January 8, 2021
Dear Clients, Colleagues and Friends,
The U.S. Small Business Administration (SBA) announced today that beginning on Monday, January 11, 2021, there will be a targeted rollout of a new round of Paycheck Protection Program (PPP) Loans. The new round will initially be made available exclusively for first-time borrowers who apply at community financial institutions beginning on Monday. Beginning Wednesday, January 13, 2021, borrowers who meet the eligible criteria will be able to apply for Second Draw PPP Loans from these same community financial institutions. The SBA has not released a list of the participating community financial institutions and has indicated that the new round of PPP Loans will open to all other participating lenders shortly thereafter. It is anticipated that shortly thereafter could be the end of next week or the week after.
On January 6, 2021 The U.S. Treasury released Interim Final Rules (IFR) regarding Second Draw PPP Loans. This IFR provides clarity regarding several items. In particular, it clarifies the required documentation that borrowers who apply for a Second Draw PPP Loan need to provide. The IFR indicates if a borrower applies for a Second Draw PPP Loan from the same lender who provided the applicant’s First Draw PPP Loan, no additional documentation is required to substantiate payroll costs if they used calendar year 2019 figures to determine their First Draw PPP Loan as well as their Second Draw PPP Loan. This provides incentive for borrowers to reapply with the same lender to ensure a relatively smoother underwriting process than if they were to apply with a new lender. In addition the IFR clarifies that for loans with a principal amount of $150,000 or less, a borrower does not need to submit documentation that substantiates a reduction of 25% or greater in gross receipts at the time the borrower submits their Second Draw PPP Loan application, but that it must be submitted on or before the date the borrower applies for loan forgiveness. Presti & Naegele recommends that these borrowers still gather the supporting documentation now to confirm and substantiate their 25% reduction in gross receipts.
For all of our COVID-19 updates, please visit our website at www.pntax.com and our COVID-19 updates page at https://www.pntax.com/covid-19/.
If you have any questions or need further information, please contact your Presti & Naegele professional directly, or dial 212-736-0055 for immediate assistance. Stay safe.
Presti & Naegele
January 8, 2021
- Temporary, Proposed Regs Authorize Assessment of Erroneous Refund of COVID-19 Employment Tax Credits
- Qualified Sick and Family Leave Wages Reporting Guidance Issued
- IRS Reminder for Classification of Workers as Employees or Independent Contractors
- 2021-2022 Special Per Diem Rates Released
- Final Foreign Partner Withholding Regulations To Be Deferred Until 2023