Paycheck Protection Program Update 12/27/2020

On December 27th, the Coronavirus Relief and Government Funding Package was signed into law. The law addresses a variety of aspects of the Small Business Administration’s Paycheck Protection Program. Per the law, the SBA has 10 days to release official guidance and an application. While we are waiting on official guidance and a timeline from the SBA, we do know of a few changes that will affect original PPP loans and some qualifications for the “Second Draw” PPP loan. 


Original PPP Loans 

The new law includes updates to the forgiveness process that could affect borrowers who have already been approved for forgiveness and for borrowers who have yet to apply for forgiveness. For borrower’s who have received EIDL Advances, the advance will no longer be deducted from the forgiven amount. This provision is retroactive, and we are waiting on the SBA to issue guidance and procedures to ensure our borrowers receive their previously deducted EIDL Advance.   

 

The SBA will also be releasing a one-page forgiveness application for loans $150,000 and below. We believe this application will require borrowers attest they used the funds according to the program and will not be required to provide supporting information.   


“Second Draw” PPP Loans 

Borrowers who previously received a PPP loan could be eligible for a second PPP loan provided they meet the criteria stated in the new law. While the SBA has not issued specific guidance, we are aware of some of the following qualifications.  

 

The borrower:   

  • Does not employ more than 300 people. 
  • Qualifies as a small business based on the SBA’s annual revenue. 
  • Has experienced a decline of 25% of revenue or more in at least one quarter of the year 2020, compared to the same quarter of 2019.  
  • Is limited to a loan size that is lesser of $2 million or 2.5 times the businesses average monthly payroll. If the business has a NAICS code that starts with 72, that business could then multiple monthly average payroll by 3.5. This applies to most lodging and food service industries.  

Next Steps 

Oregon Pacific Bank remains grateful to all the businesses who trusted us with their original PPP request. Our existing clients continue to be our number one priority. We are dedicated to the markets we serve, but with anticipated influx of applications we will focus on accepting PPP applications from current clients only.   

 

We are currently in the process of evaluating the program and putting the resources together to ensure we can provide our clients with the necessary educational resources and an efficient application process. As with the original PPP process, we will continue to do our best to keep you updated on this new round of PPP funding and when the SBA will begin accepting applications. 

 

We are wishing you a safe and happy New Years and brighter 2021. As always if you have any questions please reach out to your local community banker.   

 

Best Regards,  

Oregon Pacific Bank