SBA PPP FIRST DRAW LOANS
SBA reopened the Paycheck Protection Program (PPP) for First Draw Loans the week of January 11, 2021. First Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
Full Forgiveness Terms
First Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
• Employee and compensation levels are maintained;
• The loan proceeds are spent on payroll costs and other eligible expenses;
• At least 60 percent of the proceeds are spent on payroll costs.
Who Can Apply
Eligible small entities, that together with their affiliates (if applicable), have 500 or fewer employees--including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors--can apply. Entities with more than 500 employees in certain industries that meet SBA's alternative size standard or SBA's size standards for those particular industries can also apply.
SBA PPP SECOND DRAW LOANS
The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan. Second Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
Full Forgiveness Terms
Second Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
• Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan;
• The loan proceeds are spent on payroll costs and other eligible expenses; and
• At least 60 percent of the proceeds are spent on payroll costs.
Targeted Eligibility
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
• Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
• Has no more than 300 employees; and
• Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Small Business Administration's (SBA) Paycheck Protection Program (PPP) Round 1 & 2 Loan Forgiveness Application
MSUFCU is monitoring
SBA and
U.S. Treasury guidance as they continue to provide details about the Forgiveness portion of the Paycheck Protection Program. SBA PPP Forgiveness Applications will be processed electronically, through an online portal.
Our goal is to ensure the best experience for all borrowers.
We are excited to continue our partnership with Lendio. Lendio helped with the initial SBA PPP application for funding and will also assist with the forgiveness application portion.
Notifications will be sent based on the funding date of your PPP loan.
As a reminder, repayment of the SBA PPP loan is deferred until the amount of loan forgiveness is determined, or 10 months from the end of the forgiveness coverage period, if you do not apply for forgiveness.
How to prepare for Forgiveness (Guidance for SBA PPP Round 1 & 2):
• The SBA has released forms and frequently asked questions (FAQs - SBA) that will be helpful during your forgiveness process (PPP Loan Forgiveness - SBA).. We recommend you familiarize yourself with these documents, as they are an important part of the Forgiveness process.
• Forgiveness is not automatic; you must request it through MSUFCU.
• Borrower is responsible for any and all amount(s) not forgiven.
• You will need to certify and document that you used the loan funds for SBA-eligible purposes.
• We will review your request and send it to the SBA for authorization.
• Once the SBA makes a decision, we will email you.
WHAT IS THE INTEREST RATE, FEE AND MATURITY ON A PPP LOAN?
• The interest rate will be 100 basis points or one percent.
• The maturity is five years (previously two years).
• No fees will be charged.
WHEN MUST REPAYMENT OF PRINCIPAL AND INTEREST BEGIN?
Payments do not need to be made for ten months (previously six months) following the date of disbursement of the loan. However, interest will continue to accrue on PPP loans during this ten month (previously six-month) deferment.
ADDITIONAL RESOURCES
• SBA may provide further guidance, if needed, through SBA notices and a program guide which will be posted on
SBA's website.
• Questions on the Paycheck Protection Program 7(a) Loans may be directed to the Lender Relations Specialist in the
local SBA Field Office.
*The statements and suggestions provided in this FAQ document are not legal opinions and cannot be relied upon as legal or financial advice. You should consult with your own legal counsel and/or financial advisor for guidance on use of loaned funds and requirements for forgiveness of the loan obligation. MSUFCU will only forgive as much of the loaned amount as the federal government pays to MSUFCU pursuant to the loan forgiveness application. Any unforgiven amount of the loaned funds will be your obligation to repay to MSUFCU according to the terms of the note and other loan documents.
