SBA Paycheck Protection Program (PPP) Update-March 2021
The following is a general overview; however, all specifics and most current up-to-date information may be obtained at www.sba.gov/ppp.
Revisions to Loan Amount Calculations and Eligibility rules and related applications released 3.18.21
- Allows individuals who file an IRS Form 1040, Schedule C to calculate their maximum loan amount using gross income
- Removes the eligibility restriction that prevents businesses with owners who have non-financial fraud felony convictions in the last year from obtaining PPP Loans
- And removes the eligibility restriction that prevents business with owners who are delinquent or in default on their Federal student loans from obtaining PPP loans.
- Applies to both First Draw and Second Draw PPP Loans
Schedule C Filers
SBA determined that changing the calculation for sole proprietors, independent contractors, and self-employed individuals will reduce barriers to accessing the PPP and expand funding among the smallest businesses.
Note: A borrower whose PPP loan has already been approved as of the effective date of this rule cannot increase its PPP loan amount based on the new calculation methodology.
Schedule C filer may elect to calculate the owner compensation share of its payroll costs based on either (i) net profit or (ii) gross income (in accordance to the rule’s calculation methods). However, the new IFR states that if a business uses gross income over $150,000 to calculate their PPP loan, then the safe harbor no longer exists.
Partnerships and LLCs:
- Partnerships may not use the new gross income method or form for Schedule C borrowers.
- Single member LLCs that file Schedule C may use the gross income method and new application form.
- Qualified joint ventures as defined by the IRS (generally married couples that file jointly, both materially participate in the business and each elect not to be treated as a partnership) can apply as Schedule C borrowers using gross income.
- See the instructions on the loan application form for more information. (These same rules apply to farmers seeking to use gross income to calculate loan amounts.)
Effective Date: The platform will start accepting applications on the new form for Schedule C borrowers using gross income is March 5.
PPP First and Second Draw Applications have been updated; New First and
Second Draw PPP Applications also available for Schedule C Filers.
PPP 1st Draw Application 2483 3.18.21
PPP 1st Draw Application Sch C filer 3.18.21 2483-C
PPP 2nd Draw Application 2483-SD 3.18.21
PPP 2nd Draw Application Sch C Filer 2483-SD-C 3.18.21
SBA Paycheck Protection Program (PPP) Update-January 2021
Thank you for choosing Tennessee State Bank (TSB) as your PPP lender. In Late December, the Economic Aid Act was signed into law which re-launched the Paycheck Protection Program; created the PPP Second Draw Loan for qualified businesses; and changed the PPP Forgiveness process for all PPP borrowers. The following is a general overview; however, all specifics and most current up-to-date information may be obtained at www.sba.gov/ppp.
"Get the Facts on EIDL & PPP" webinars. Come learn and ask questions about the Paycheck Protection Program (PPP) First and Second Draw Loans and the Economic Injury Disaster Loans for Covid-19 (EIDL). The webinars will take place on Friday, January 22nd and every Monday & Friday until August 2021.
If you have any questions, please contact the SBA Tennessee District Office for questions and assistance at, 615/736-5881.
Time: 11:00AM – 12:00PM CST
You can register here:
SBA is re-launching this program for eligible applicants that did not receive a PPP loan prior to August 8, 2020. These applicants now have the ability to apply for a PPP First Draw Loan before March 31, 2021.
• Eligibility for PPP loans has been revised to include additional types of entities.
• Covered eligible expenses expanded and now includes the following: payroll costs, rent, mortgage interest, utilities, operations expenditures, property damage costs, supplier costs, and worker protection expenditures.
• Certain borrowers may reapply or request an increase to their original PPP loan amount. Existing PPP borrowers that did not receive loan forgiveness by December 27, 2020 may: (1) reapply for a First Draw PPP Loan if they previously returned some or all of their First Draw PPP Loan funds, or (2) under certain circumstances, request to modify their First Draw PPP Loan amount if they previously did not accept the full amount for which they are eligible.
Eligible borrowers that previously received a PPP First Draw Loan may apply for a PPP Second Draw Loan of up to $2 million with the same general loan terms as their PPP First Draw Loan. A borrower is generally eligible for a PPP Second Draw Loan if the borrower: (1) was eligible for and previously received a PPP First Draw Loan (2) has or will use the full PPP First Draw loan amount only for eligible expenses before the PPP Second Draw Loan is disbursed; (3) has no more than 300 employees; and (4) can demonstrate at least a 25% reduction in gross receipts between comparable, calendar quarters in 2019 and 2020.
• 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.
PPP Forgiveness Update
Many of you have already received full forgiveness of the initial PPP loan; TSB thanks you for completing the process. For others that have not started or finalized the process, please be aware that for borrowers with a loan $150,000 and under, the process has been simplified following the passage of the most recent Economic Aid Act. Other forgiveness updates include, but are not limited to:
• Borrowers now have the option to select a covered period during which they can use PPP loan proceeds anytime between 8 and 24 weeks after disbursement.
• SBA will no longer deduct EIDL advances from forgiveness payment.
Please note that while the forgiveness application process is being simplified, all of the rules related to seeking forgiveness still apply. Previously, the process required the borrower to show how the borrower arrived at certain numbers. Now, the simplified application is designed to ask borrowers to self-certify that they have abided by all the terms of the PPP loan; borrowers will be required to retain proof of all certifications made. As a reminder, please retain all documentation associated with your PPP loan for six years after the loan is forgiven or repaid in full since you may be contacted by SBA or SBA’s Office of Inspector General (SBA OIG), at their discretion, for a file review. In the event you are chosen for a review, SBA or SBA OIG may require that we contact you in writing to request additional information or they may contact you directly. SBA will consider all information provided by you in response to an inquiry. Failure to respond to SBA’s or SBA OIG’s inquiries may result in a determination that you were ineligible for a PPP loan or ineligible to receive the loan amount or loan forgiveness amount you have claimed.
For those borrowers that TSB already received a forgiveness payment net of an EIDL Advance, SBA will provide a reconciliation payment to TSB to be applied to the outstanding loan balance or the borrower, if the borrower has already paid the outstanding loan balance. TSB will contact impacted borrowers as soon as we receive any reconciliation payments.
June 2020 PPP Forgiveness Information from Tennessee State Bank
In addition to the June 18, 2020 update as noted below, the Small Business Administration released a much-anticipated, streamlined loan forgiveness application for Paycheck Protection Program loans totaling $150,000 or less.
The two-page forgiveness application, Form 3508S, includes certifications from You, (the borrower) but does not require calculations to be shown on the actual application; however, You must still submit the supporting documentation verifying forgivable payroll and non-payroll expenses. Borrowers are required to retain the documentation supporting their certifications for six years.
June 18, 2020 Forgiveness Update from Tennessee State Bank:
Thank you for choosing Tennessee State Bank (TSB) as your lender for the Paycheck Protection Program (SBA PPP). Earlier in May we provided you the original SBA PPP Loan Forgiveness Application. The U.S. Small Business Administration, in consultation with the U.S. Department of the Treasury, issued new and revised guidance for the Paycheck Protection Program (PPP). This guidance implements the Paycheck Protection Program Flexibility Act (PPPFA), signed into law by President Trump on June 5, 2020.
To implement the PPPFA, SBA revised its first PPP interim final rule, which was posted on April 2, 2020. The new rule updates provisions relating to the reduction of the payroll requirement (from 75% to 60%), extending the covered period from 8 weeks to 24 weeks, loan maturity, deferral of loan payments, and other forgiveness provisions. As such, SBA has issued revised PPP applications and Loan Forgiveness Application, including a new EZ application form. The new EZ version of the forgiveness application (Form 3508EZ) applies to borrowers that:
- Are self-employed and have no employees; OR did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
The EZ application requires fewer calculations and less documentation for eligible borrowers. Details regarding the applicability of these provisions are available in the instructions to the new EZ application form.
For additional information, you may access the U.S. Department of the Treasury for the various resources in regard to the Small Business Paycheck Protection Program. For any additional inquiries or assistance on compiling your documentation for forgiveness, please contact your tax preparer and/or attorney.
As a reminder, retain all documentation associated with your SBA PPP loan, the SBA may undertake a review at any time. You must retain PPP documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.
We hope that this update has been helpful. Please contact your TSB Lender if you have any questions.
Once again, thank you for your business with Tennessee State Bank.
Coronavirus Emergency Loans for Small Businesses:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed and the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses.
Please see this resource for Recommendations on Keeping Records to Qualify for SBA PPP Loan Forgiveness. If you need any additional information, the U.S. Department of the Treasury has additional resources in regard to the Small Business Paycheck Protection Program. For any additional inquires, it is recommended that guidance is sought from a tax preparer and/or attorney representing the borrower.
If you have any questions or need information on the Paycheck Protection Program, please contact our Credit Department at (865) 908-5839.