Blog Posts With Helpful Tips On Loans, Banking And More
Blog Posts With Helpful Tips On Loans, Banking And More
PPP Loans, Round 2: Details regarding The Relief Act (Part 1 of 2)
Posted on Monday, January 4, 2021
US government building with the words ROUND 2 across it

Much to the relief of small business owners nationwide, President Trump recently signed the Consolidated Appropriations Act, 2021, (also known as the “Relief Act,”) into law.  The Relief Act consists of billions of dollars in aid to small businesses and individuals impacted by COVID-19. It will provide a new round of PPP loans with provisions intended to help smaller businesses, and will offer additional funding to borrowers of the original PPP loans.

Please note that the opportunity to apply for a first-draw (round one) PPP loan continues to be available through March 31, 2021.

The Relief Act contains guidance and changes that will affect past borrowers even if they do not choose to reapply. For Part One of our Relief Act summary, we’re focusing solely on past borrowers.

The following contains key guidance and issues contained in the Act that focus on past borrowers of both PPP Loans and Economic Injury Disaster Loan (EIDL) grants.

For those who received a PPP loan and/or an EIDL grant:

  • Reimbursement: Borrowers of PPP loans who also received EIDL grants had their grant money deducted from their total PPP loan amount. The Relief Act includes a reimbursement of the portion deducted from the PPP loan.
  • Additional grant money for EIDL recipients who received less than $10K: During round one of PPP, borrowers were able to apply for an EIDL grant of up to $10,000, depending on their number of employees. Through the Relief Act, those who received less than $10,000 will now be eligible to apply for the difference. For example, if a business received $6,000, they’ll be eligible to claim an additional $4,000 to equal the total maximum amount of $10,000 regardless of number of employees.
  • Please note that while PPP loans are handled by your lender, you will need to work directly with the SBA regarding your EIDL grant.

For those who borrowed less than $150,000 in PPP loans and have not yet applied for forgiveness:

Until the Relief Act, simplified forgiveness forms were only available for borrowers of up to $50,000. After the Relief Act is enacted, the SBA has 24 days to create a one-page loan forgiveness certification form for original PPP loans of up to $150,000. Other requirements the eligible borrower will be expected to provide include but are not limited to the following:

  • The total amount of the PPP loan
  • An approximate amount of the loan spent on payroll costs
  • A description of the number of employees retained due to the PPP loan
  • Additional verification including payroll documentation may be required

Be sure to check back next week for Part 2 of our Relief Act Summary focused on second time and new borrowers. Please note this is based on information that is currently available and is subject to change. Once the SBA has established regulations and provided guidelines to banks, we will announce a date that we will start accepting applications. We do not expect to receive SBA guidance before Jan. 12, 2021.

Western State Bank. Member FDIC.