The Small Business Administration (SBA) has announced that Paycheck Protection Program Funding has been exhausted and that they will today (May 4, 2021) stop accepting applications for loans from most lenders.
SBA said that it had reserved approximately $6 billion in funding for previously submitted loan applications subject to hold codes that have yet to be resolved. If you have a loan application in process, we will contact you as soon as we receive updates from the SBA.
About the PayCheck Protection Program
A brief summary of key Paycheck Protection Program (PPP) terms - and changes anticipated in the new round of amendments - is provided below, but these terms are subject to change beyond our control. For the most recent official PPP terms and information, please visit the Small Business Administration's (SBA) PPP website and consult your legal, tax, accounting, or financial advisors, as necessary, to determine how program requirements apply to your business.
- The Small Business Administration (SBA) Paycheck Protection Program (PPP) is a federal relief program designed to help small businesses keep their workforce employee during the COVID-19 crisis.
- For now, loans can be used for payroll costs, certain interest payments on mortgages, rent payments, and certain utility payments. Additional eligible expenses - including certain business software and cloud computing expenses, uninsured property damage costs from damage in 2020 due to vandalism, essential supply costs, and worker protection expenditures may be added by Congress and the SBA shortly. For more information about these eligible expenses please click here to visit the PPP loan page of the SBA's website.
- To qualify for an initial PPP loan, companies and nonprofits must have fewer than 500 total employees, including all affiliates, subsidiaries, and companies under common ownership, or otherwise be considered a small business concern under the CARES Act and corresponding SBA regulations. Certain exceptions apply for small businesses in the accommodation and food service sector, religious organizations, franchises, and SBIC-financed businesses; and certain other SBA exclusions apply.
- The maximum loan amount of an initial PPP loan is 2.5 times your average monthly payroll, up to $10 million.
- In addition to providing for new PPP loans for first-time borrowers, the legistration also allows certain existing PPP borrowers to receive a "second draw" PPP loan if they have used all of their first loan (or will have used by the time of disbursement of the second loan), who have fewer than 300 total employees and can demonstrate a year-over-year quarterly revenue of at least 25%.
- The maximum amount for a "second draw" loan is expected to be 2.5 times your average monthly payroll (3.5 times for eligible accommodation and foodservice companies), up to $2 million, but - as with all aspects of the "second draw" loan program currently under consideration - Congress and the SBA will still have to finalize terms before they are effective.
- All borrowers are required to make several good faith certifications, including that current economic uncertainty makes their PPP loan request necessary to support ongoing business operations.
- All or a portion of any PPP loan may be eligible for forgiveness. Subject to certain restrictions, the portion of the loan eligible for forgiveness may consist of payments for eligible expenses made during certain periods following your loan funding. For additional information about forgiveness please visit the SBA website referenced above.
- You can apply for both an Economic Injury Disaster Loan (through the SBA) and a Paycheck Protection Program Loan, but there may be no duplication in the use of funds.
- These will be unsecured loans that do not require personal guarantees.
- You may defer payments as provided for in the CARES Act, Paycheck Protection Program Flexibility Act, or corresponding SBA regulations.
We would like to remind you that some people are using times like this as an opportunity to take advantage. Please remember that we will never contact you to ask for sensitive information, like online banking IDs, passwords, one-time verification codes, account numbers, or Social Security numbers. Please be on the lookout for scams that are designed to trick you into giving your personal information.
Thank you for your trust in us as we all navigate these difficult times and rest assured, we are here for you, we are here for good.
Wood & Huston Bank and its subsidiaries are not tax or legal advisors. Please consult your tax or legal advisors for more information regarding your personal situation. We have no such agency relationships with CPAs, tax, or legal advisors.
Date Last Updated: May 4, 2021