round B loan nor does it guarantee the applicant's loan will be approved once the program is officially open. By starting an application now, applicants are providing us with some of the required information about themselves and their business that we know will be required for the next round. There are still additional requirements which must be submitted and approved by the SBA, including but not limited to, payroll calculations, tax forms, and e-signatures in order to submit a completed application for consideration to receive a PPP Round B loan.

Providing this information only assists in beginning the initial stages of the application process to help save time once the program is officially open. Providing this information will not automatically result in an approval decision of an applicant's loan.

No, once applicants provide the requested information and fill out these first pages, they will be able to start the remainder of their application once the SBA begins accepting applications and has made the rest of the application requirements public. Applicants will receive an email once the program is officially open with a link that will return them to their application for completion and submission.

Once they have completed the pre-application, applicants will receive an email confirmation containing a unique link to their application where they will have the opportunity to make changes to the information initially entered as well as continue the application once the SBA beings to officially accept PPP Round B applications.

At this time the SBA has not officially opened the program and lenders are waiting for the Agency to release further guidance. The additional guidance will provide borrowers and lenders with additional details necessary to complete a final application. Once the program officially opens, you will be able to complete the final part of your PPP loan.

By starting an application now, applicants will be automatically signed up to receive email communication once the program is officially open and the rest of the application becomes available.

Yes, the program will be open for both first-time borrowers and borrowers looking for a second loan. Please note that the requirements for first-time borrowers and second time borrowers are different. Continue reading below for a non-exhaustive list of eligibility requirements and other helpful information. Please be advised that qualifying as an eligible business does not guarantee a PPP loan will be offered.

Yes, applicants may still apply for a Round B PPP loan through us regardless of receiving a PPP loan from a different lender in the previous round.

Please be advised that only eligible businesses may apply for a second draw loan. Each business is only entitled to one PPP second draw loan, and previous approval does not guarantee approval for a second draw loan.

Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans. These terms include:

• The guarantee percentage is 100 percent.
• No collateral will be required.
• No personal guarantees will be required.
• The interest rate will be 100 basis points or one percent, calculated on a non-compounding, non-adjustable basis.
• Maturity is five years.
• All loans will be processed by all lenders under delegated authority and lenders will be permitted to rely on certifications of the borrower in order to determine eligibility of the borrower and the use of loan proceeds.

In order to be eligible for a loan, first-time businesses must have been in operation on February 15, 2020.

The absolute maximum cap on loans (both first-time applicants and second draw borrowers) for PPP is $2,000,000. In your application you will be requested to submit certain documentation as proof of eligibility that will determine the amount your business is eligible for under the program. Please be advised that borrowers are not guaranteed the full amount requested in their application.

In addition to the expenses that were eligible under the previous round (payroll, rent, covered mortgage interest and utilities), both first-time applicants and borrowers applying for a second draw may also use their PPP loan to cover the following expenses: covered operations (software, cloud computing, and other human resources and accounting needs); property damage costs due to public disturbances that occurred during 2020 that are not covered by insurance; covered supplier costs; and covered worker protection expenditures and personal protective equipment (PPE) to help a loan recipient comply with federal, state or local health guidance including requirements issued by the CDC, OSHA, HHS and state or local governments.

Eligible businesses that received a prior loan must:

• Have 300 or fewer employees,
• Have sustained a 25 percent drop in revenue in any quarter of 2020 when compared to the same quarter in 2019, and
• A borrower must have used the full amount of its first PPP loan to apply for a second.

Yes, seasonal employers are eligible for PPP loans. Seasonal employers are defined as businesses that do not operate for more than seven months in a calendar year or earned no more than one-third of their receipts in any six months in the prior calendar year.

As defined by section 315 of the Economic Aid Act, a borrower is a seasonal employer if it does not operate for more than 7 months in any calendar year or, during the preceding calendar year, it had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts for the other 6 months of that year. Under section 336 of the Economic Aid Act, a seasonal employer must determine its maximum loan amount for purposes of the PPP by using the employer's average total monthly payments for payroll for any 12-week period selected by the seasonal employer beginning February 15, 2019, and ending February 15, 2020.

No. If the applicant or the owner of the applicant is the debtor in a bankruptcy proceeding, either at the time it submits the application or at any time before the loan is disbursed, the applicant is ineligible to receive a PPP loan. If the applicant or the owner of the applicant becomes the debtor in a bankruptcy proceeding after submitting a PPP application but before the loan is disbursed, it is the applicant's obligation to notify the lender and request cancellation of the application.

Failure by the applicant to do so will be regarded as a use of PPP funds for unauthorized purposes. The Borrower Application Form for PPP loans (SBA Form 2483), which reflects this restriction in the form of a borrower certification, is a loan program requirement. Lenders may rely on an applicant's representation concerning the applicant's or an owner of the applicant's involvement in a bankruptcy proceeding.

In most cases, a borrower will be considered together with its affiliates for purposes of determining eligibility for the PPP. Under SBA rules, entities may be considered affiliates based on factors including but not limited to stock ownership, overlapping management, and identity of interest. See 13 CFR 121.301(f). The affiliation rules under 13 CFR 121.301(f) are waived with respect to eligibility for a Second Draw PPP Loan for: (i) any business concern with not more than 300 employees that, as of the date on which the covered loan is disbursed, is assigned a NAICS code beginning with 72; and (ii) (A) any business concern (including any station which broadcasts pursuant to a license 25 granted by the Federal Communications Commission under title III of the Communications Act of 1934 (47 U.S.C. 301 et seq.) without regard for whether such a station is a concern as defined in 13 C.F.R. § 121.105, or any successor thereto) that employs not more than 300 employees, per physical location of such business concern and is majority owned or controlled by a business concern that is assigned a NAICS code beginning with 511110 or 5151; or (B) any nonprofit organization that is assigned a NAICS code beginning with 5151.

This rule exempts otherwise qualified faith-based organizations from the SBA's affiliation rules, including those set forth in 13 CFR part 121, where the application of the affiliation rules would substantially burden those organizations' religious exercise. For the reasons described in 85 Fed. Reg. 20817, the SBA's affiliation rules, including those set forth in 13 CFR part 121, do not apply to the relationship of any church, convention or association of churches, or other faith-based organization or entity to any other person, group, organization, or entity that is based on a sincere religious teaching or belief or otherwise constitutes a part of the exercise of religion. This includes any relationship to a parent or subsidiary and other applicable aspects of organizational structure or form. A faith-based organization seeking loans under this program may rely on a reasonable, good faith interpretation in determining whether its relationship to any other person, group, organization, or entity is exempt from the affiliation rules under this provision, and SBA will not assess, and will not require participating lenders to assess, the reasonableness of the faith-based organization's determination.

Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care or group life, disability, vision, or dental insurance, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or similar compensation.

Yes. The Act expressly excludes the following:

• Any compensation of an employee whose principal place of residence is outside of the United States;
• The compensation of an individual employee in excess of $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred;
• Federal employment taxes imposed or withheld during the applicable period, including the employee's and employer's share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees; and
• Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116-127).

If you submit to your lender a loan forgiveness application within 10 months after the end of your loan forgiveness covered period, you will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to your lender (or notifies your lender that no loan forgiveness is allowed).

Your "loan forgiveness covered period" is the period beginning on the date the lender disburses the PPP loan and ending on any date selected by the borrower that occurs during the period (i) beginning on the date that is 8 weeks after the date of disbursement and (ii) ending on the date that is 24 weeks after the date of disbursement. Your lender must notify you of remittance by SBA of the loan forgiveness amount (or notify you that SBA determined that no loan forgiveness is allowed) and the date your first payment is due. Interest continues to accrue during the deferment period.

If you do not submit to your lender a loan forgiveness application within 10 months after the end of your loan forgiveness covered period, you must begin paying principal and interest after that period. For example, if a borrower's PPP loan is disbursed on January 25, 2021, the 24-week period ends on July 12, 2021. If the borrower does not submit a loan forgiveness application to its lender by May 12, 2022, the borrower must begin making payments on or after May 12, 2022.

If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If one of your shareholders, members, or partners uses PPP funds for unauthorized purposes, SBA will have recourse against the shareholder, member, or partner for the unauthorized use.

No. The lender must make a one-time, full disbursement of the PPP loan within ten calendar days of loan approval; for the purposes of this rule, a loan is considered approved when the loan is assigned a loan number by SBA. If the tenth calendar day is a Saturday, Sunday, or legal holiday, the period continues to run until the end of the next business day. Notwithstanding this limitation, lenders are not responsible for delays in disbursement attributable to a borrower's failure to timely provide required loan documentation, including a signed promissory note. Loans for which funds have not been disbursed because a borrower has not submitted required loan documentation within 20 calendar days of loan approval shall be canceled by the lender. When disbursing loans, lenders must send any amount of loan proceeds designated for the refinance of an EIDL loan directly to SBA and not to the borrower.

The following businesses are NOT eligible to receive PPP loans:

• Entities listed in 13 C.F.R. 120.110 and subsequent regulations except for entities from that regulation which have otherwise been made eligible by statute or guidance, and except for nonprofits and religious organizations;
• Entities involved in political and lobbying activities including engaging in advocacy in areas such as public policy or political strategy or otherwise describes itself as a think tank in any public document;
• Entities affiliated with entities in the People's Republic of China;
• Registrants under the Foreign Agents Registration Act; and
• Entities that receive a grant under the Shuttered Venue Operator Grant program.
• Publicly traded companies

In addition to the businesses that were eligible in the initial round of PPP (including but not limited to small businesses, nonprofit organizations, veterans organizations, Tribal business concerns, small agricultural cooperatives that meet the SBA size standards, sole proprietors, self-employed individuals or independent contractors), during this round the program includes entities that are 501(c)(6)s, destination marketing organizations (DMOs), housing cooperatives, newspapers, broadcasters, and radio stations. Additionally, for first-time borrowers to qualify for eligibility, the entity may employ no more than 500 employees.

Business must have less than 500 full-time, part-time, or seasonal employees and meets all other loan eligibility requirements.

The maximum amount of a first draw loan is 2.5 times the average monthly payroll costs and health care costs with a maximum of $10 million.

Any borrower who received a PPP loan in 2020 is not eligible to receive another First Draw PPP Loan, but may be eligible for a second draw PPP loan.

The applicant for a First Draw loan must submit a Paycheck Protection Program Borrower Application form (SBA Form 2483) and payroll documentation.

At least 60 percent of the loan proceeds must be used for payroll costs with 40 percent available for rent, utilities, operational costs, covered supplier costs and covered worker protection costs.

Generally, second draw loans have narrower eligibility criteria compared to first draw. To be Eligible for a Second Draw PPP Loan, a business must have 300 or fewer employees and experienced a revenue reduction in 2020 relative to 2019.

• 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.
• Clarifies that the borrower must have spent the full amount of its First Draw PPP Loan on eligible expenses

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A borrower that was in operation in all four quarters of 2019 is deemed to have experienced the required revenue reduction if it experienced a reduction in annual receipts of 25 percent or greater in 2020 compared to 2019 and the borrower submits copies of its annual tax forms substantiating the revenue decline.

Calculate revenue reduction by revenue reduction by comparing the borrower’s quarterly gross receipts for one quarter in 2020 with the borrower’s gross receipts for the corresponding quarter of 2019.

• Gross receipts consistent with the definition of receipts in 13 C.F.R. 121.104 of SBA’s size regulations because this definition appropriately captures the type of income that is typically included in a small business’s gross receipts.
• IFR generally defines gross receipts to include all revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. 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.

• 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.
• The IFR specifies that any forgiveness amount of a First Draw PPP Loan that a borrower received in calendar year 2020 is excluded from a borrower’s gross receipts. – consistent with notion PPP loan is not taxed income.

• 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.
• if each hotel or restaurant location owned by a parent business is a separate legal business entity and employs not more than 500 employees, each hotel or restaurant location is permitted to apply for a separate PPP loan provided it uses its unique EIN.

• a single business entity that is assigned a NAICS code beginning with 72 is eligible to receive a Second Draw PPP Loan if it employs no more than 300 employees per physical location and meets the revenue reduction requirements and otherwise satisfies the eligibility criteria.
• NAIC 72 eligible for 3.5 times monthly payroll in calculation.

• Unlike First Draw PPP Loans, the Economic Aid Act provides that the relevant time period for calculating a borrower’s payroll costs for a Second Draw PPP Loan is either the twelve-month period prior to when the loan is made or calendar year 2019.
• Second Draw PPP Loan borrowers who are not self-employed (including sole proprietorships and independent contractors) are also permitted to use the precise 1-year period before the date on which the loan is made to calculate payroll costs if they choose not to use 2019 or 2020 to calculate payroll costs.
• Businesses that are part of a single corporate group shall in no event receive more than $4 million of Second Draw PPP Loans in the aggregate.
• Businesses that are part of a single corporate group cannot obtain more than $20 million in the aggregate for a First Draw loan.

• The documentation required to substantiate an applicant’s payroll cost calculations is generally the same as documentation required for First Draw PPP Loans.
• no additional documentation to substantiate payroll costs will be required if the applicant (i) used calendar year 2019 figures to determine its First Draw PPP Loan amount, (ii) used calendar year 2019 figures to determine its Second Draw PPP Loan amount (instead of calendar year 2020), and (iii) 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.

• The lender may request additional documentation, however, if on further review the lender concludes that it would be useful in conducting the lender’s good-faith review of the borrower’s loan amount calculation.
• For loans with a principal amount greater than $150,000, the applicant must also submit documentation adequate to establish that the applicant experienced a revenue reduction of 25% or greater in 2020 relative to 2019.
• Such documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, quarterly financial statements or bank statements.
• For loans with a principal amount of $150,000 or less, such documentation is not required at the time the borrower submits its application for a loan, but must be submitted on or before the date the borrower applies for loan forgiveness, as required under the Economic Aid Act. If a borrower does not submit an application for loan forgiveness, such documentation must be provided upon SBA’s request.

• “Loan forgiveness covered period” is the period beginning on the date the lender disburses the PPP loan and ending on any date selected by the borrower that occurs during the period (i) beginning on the date that is 8 weeks after the date of disbursement and (ii) ending on the date that is 24 weeks after the date of disbursement.
• If borrower does not submit to the lender a loan forgiveness application within 10 months after the end of your loan forgiveness covered period, you must begin paying principal and interest after that period. Lender must notify borrower of remittance by SBA of the loan forgiveness amount (or notify borrowers that SBA determined that no loan forgiveness is allowed) and the date the first payment is due.

• Entities listed in 13 C.F.R. 120.110 and subsequent regulations except for entities from that regulation which have otherwise been made eligible by statute or guidance, and except for nonprofits and religious organizations.
• Entities involved in political and lobbying activities including engaging in advocacy in areas such as public policy or political strategy or otherwise describes itself as a think tank in any public document.
• Entities affiliated with entities in the People’s Republic of China.
• Registrants under the Foreign Agents Registration Act.

• Entities that receive a grant under the Shuttered Venue Operator Grant program.
• Publicly traded companies.

• If the applicant or the owner of the applicant is the debtor in a bankruptcy proceeding, either at the time it submits the application or at any time before the loan is disbursed, the applicant is ineligible to receive a PPP loan.
• If the applicant or the owner of the applicant becomes the debtor in a bankruptcy proceeding after submitting a PPP application but before the loan is disbursed, it is the applicant’s obligation to notify the lender and request cancellation of the application.

• 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.
• For a Second Draw PPP Loan greater than $150,000, the lender must confirm the dollar amount and percentage of the borrower’s revenue reduction by performing a good faith review, in a reasonable time, of the borrower’s calculations and supporting documents concerning the borrower’s revenue reduction.

• Lenders shall confirm receipt of borrower certifications contained in Paycheck Protection Program Borrower Application Form (SBA Form 2483) issued by the Administration or lender’s equivalent form.
• Confirm receipt of information demonstrating that a borrower was either an eligible self-employed individual, independent contractor, or sole proprietorship with no employees or had employees for whom the borrower paid salaries and payroll taxes on or around February 15, 2020.
• Confirm the dollar amount of average monthly payroll costs for 2019 or 2020 by reviewing the payroll documentation submitted with the borrower’s application.
• Subject to follow all applicable BSA requirements

The lender does not need to independently verify the borrower’s reported information if the borrower submits documentation supporting its request for loan forgiveness and attests that it accurately verified the payments for eligible costs.

Visit sba.gov/ppp or treasury.gov/cares. 

Our application is currently accommodating 1040 Schedule C applicants in accordance with the latest Program guidelines from the SBA.

Once a loan application is approved by the SBA, Cross River begins preparing your closing documents and ensures that all information is accurately reflected on your closing documents prior to sending and we appreciate your patience while we get these ready for you. It typically takes several days for the closing documents to be sent via DocuSign once you have been notified of SBA approval. The DocuSign email will be sent to the primary email address used during the application process. Please ensure the email is not in the spam or junk folder. The loan will not be funded until the loan documents are executed.

No. A borrower must submit their fully executed loan documentation in order for their loan to be funded.