Paycheck Protection Program (2021 Funding)

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This page is dedicated to information related to the new round of PPP funding in 2021. For information on the loan forgiveness process, visit this page

877-538-3335
Monday - Friday:  8 AM - 5 PM, CT

Important Notice

As of May 4, 2021, PPP funding for new PPP loan applications has run out and the bank is no longer accepting applications. If you previously submitted a loan application for review, the bank will provide you additional details on the status of your application as soon as we know more.

What is the Paycheck Protection Program?

The Paycheck Protection Program is an SBA loan designed help businesses keep their workforce employed during the Coronavirus crisis. The deadline to apply has been extended to May 31, 2021, or until PPP funds run out. Completed applications must be submitted well in advance of that date to allow sufficient time for the review and approval process to be completed.

Through the forgiveness process, the SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.

If your eligible business never obtained a PPP loan during the original program, the re-opened program means you can now apply for the first time but are subject to the terms of the initial program.

The SBA released two new rules, Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act and Interim Final Rule on Second Draw Loans, that provide further clarity on both first and second draw PPP loans.

Information provided by the Bank, on this website and through other resources, should not be considered a substitute for legal or accounting advice. Borrowers are encouraged and should confirm legal and accounting advice through their consultants and through their own due diligence.*

Latest Updates

Terms & Eligibility

  • First Draw PPP

    Loan Terms

    • Interest Rate: 1%
    • Maturity: 5 years
    • Loan Maximum: $10M
    • Loan amount based on 2.5 times average monthly payroll

    • Eligibility

      • Employ not more than 500 employees
      • Have not received a PPP loan
      • Business in operation on February 15, 2020
      • Currently in operation
  • Second Draw PPP

    Loan Terms

    • Interest Rate: 1%
    • Maturity: 5 years
    • Loan Maximum: $2M
      • Loan amount based on 2.5 times average monthly payroll
      • 3.5 times for entities that fall under the North America Industry Classification System (NAICS) code 72 for Accommodation and Food Services Industry

    • Eligibility

      • Employ not more than 300 employees (with limited exceptions for NAICS code 72 and eligible news organizations)
      • Have used or will use the full amount of their first PPP loan on or before the expected date on which the second draw PPP loans is disbursed to the borrower
      • Demonstrate at least a 25% reduction in gross receipts in a quarter in 2020 relative to the same quarter in 2019 (businesses that did not operate during first half of 2019, that operated in second half of 2019 can look to a reduction in any quarter of 2020 compared to 2019)
      • Currently in operation

How Can I Apply

Hancock Whitney clients can apply through our online portal. If you received your first PPP loan from us, we notified you when the portal became available. If you did not previously receive a PPP loan with us, we ask that you reach out to your banker or call one of our dedicated PPP associates at 877-538-3335. They will be able to assist in providing more information and access to our portal once available.

If you wish to begin preparing your application, you can download a copy of the following documents to find helpful resources and see the information that will be requested from you when you start your online application process.

First Draw PPP Application Form (2483)

Here’s a PDF version of the loan application to help you prepare before using our online portal.

Second Draw PPP Application Form (2483-SD)

Here’s a PDF version of the loan application to help you prepare before using our online portal.

PPP Application Documents Checklist

Use this checklist to make sure you have all the documentation needed for your application.

PPP Loans Frequently Asked Questions by SBA

Review the previously released SBA guidance regarding PPP Loans.

How Much Will Be Forgiven?

To receive full forgiveness, At least 60% of the amount forgiven must be attributable to eligible payroll costs while only up to 40% can be used on non-payroll covered expenses.

Please see below for a list of eligible expenses. You may find more information on our PPP Forgiveness Page.

  • 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 group health care benefits paid by EMPLOYER (Not Self-Employed or Partnership), including life, disability, medical, dental, and vision;
  • 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.

Interest payments on any business mortgage obligation on real or personal property that was incurred before February 15, 2020 (but not any prepayment or payment of principal).

Payments on business rent obligations on real or personal property under a lease agreement in force before February 15, 2020.

Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.

  • Operational Expenses: Software, cloud computing, and other human resources and accounting needs
  • Property Damage: Property damage due to public disturbances that occurred during 2020 that are not covered by insurance
  • Supplier Cost: Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan
  • Worker Protection: Personal protective equipment and adaptive investments made between 3/1/2020 and the end of national emergency declaration

Frequently Asked Questions

 

Understanding the Loan Terms

  1. What are the terms of PPP Loans?
  2. What is the maturity date of a PPP loan?
  3. Are PPP Loans eligible for forgiveness?
  4. Who is eligible to apply for a PPP Loan?
  5. Who is not eligible for a Second Draw PPP Loan?
  6. To determine borrower eligibility under the number of employees or other applicable threshold established by the CARES Act, must a borrower count all employees or only full-time equivalent employees?
  7. Are small business concerns required to have 500 or fewer employees to be eligible borrowers in the First Draw PPP?
  8. Will I be eligible for PPP loan increases if my business is a partnership?
  9. Will I be eligible for PPP loan increases if I am a seasonal employer?
  10. Are PPP loan increases available for farmers and ranchers?
  11. If I have repaid my First Draw PPP Loan and did not receive any SBA forgiveness payment, will I be eligible to apply for a new First Draw PPP?
  12. If I have returned part of my First Draw PPP and did not receive SBA forgiveness payment, will I be eligible to apply for a loan increase?
  13. If I did not accept the full amount of my First Draw PPP Loan for the amount I was approved, will I be eligible to apply for a loan increase?
  14. Does my business have to qualify as a small business concern in order to participate in the PPP?
  15. Is a business that was in operation on February 15, 2020 but had a change in ownership after February 15, 2020 eligible for a PPP loan?
  16. Is a business that was in operation on February 15, 2020 but had a change in ownership after February 15, 2020 eligible for a PPP loan?
  17. Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?
  18. Are agricultural producers, farmers, and ranchers eligible for PPP loans?
  19. Are agricultural and other forms of cooperatives eligible to receive PPP loans?
  20. Are borrowers required to apply SBA’s affiliation rules?
  21. How do SBA’s affiliation rules apply with regard to counting the employees of foreign and U.S. affiliates?
  22. How do the loan amount cap and affiliation rules work for hotels and restaurants?
  23. How do the loan amount cap and affiliation rules work for franchises?
  24. Will an applicant’s Second Draw PPP Loan application be affected if there are unresolved issues regarding the applicant’s First Draw PPP Loan?
  25. What reference periods can be used to determine whether the borrower can demonstrate at least a 25% gross receipts reduction in order to qualify for a Second Draw PPP Loan?
  26. Can I document my reduction in gross receipts with income tax returns if my entity files taxes on the basis of a fiscal year that differs from the calendar year?
  27. Can I apply for a PPP loan with my Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number (SSN)?
  28. I have delinquent student loan debts. Will I be eligible to receive PPP loans?
  29. If I’m a small business owners with non-financial fraud felonies, will I be eligible to receive PPP loans?

Understanding the Loan Application Process

  1. What is the last day to apply for PPP Loans?
  2. How do I apply for a PPP Loan?
  3. What documentation are required for a PPP application?
  4. What are the supporting documents for substantiating revenue reduction?
  5. When will I be able to receive loan disbursement?
  6. What other documentation can an applicant provide for the purpose of substantiating payroll costs used to calculate the applied-for First Draw PPP Loan amount?
  7. What documentation do I need to provide to corroborate that my entity sustained at least a 25 percent reduction in gross receipts?
  8. I am applying for a Second Draw PPP Loan amount greater than $150,000. When do I need to provide the documentation to substantiate the reduction in gross receipts?
  9. I am an applicant for a Second Draw PPP Loan amount of $150,000 or less. When do I need to provide the documentation to substantiate the reduction in gross receipts?

Understanding the Loan Amount

  1. What is the maximum loan amount for a Second Draw PPP Loan?
  2. Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs?
  3. The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value?
  4. What is the maximum loan amount a seasonal employer can apply for a Second Draw PPP Loan?
  5. Can a seasonal employer that elects to use a 12-week period between May 1, 2019 and September 15, 2019 to calculate its maximum PPP loan amount under the interim final rule issued by Treasury on April 27, 2020, make all the required certifications on the Borrower Application Form?
  6. What is the maximum loan amount a new entity borrower can apply for a Second Draw PPP Loan?
  7. How should I calculate revenue reduction?
  8. What are “gross receipts” for the purpose of determining eligibility for a Second Draw PPP Loan?
  9. How should gross receipts of affiliates be calculated?
  10. Do “gross receipts” include PPP Loan proceeds that are forgiven or EIDL advances?
  11. How are total employee numbers calculated if my business has more than one physical location?
  12. Should payments that an eligible borrower made to an independent contractor or sole proprietor be included in calculation of the eligible borrower’s payroll costs?
  13. How is the time period selected for calculating payroll costs?
  14. I am an LLC owner. Which set of loan amount calculation instructions applies to me?
  15. In addition to pre-tax employee contributions for health insurance, what are the other pre-tax employee contributions for fringe benefits that may have been excluded from IRS Form 941 Taxable Medicare wages & tips that is part of employee gross pay?
  16. How should a borrower account for federal taxes when determining its payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven?
  17. Is there a limit on the dollar amount of First Draw PPP Loans a corporate group can receive?
  18. If I use my entity’s annual income tax returns to demonstrate a gross receipts reduction of at least 25%, what amounts do I use to calculate gross receipts?
  19. If I used payroll costs from the prior 12 months when computing my First Draw PPP Loan amount, can I continue to use those figures to compute my Second Draw PPP Loan amount?
  20. Can I enter NAICS code 72 on my Second Draw PPP Loan application if the business activity code line was left blank on my business’s most recently filed income tax return?
  21. How should a borrower account for federal taxes when determining its payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven?
  22. Is there a limit on the dollar amount of Second Draw PPP Loans a corporate group can receive?
  23. I am self-employed and have no employees, how do I calculate my maximum First Draw PPP Loan amount?
  24. I am self-employed and have employees, how do I calculate my maximum First Draw PPP Loan amount (up to $10 million)?
  25. I am a self-employed farmer or rancher who reports my income on IRSForm 1040 Schedule F. What documentation must I provide in place of Schedule C and how should my maximum loan amount be determined (up to $10 million)?
  26. How do partnerships apply for PPP loans, and how is the maximum First Draw PPP Loan amount calculated for partnerships (up to $10 million)? Shouldpartners’ self- employment income be included on the business entity level PPP loan application or on separate PPP loan applications for each partner?
  27. How is the maximum First Draw PPP Loan amount calculated for S corporations and C corporations (up to $10 million)?
  28. How is the maximum First Draw PPP Loan amount calculated for eligible nonprofit organizations (up to $10 million)?
  29. How is the maximum First Draw PPP Loan amount calculated for eligible nonprofit religious institutions, veterans’ organizations, and tribal businesses?
  30. I have income from self-employment and file an IRS Form 1040, Schedule C. Can I use gross business income to calculate my loan amount?

More questions? Contact us.

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Understanding the Loan Terms

Q: What are the terms of PPP Loans?
A:

First and Second Draw PPP Loans are subject to the same terms, conditions and requirements. These include, but are not limited to the following terms:

  • The guarantee percentage is 100%
  • No collateral will be required
  • No personal guarantees will be required
  • The interest rate will be 100 basis point or 1%, calculated on a non-compounding, non-adjustable basis
  • The maturity is 5 years
  • All loans will be processed by all lenders under delegated authority and lenders will be permitted to rely on certifications of the borrower to determine the borrower's eligibility and use of loan proceeds
Q: What is the maturity date of a PPP loan?
A:

If a PPP loan received an SBA loan number on or after June 5, 2020, the loan has a five-year maturity. If a PPP loan received an SBA loan number before June 5, 2020, the loan has a two-year maturity, unless the borrower and lender mutually agree to extend the term of the loan to five years. The promissory note for the PPP loan will state the term of the loan.

Q: Are PPP Loans eligible for forgiveness?
A:

Yes. First and Second Draw PPP Loans are eligible for loan forgiveness on the same terms and conditions,  except that Second Draw PPP Loan borrowers with a principal amount of $150,000 or less are required to provide documentation of revenue reduction if such documentation was not provided at the time of the loan application.

Q: Who is eligible to apply for a PPP Loan?
A:

You are eligible for a PPP loan if (i) you, together with any affiliates (if applicable), are:

  • A small business concern under the applicable revenue-based size standard established by SBA in 13 C.F.R. 121.201 for your industry or under the SBA alternative size standard;
  • An independent contractor, eligible self-employed individual, or sole proprietor;
  • A business concern, a tax-exempt nonprofit organization described in section 501(c)(3) of the Internal Revenue Code (IRC), a tax-exempt veterans organization described in section 501(c)(19) of the IRC, a Tribal business concern described in section 31(b)(2)(C) of the Small Business Act, and you employ no more than the greater of 500 employees or, if applicable, the size standard in number of employees established by SBA in 13 C.F.R. 121.201;
  • A housing cooperative, an eligible section 501(c)(6) organization, or an eligible destination marketing organization6, that employs no more than 300 employees;
  • A news organization that is majority owned or controlled by a NAICS code 511110 or 5151 business or a nonprofit public broadcasting entity with a trade or business under NAICS 511110 or 5151, that employs no more than 500 employees (or, if applicable, the size standard in number of employees established by SBA in 13 C.F.R. 121.201 for your industry) per location; or
  • Another type of entity specifically provided for by PPP rules (as described below); and
    (ii) you were in operation on February 15, 2020, and either had employees for whom you paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC or you were an eligible self-employed individual, independent contractor, or sole proprietorship with no employees.

A borrower is eligible for a Second Draw PPP Loan only if it has 300 or fewer employees (with limited exceptions for NAICS code 72 and eligible news organizations) and experienced a revenue reduction in 2020 relative to 2019.

A Second Draw PPP Loan may only be made to an eligible borrower that:

  1. has received a First Draw PPP Loan;
  2. 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.
Specifically, the "full amount" of the borrower's First Draw PPP Loan includes the amount of any increase on such First Draw PPP Loan. Borrower must have spent the full amount of its First Draw PPP Loan on eligible expenses under the PPP rules to be eligible for a Second Draw PPP Loan.
Q: Who is not eligible for a Second Draw PPP Loan?
A:

An entity that is ineligible to receive a First Draw PPP Loan under the CARES Act or Consolidated First Draw PPP IFR is also ineligible for a Second Draw PPP Loan.

These categories of borrowers are also prohibited:

  • 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 (22 U.S.C. 612);

  • A person or entity that receives a grant for shuttered venue operators under section 324 of the Economic Aid Act;

  • Entities in which the President, the Vice President, the head of an Executive department, or a Member of Congress, or the spouse of such person owns, controls, or holds at least 20 percent of any class of equity;

  • A publicly traded company, defined as an 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. 78f).
In addition, an entity that has previously received a Second Draw PPP Loan may not receive another Second Draw PPP Loan. An entity that has permanently closed is also prohibited from receiving a Second Draw PPP Loan. A borrower that has temporarily closed or temporarily suspended its business remains eligible for a Second Draw PPP Loan.
Q: To determine borrower eligibility under the number of employees or other applicable threshold established by the CARES Act, must a borrower count all employees or only full-time equivalent employees?
A:

For purposes of loan eligibility, the CARES Act defines the term employee to include “individuals employed on a full-time, part-time, or other basis.” A borrower must therefore calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold.

For example, if a borrower has 200 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 250 employees.

By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of “full-time equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions.

Q: Are small business concerns required to have 500 or fewer employees to be eligible borrowers in the First Draw PPP?
A:

No. Small business concerns can be eligible borrowers even if they have more than 500 employees, as long as they satisfy the existing statutory and regulatory definition of a “small business concern” under section 3 of the Small Business Act, 15 U.S.C. 632. A business can qualify if it meets the SBA employee-based or revenue-based size standard corresponding to its primary industry. Go to www.sba.gov/size for the industry size standards.

Additionally, a business can qualify for the Paycheck Protection Program as a small business concern if it met both tests in SBA’s “alternative size standard” as of March 27, 2020: (1) maximum tangible net worth of the business is not more than $15 million; and (2) the average net income after Federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million.

A business that qualifies as a small business concern under section 3 of the Small Business Act, 15 U.S.C. 632, may truthfully attest to its eligibility for PPP loans on the Borrower Application Form, unless otherwise ineligible.

Q: Will I be eligible for PPP loan increases if my business is a partnership?
A:

You may be eligible to increase the First Draw PPP loan amount if your First Draw PPP loan only included payroll costs of partnership’s employee and eligible operating expenses, and partner compensation was not included.

You may only request for an increase on your PPP loan if SBA has not remitted a forgiveness payment to the Bank. The amount of increases may not exceed the maximum loan amount to which you are entitled and cannot exceed the maximum PPP loan amount ($10 million for an individual or $20 million for a corporate group). Borrowers are also required to provide documentation to support the calculation of the increase to include partner compensation. Any request for an increase must be submitted by the Bank by May 31, 2021 and is subject to the availability of funds.

Q: Will I be eligible for PPP loan increases if I am a seasonal employer?
A:

Seasonal employers are allowed to use the average total monthly payments for payroll for any 12-week period between 2/15/2019 – 2/15/2020. You would be eligible for an increase if (1) you received a First Draw PPP and SBA has not remitted a forgiveness payment to the Bank, and (2) You provide all required documentation to support the calculation of the increase due to new selected 12 week period.

The amount of increases may not exceed the maximum loan amount to which you are entitled and cannot exceed the maximum PPP loan amount ($10 million for an individual or $20 million for a corporate group). Any request for an increase must be submitted by the Bank by May 31, 2021 and is subject to the availability of funds.

Q: Are PPP loan increases available for farmers and ranchers?
A:

Section 313 of the Economic Aid Act changed the calculation of the maximum loan amount for certain farmers and ranchers. Farmers and ranchers would be eligible for an increase if (1) the borrower received a First Draw PPP and SBA has not remitted a forgiveness payment to the Bank; (2) A higher maximum loan amount is calculated based on the formula described in subsection B.4.d of the Consolidated IFR; and (3) the borrower provides all required documentation to support the calculation of the increase under new methodology.

The amount of increases may not exceed the maximum loan amount to which you are entitled and cannot exceed the maximum PPP loan amount ($10 million for an individual). Any request for an increase must be submitted by the Bank by May 31, 2021 and is subject to the availability of funds.

Q: If I have repaid my First Draw PPP Loan and did not receive any SBA forgiveness payment, will I be eligible to apply for a new First Draw PPP?
A:

Borrowers who fully repaid a First Draw PPP Loan and were reported to the SBA before 12/27/2020 would be eligible for a reapplication of First Draw PPP Loan, given that the bank did not receive SBA forgiveness payment.

Q: If I have returned part of my First Draw PPP and did not receive SBA forgiveness payment, will I be eligible to apply for a loan increase?
A:

Borrowers who returned part of a First Draw PPP and were reported to the SBA before 12/27/2020 may be approved for a loan increase. The funds will be equal to the difference between amount retained by the borrower and the amount previously approved.

Any request for an increase must be submitted by the Bank by May 31, 2021 and is subject to the availability of funds.

Q: If I did not accept the full amount of my First Draw PPP Loan for the amount I was approved, will I be eligible to apply for a loan increase?
A:

The bank may approve a loan increase in the amount of the First Draw PPP Loan up to the amount previously approved.

Any request for an increase must be submitted by the Bank by May 31, 2021 and is subject to the availability of funds.

Q: Does my business have to qualify as a small business concern in order to participate in the PPP?
A:

No. In addition to small business concerns, a business is eligible for a First Draw PPP loan if the business has 500 or fewer employees (or 300 or fewer employees for Second Draw) whose principal place of residence is in the United States, or the business meets the SBA employee-based size standards for the industry in which it operates (if applicable). Similarly, PPP loans are also available for qualifying tax-exempt nonprofit organizations described in section 501(c)(3) of the Internal Revenue Code (IRC), tax-exempt veterans organization described in section 501(c)(19) of the IRC, and Tribal business concerns described in section 31(b)(2)(C) of the Small Business Act that have 500 or fewer employees (or 300 or fewer employees for Second Draw) whose principal place of residence is in the United States, or meet the SBA employee-based size standards for the industry in which they operate.

Q: Is a business that was in operation on February 15, 2020 but had a change in ownership after February 15, 2020 eligible for a PPP loan?
A:

Yes. As long as the business was in operation on February 15, 2020, if it meets the other eligibility criteria, the business is eligible to apply for a PPP loan regardless of the change in ownership.

In addition, where there is a change in ownership effectuated through a purchase of substantially all assets of a business that was in operation on February 15, the business acquiring the assets will be eligible to apply for a PPP loan even if the change in ownership results in the assignment of a new tax ID number and even if the acquiring business was not in operation until after February 15, 2020. If the acquiring business has maintained the operations of the pre-sale business, the acquiring business may rely on the historic payroll costs and headcount of the pre-sale business for the purposes of its PPP application, except where the pre-sale business had applied for and received a PPP loan.

Q: Is a business that was in operation on February 15, 2020 but had a change in ownership after February 15, 2020 eligible for a PPP loan?
A:

Yes. As long as the business was in operation on February 15, 2020, if it meets the other eligibility criteria, the business is eligible to apply for a PPP loan regardless of the change in ownership.

In addition, where there is a change in ownership effectuated through a purchase of substantially all assets of a business that was in operation on February 15, the business acquiring the assets will be eligible to apply for a PPP loan even if the change in ownership results in the assignment of a new tax ID number and even if the acquiring business was not in operation until after February 15, 2020. If the acquiring business has maintained the operations of the pre-sale business, the acquiring business may rely on the historic payroll costs and headcount of the pre-sale business for the purposes of its PPP application, except where the pre-sale business had applied for and received a PPP loan.

Q: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?
A:

In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application.

Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere, borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.

Q: Are agricultural producers, farmers, and ranchers eligible for PPP loans?
A:

Yes. Agricultural producers, farmers, and ranchers are eligible for PPP loans if: (i) the business has 500 or fewer employees, or (ii) the business fits within the revenue-based sized standard, which is average annual receipts of $1 million.

Additionally, agricultural producers, farmers, and ranchers can qualify for PPP loans as a small business concern if their business meets SBA’s “alternative size standard.” The “alternative size standard” is currently: (1) maximum net worth of the business is not more than $15 million, and (2) the average net income after Federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million.

For all of these criteria, the applicant must include its affiliates in its calculations.

Q: Are agricultural and other forms of cooperatives eligible to receive PPP loans?
A:

As long as other PPP eligibility requirements are met, small agricultural cooperatives and other cooperatives may receive PPP loans.

Q: Are borrowers required to apply SBA’s affiliation rules?
A:

Yes. Borrowers must apply the affiliation rules set forth in SBA’s Interim Final Rule on Affiliation. A borrower must certify on the Borrower Application Form that the borrower is eligible to receive a PPP loan, and that certification means that the borrower is a small business concern as defined in section 3 of the Small Business Act (15 U.S.C. 632), meets the applicable SBA employee-based or revenue-based size standard, or meets the tests in SBA’s alternative size standard, after applying the affiliation rules, if applicable. SBA’s existing affiliation exclusions apply to the PPP, including, for example the exclusions under 13 CFR 121.103(b)(2).

Q: How do SBA’s affiliation rules apply with regard to counting the employees of foreign and U.S. affiliates?
A:

For purposes of the PPP’s 500 or fewer (300 or fewer for the Second Draw) employee size standard, an applicant must count all of its employees and the employees of its U.S and foreign affiliates, absent a waiver of or an exception to the affiliation rules.

Q: How do the loan amount cap and affiliation rules work for hotels and restaurants?
A:

Under CARES Act, any single business entity that is assigned a NAICS code beginning with 72 (including hotels and restaurants) and that employs not more than 500 employees (or 300 employees for Second Draw PPP) per physical location is eligible to receive a PPP loan.

In most cases, a borrower is considered together with its affiliates to determine eligibility for the PPP. However, the CARES Act waived the affiliation rules for certain categories of borrowers, including hotels and restaurants that are assigned a NAICS code beginning with 72.

As a result, if each hotel or restaurant location owned by a parent business is a separate legal business entity, each hotel or restaurant location that employs not more than 500 employees (or 300 employees for Second Draw) is permitted to apply for a separate PPP loan provided it uses its unique EIN.

The loan amount limitation ($10 million for First Draw and $2 million for Second Draw) applies to each eligible business entity, because individual business entities cannot apply for more than one loan.

Q: How do the loan amount cap and affiliation rules work for franchises?
A:

If a franchise brand is listed on the SBA Franchise Directory, each of its franchisees that meets the applicable size standard can apply for a PPP loan. (The franchisor does not apply on behalf of its franchisees.) The loan amount cap on PPP loans ($10 million for First Draw PPP and $2 million for Second Draw PPP) is a limit per franchisee entity, and each franchisee is limited to one PPP loan.

Franchise brands that have been denied listing on the Directory because of affiliation between franchisor and franchisee may request listing to receive PPP loans. SBA will not apply affiliation rules to a franchise brand requesting listing on the Directory to participate in the PPP, but SBA will confirm that the brand is otherwise eligible for listing on the Directory.

Q: Will an applicant’s Second Draw PPP Loan application be affected if there are unresolved issues regarding the applicant’s First Draw PPP Loan?
A:
  1. If a First Draw PPP Loan is under review pursuant to PPP rules and/or information in SBA’s possession indicates that the borrower may have been ineligible for the First Draw PPP Loan it received or for the loan amount received by the borrower, the lender will receive notification from SBA when the lender submits an application for guaranty of a Second Draw PPP Loan (“unresolved borrower”).

  2. If the lender receives notification that the Applicant for a Second Draw PPP Loan is an unresolved borrower, the lender will not receive an SBA loan number. SBA will resolve the issue related to the unresolved borrower expeditiously and will notify the lender of the process to obtain an SBA loan number for the Second Draw PPP Loan, if appropriate.
Q: What reference periods can be used to determine whether the borrower can demonstrate at least a 25% gross receipts reduction in order to qualify for a Second Draw PPP Loan?
A:

The appropriate reference periods depend on how long the Applicant has been in business:

  • For all Applicants, except those satisfying the conditions set forth below, the Applicant must demonstrate that gross receipts in any calendar quarter of 2020 were at least 25 percent lower than the same quarter of 2019. Alternatively, Applicants may compare annual gross receipts in 2020 with annual gross receipts in 2019 if they were in business in 2019.
  • For entities not in business during the first and second quarters of 2019 but in operation during the third and fourth quarters of 2019, Applicants must demonstrate that gross receipts in any quarter of 2020 were at least 25 percent lower than during either the third or fourth quarters of 2019.
  • For entities not in business during the first, second, and third quarters of 2019 but in operation during the fourth quarter of 2019, Applicants must demonstrate that gross receipts in any quarter of 2020 were at least 25 percent lower than the fourth quarter of 2019.
  • For entities not in business during 2019 but in operation on February 15, 2020, Applicants must demonstrate that gross receipts in the second, third, or fourth quarter of 2020 were at least 25 percent lower than the first quarter of 2020.
Q: Can I document my reduction in gross receipts with income tax returns if my entity files taxes on the basis of a fiscal year that differs from the calendar year?
A:

Entities that use a fiscal year to file taxes may document a reduction in gross receipts with income tax returns only if their fiscal year contains all of the second, third, and fourth quarters of the calendar year (i.e., have a fiscal year start date of February 1, March 1, or April 1).

For more information related to required documentation, please visit our PPP Origination Documentation Checklist.

Q: Can I apply for a PPP loan with my Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number (SSN)?
A:

Yes. An ITIN is a tax processing number only available to certain nonresident and resident aliens, their spouses, and dependents who cannot get a SSN. To be eligible for a PPP loan or to receive loan forgiveness, the applicant must meet all eligibility criteria and PPP requirements, which includes the requirement that the principal place of residence for a sole proprietor, self-employed individual, or independent contractor must be in the United States.

Q: I have delinquent student loan debts. Will I be eligible to receive PPP loans?
A:

Yes. PPP borrowers with delinquent or defaulted student loan debts will no longer be restricted from obtaining relief through the PPP, and the SBA will apply this change to all First Draw PPP Loans and Second Draw PPP Loans, regardless of when the loan was made.

Q: If I’m a small business owners with non-financial fraud felonies, will I be eligible to receive PPP loans?
A:

Small business owners with non-financial fraud felonies within the one-year lookback period will not be restricted from obtaining relief through PPP. However, you may not be eligible for PPP loans if you have a felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance within the last five years, or any other felony within the last year.

Understanding the Loan Application Process

Q: What is the last day to apply for PPP Loans?
A:

The last day to apply for and receive a PPP loan is May 31, 2021.

Q: How do I apply for a PPP Loan?
A:

The applicant must submit to the lender Paycheck Protection Program Borrower Application Form (SBA Form 2483 / 2483-SD) or the lender’s equivalent form including the required certifications and documentation. Hancock Whitney clients will soon be provided a link to submit their application through our online portal.

If you previously obtained a PPP Loan from another lender, you should consider returning to that lender for a Second Draw request in order to streamline your application and avoid processing delays.

If you did not previously receive a PPP loan with us, we ask that you reach out to your banker or call one of our dedicated PPP associates at 877-538-3335. They will be able to assist in providing you access to our online application.

Q: What documentation are required for a PPP application?
A:

To help complete your PPP Loan application, we have prepared a PPP Origination Documentation Checklist to assist you in gathering required documentation.

Q: What are the supporting documents for substantiating revenue reduction?
A:

Annual tax return forms will be allowed to substantiate borrower's revenue reduction. If annual filings show a 25% revenue reduction, then at least one quarter in 2020 would have had at least a 25% revenue reduction.

Q: When will I be able to receive loan disbursement?
A:

If you are applying for a loan increase, additional disbursements will be made within 10 calendar days of successful processing of the loan increase in E-Tran. If you are applying for a new First Draw PPP Loan, onetime, full disbursement will be made within 10 calendar days of loan approval. Your PPP loan is considered approved when an SBA loan number is assigned to your loan.

Q: What other documentation can an applicant provide for the purpose of substantiating payroll costs used to calculate the applied-for First Draw PPP Loan amount?
A:

An applicant may provide IRS Form W-2s and IRS Form W-3 or payroll processor reports, including quarterly and annual tax reports, in lieu of IRS Form 941.

Additionally, very small businesses that file an annual IRS Form 944 or agricultural employers that file an annual IRS Form 943 should rely on and provide IRS Form 944 or IRS Form 943 in lieu of IRS Form 941.

An applicant may provide records from a retirement administrator to document employer retirement contributions. An applicant may also provide records from a health insurance company or third-party administrator for a self-insured plan to document employer health insurance contributions.

Q: What documentation do I need to provide to corroborate that my entity sustained at least a 25 percent reduction in gross receipts?
A:

The following are the primary sets of documentation Applicants can provide to substantiate their certification of a 25 percent gross receipts reduction (only one set is required):

  • Quarterly financial statements for the entity. If the financial statements are not audited, the Applicant must sign and date the first page of the financial statement and initial all other pages, attesting to their accuracy. If the financial statements do not specifically identify the line item(s) that constitute gross receipts, the Applicant must annotate which line item(s) constitute gross receipts.
  • Quarterly or monthly bank statements for the entity showing deposits from the relevant quarters. The Applicant must annotate, if it is not clear, which deposits listed on the bank statement constitute gross receipts (e.g., payments for purchases of goods and services) and which do not (e.g., capital infusions).
  • Annual IRS income tax filings of the entity (required if using an annual reference period). If the entity has not yet filed a tax return for 2020, the Applicant must fill out the return forms, compute the relevant gross receipts value, and sign and date the return, attesting that the values that enter into the gross receipts computation are the same values that will be filed on the entity’s tax return.

    For more information related to required documentation, please visit our PPP Origination Documentation Checklist.
Q: I am applying for a Second Draw PPP Loan amount greater than $150,000. When do I need to provide the documentation to substantiate the reduction in gross receipts?
A:

For a Second Draw PPP Loan amount greater than $150,000, the applicant must provide documentation substantiating the reduction in gross receipts with its Second Draw Borrower Application Form (SBA Form 2483-SD or lender’s equivalent form). The documentation must support the amounts provided in the application.


For more information related to required documentation, please visit our PPP Origination Documentation Checklist.

Q: I am an applicant for a Second Draw PPP Loan amount of $150,000 or less. When do I need to provide the documentation to substantiate the reduction in gross receipts?
A:

For a Second Draw PPP Loan amount of $150,000 or less, the borrower must provide documentation substantiating the reduction in gross receipts before or at the time the borrower seeks loan forgiveness (or upon SBA request). The documentation must clearly identify both of the reference quarters (if not using annual comparison), must contain the gross receipts amounts for both quarters, and support the amounts provided.

(Payroll documentation to substantiate the amount of the loan requested must still be provided with the Second Draw PPP Loan application)

For more information related to required documentation, please visit our PPP Origination Documentation Checklist.

Understanding the Loan Amount

Q: What is the maximum loan amount for a Second Draw PPP Loan?
A:

The maximum loan amount for a Second Draw PPP Loan is equal to the lesser of 2.5 months of the borrower's average monthly payroll costs or $2 million.

In calculating a borrower’s payroll costs, the borrower must subtract any compensation paid to an employee in excess of $100,000 on an annualized basis, as prorated for the time period during which the payments are made or the obligation to make the payments is incurred.

For borrowers assigned a NAICS code beginning with 72 at the time of disbursement, the maximum loan amount is equal to 3.5 months of payroll costs rather than 2.5 months.

For a borrower with a NAICS code beginning with 72 that would fall into more than one category listed in subsection (f) (for example, a business with a NAICS code beginning with 72 that is also a seasonal business or is also a new entity without 12 months of payroll costs), the borrower may calculate its average monthly payroll costs based on the methodology that applies to the entity but may use the 3.5 multiplier applicable to businesses with a NAICS code beginning with 72.

Businesses that are part of a single corporate group shall in no event receive more than $4,000,000 of Second Draw PPP Loans in the aggregate.

Q: Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs?
A:

Yes. Payroll costs includes all cash compensation paid to employees, subject to the $100,000 annual compensation per employee limitation.

Q: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value?
A:

No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:

  • Employer contributions to defined-benefit or defined-contribution retirement plans;
  • Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
  • Payment of state and local taxes assessed on compensation of employees.
Q: What is the maximum loan amount a seasonal employer can apply for a Second Draw PPP Loan?
A:

The maximum amount of a Second Draw PPP Loan to a borrower that is a seasonal employer is calculated as the lesser of:

  1. the product obtained by multiplying:
    • at the election of the borrower, the average total monthly payments for payroll costs incurred or paid by the borrower for any 12-week period between February 15, 2019 and February 15, 2020; by
    • 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 at the time of disbursement, 3.5); or 
  2. $2,000,000.
Q: Can a seasonal employer that elects to use a 12-week period between May 1, 2019 and September 15, 2019 to calculate its maximum PPP loan amount under the interim final rule issued by Treasury on April 27, 2020, make all the required certifications on the Borrower Application Form?
A:

Yes. The Borrower Application Form requires applicants to certify that “The Applicant is eligible to receive a loan under the rules in effect at the time this application is submitted that have been issued by the Small Business Administration (SBA) implementing the Paycheck Protection Program.”

On April 27, 2020, Treasury issued an interim final rule allowing seasonal borrowers to use an alternative base period for purposes of calculating the loan amount for which they are eligible under the PPP. An applicant that is otherwise in compliance with applicable SBA requirements, and that complies with Treasury’s interim final rule on seasonal workers, will be deemed eligible for a PPP loan under SBA rules. Instead of following the instructions on page 3 of the Borrower Application Form for the time period for calculating average monthly payroll for seasonal businesses, an applicant may elect to use the time period in Treasury’s interim final rule on seasonal workers.

Q: What is the maximum loan amount a new entity borrower can apply for a Second Draw PPP Loan?
A:

The maximum amount of a Second Draw PPP Loan to a borrower that did not exist during the 1-year period preceding February 15, 2020, but was in operation on February 15, 2020 ("new entity"), is calculated as the lesser of:

  1. the product obtained by multiplying:
    • the quotient obtained by dividing:
    • the sum of the total monthly payments by the borrower for payroll costs paid or incurred by the borrower as of the date on which the borrower applies for the Second Draw PPP Loan; by
    • the number of months in which those payroll costs were paid or incurred, by
    • 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 at the time of disbursement, 3.5); or
  2. $2,000,000.
Q: How should I calculate revenue reduction?
A:

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. A borrower must calculate this 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.

For example, a borrower with gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020 has experienced a revenue reduction of 40% between the quarters and is therefore eligible for a Second Draw PPP Loan.

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% or greater in 2020 compared to 2019 and the borrower submits copies of its annual tax forms substantiating the revenue decline.

Q: What are “gross receipts” for the purpose of determining eligibility for a Second Draw PPP Loan?
A:

For-Profit Businesses:
Gross receipts generally are all revenue in whatever form received or accrued (in accordance with the entity’s accounting method, i.e., accrual or cash) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances but excluding net capital gains and losses. These terms carry the definitions used 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 (this does not include 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.
All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer’s request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts.

Nonprofit Businesses:
For a nonprofit 501(c)(3) organization, a 501(c)(19) veterans organization, an eligible nonprofit news organization, an eligible 501(c)(6) organization, or an eligible destination marketing organization, gross receipts means gross receipts within the meaning of section 6033 of the Internal Revenue Code of 1986, which is the gross amount received by the organization during its annual accounting period from all sources without reduction for any costs or expenses including, for example, cost of goods or assets sold, cost of operations, or expenses of earning, raising, or collecting such amounts. Thus “gross receipts” includes, but is not limited to:
(v) the gross amount received as contributions, gifts, grants, and similar amounts without reduction for the expenses of raising and collecting such amounts,
(ii) the gross amount received as dues or assessments from members or affiliated organizations without reduction for expenses attributable to the receipt of such amounts,
(iii) gross sales or receipts from business activities (including business activities unrelated to the purpose for which the organization qualifies for exemption, the net income or loss from which may be required to be reported on Form 990-T),
(iv) the gross amount received from the sale of assets without reduction for cost or other basis and expenses of sale, and
(v) the gross amount received as investment income, such as interest, dividends, rents, and royalties.

Gross receipts of a borrower’s affiliates (unless a waiver of affiliation applies) are calculated by adding the gross receipts of the business concern with the gross receipts of each affiliate.
Q: How should gross receipts of affiliates be calculated?
A:
  1. 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.

  2. If a borrower has acquired an affiliate or been acquired as an affiliate during 2020, gross receipts includes the receipts of the acquired or acquiring concern. This aggregation applies for the entire period of measurement, not just the period after the affiliation arose. However, if a concern acquired a segregable division of another business concern during 2020, gross receipts do not include the receipts of the acquired division prior to the acquisition.

  3. The gross receipts of a former affiliate are not included. This exclusion of gross receipts of such former affiliate applies during the entire period of measurement, rather than only for the period after which affiliation ceased. However, if a borrower sold a segregable division during 2020, the gross receipts will continue to include the receipts of the division that was sold.
Q: Do “gross receipts” include PPP Loan proceeds that are forgiven or EIDL advances?
A:

No. The amount of any forgiven First Draw PPP Loan or any EIDL advance, which are not subject to federal income tax, is not included in the calculation of “gross receipts”.

Q: How are total employee numbers calculated if my business has more than one physical location?
A:

Any 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. SBA's affiliation rules do not apply to this group of business either.

As a result, 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.

This provision for Second Draw PPP Loans is modified by reducing the limit on employees per physical location to 300. The same standard applies to certain news organizations.

Q: Should payments that an eligible borrower made to an independent contractor or sole proprietor be included in calculation of the eligible borrower’s payroll costs?
A:

No. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.

Q: How is the time period selected for calculating payroll costs?
A:

The maximum loan amount for a Second Draw PPP Loan is equal to the lesser of 2.5 months of the borrower's average monthly payroll costs or $2 million. Unlike First Draw PPP Loans, the relevant time period for calculating a borrower's payroll costs for a Second Draw PPP Loan is either the 12-month period prior to when the loan is made or calendar year 2019.

The Act also provided tailored methodologies for certain categories of borrowers. These calculations are reflected in subsection (f) of this IFR. Subsection (f) of the IFR uses “calendar year 2020” to refer to “the twelve-month period prior to when the loan is made.” Calculating payroll costs based on calendar year 2020 rather than the twelve months preceding the date the loan is made will simplify the calculations and documentation requirements for borrowers because payroll records are more commonly created and retained on a calendar-year basis. Allowing borrowers to calculate payroll costs based on calendar year 2020 is also not expected to result in a significant difference in payroll costs compared to the twelve months preceding the date the loan is made because all Second Draw PPP Loans will be made in the first quarter of 2021.

Q: I am an LLC owner. Which set of loan amount calculation instructions applies to me?
A:

LLCs should follow the instructions that  apply to their tax filing status in the reference period used to calculate payroll costs (2019 or 2020)—i.e., whether the LLC filed (or will file) as a sole proprietor, a partnership, or a corporation in the reference period.

Q: In addition to pre-tax employee contributions for health insurance, what are the other pre-tax employee contributions for fringe benefits that may have been excluded from IRS Form 941 Taxable Medicare wages & tips that is part of employee gross pay?
A:

Employee contributions and deductions from pay for flexible spending arrangements (FSA) or other nontaxable benefits under a section 125 cafeteria plan, qualified transit or parking benefits (up to $270 a month), and group life insurance (for up to $50,000 of coverage) may have been excluded from IRS Form 941 Taxable Medicare wages & tips. However, pre-tax employee contributions to retirement plans are included in Taxable Medicare wages & tips and should not be added to that figure to arrive at gross pay.

Q: How should a borrower account for federal taxes when determining its payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven?
A:

Payroll costs are calculated on a gross basis without regard to federal taxes imposed or withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act (FICA) and income taxes required to be withheld from employees. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer. However, payroll costs do not include the employer’s share of payroll tax.

For example, the wages of an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes was withheld, count as $4,000 in payroll costs. However, the employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the statute.

Q: Is there a limit on the dollar amount of First Draw PPP Loans a corporate group can receive?
A:

Yes, businesses that are part of the same corporate group cannot receive First Draw PPP Loans in a total amount of more than $20 million. For purposes of this limit, businesses are part of a single corporate group if they are majority owned, directly or indirectly, by a common parent.

Q: If I use my entity’s annual income tax returns to demonstrate a gross receipts reduction of at least 25%, what amounts do I use to calculate gross receipts?
A:

The amounts required to compute gross receipts varies by the entity tax return type:

  • Self-employed individuals other than farmers and ranchers (IRS Form 1040 Schedule C): sum of line 4 and line 75
  • Self-employed farmers and ranchers (IRS Form 1040 Schedule F): sum of lines 1b and 9
  • Partnerships (IRS Form 1065): sum of lines 2 and 8, minus line 6
  • S-Corporations (IRS Form 1120-S): sum of lines 2 and 6, minus line 4
  • C-Corporations (IRS Form 1120): sum of lines 2 and 11, minus the sum of lines 8 and 9
  • Nonprofit organizations (IRS Form 990): the sum of lines 6b(i), 6b(ii), 7b(i), 7b(ii), 8b, 9b, 10b, and 12 (column (A)) of Part VIII
  • For nonprofit organizations (IRS Form 990-EZ): sum of lines 5b, 6c, 7b, and 9 of Part I.
  • LLCs should follow the instructions that apply to their tax filing status in the reference periods
Q: If I used payroll costs from the prior 12 months when computing my First Draw PPP Loan amount, can I continue to use those figures to compute my Second Draw PPP Loan amount?
A:

No, payroll costs from the precise 12-month period prior to the First Draw PPP Loan cannot be used to compute the Second Draw PPP Loan amount. Any borrower that used payroll costs from the prior 12 months when computing its First Draw PPP Loan amount can calculate the amount for its Second Draw PPP Loan amount using calendar year 2019 or calendar year 2020 payroll costs.

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 Second Draw Loan is made to calculate payroll costs if they choose not to use 2019 or 2020.

A borrower that used calendar year 2019 for its First Draw PPP Loan amount may continue to do so.

Q: Can I enter NAICS code 72 on my Second Draw PPP Loan application if the business activity code line was left blank on my business’s most recently filed income tax return?
A:

If an entry for this line is missing from your tax return, you should report the industry code that is most applicable to your business’ primary business activity. If your business is in the Accommodation and Food Services sector (e.g., a hotel, restaurant, bar), you can only report a NAICS Code beginning with 72 if you can substantiate this with alternative documentation, such as permits or licenses issued by local governments that are unique to this sector.

Q: How should a borrower account for federal taxes when determining its payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven?
A:

Payroll costs are calculated on a gross basis without regard to federal taxes imposed or withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act (FICA) and income taxes required to be withheld from employees’ pay. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer. However, payroll costs do not include the employer’s share of payroll tax. For example, the wages of an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes was withheld, count as $4,000 in payroll costs. However, the employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the statute.

Q: Is there a limit on the dollar amount of Second Draw PPP Loans a corporate group can receive?
A:

Yes, businesses that are part of the same corporate group cannot receive Second Draw PPP Loans in a total amount of more than $4 million. For purposes of this limit, businesses are part of a single corporate group if they are majority owned, directly or indirectly, by a common parent.

Q: I am self-employed and have no employees, how do I calculate my maximum First Draw PPP Loan amount?
A:

For detailed PPP Loan calculation instructions, please refer to the PPP Loan Amount Calculation Checklist.

Q: I am self-employed and have employees, how do I calculate my maximum First Draw PPP Loan amount (up to $10 million)?
A:

For detailed PPP Loan calculation instructions, please refer to the PPP Loan Amount Calculation Checklist.

Q: I am a self-employed farmer or rancher who reports my income on IRSForm 1040 Schedule F. What documentation must I provide in place of Schedule C and how should my maximum loan amount be determined (up to $10 million)?
A:

For detailed PPP Loan calculation instructions, please refer to the PPP Loan Amount Calculation Checklist.

Q: How do partnerships apply for PPP loans, and how is the maximum First Draw PPP Loan amount calculated for partnerships (up to $10 million)? Shouldpartners’ self- employment income be included on the business entity level PPP loan application or on separate PPP loan applications for each partner?
A:

For detailed PPP Loan calculation instructions, please refer to the PPP Loan Amount Calculation Checklist.

Q: How is the maximum First Draw PPP Loan amount calculated for S corporations and C corporations (up to $10 million)?
A:

For detailed PPP Loan calculation instructions, please refer to the PPP Loan Amount Calculation Checklist.

Q: How is the maximum First Draw PPP Loan amount calculated for eligible nonprofit organizations (up to $10 million)?
A:

For detailed PPP Loan calculation instructions, please refer to the PPP Loan Amount Calculation Checklist.

Q: How is the maximum First Draw PPP Loan amount calculated for eligible nonprofit religious institutions, veterans’ organizations, and tribal businesses?
A:

For detailed PPP Loan calculation instructions, please refer to the PPP Loan Amount Calculation Checklist.

Q: I have income from self-employment and file an IRS Form 1040, Schedule C. Can I use gross business income to calculate my loan amount?
A:


Yes. To help small businesses with little or negative net profit and reduce barriers to accessing the PPP, sole proprietors and independent contractors may now receive a loan amount based on their gross business income. Please note that borrowers whose PPP loans were approved before the effective date of this rule cannot increase their PPP loan amount based on the new calculation methodology. The SBA has developed new Borrower Application Forms for use by borrowers that are Schedule C filers and elect to calculate their loan amount using gross income. SBA Form 2483-C will be used by First Draw PPP Loans applicants and SBA Form 2483-SD-C will be used by Second Draw PPP Loans applicants.

*  Please note that the information provided above is based on guidance provided by the U.S. Treasury and the SBA, including information included as part of the form of Paycheck Protection Program Loan Forgiveness Application currently published by the SBA.  This information is posted here solely for your convenience. It is not intended to be, and should not be considered, comprehensive or definitive. To the extent of any conflict between any information posted below or in any FAQ and the information and guidance issued directly by the SBA and/or the U.S. Treasury, the information provided directly by the SBA and/or U.S. Treasury will control.