Paycheck Protection Program (PPP) Loans & Forgiveness

We know these are very challenging times and we want to make sure getting a PPP loan or forgiveness isn’t something you have to stress about.

Ready to apply for PPP Forgiveness?

Email us to get started!

Please remember to provide your business name EXACTLY as it appears on your PPP Loan. The unique link and PIN to access your forgiveness application will be sent to the email you provided on your PPP Loan Application.  

    You have 10 months after the end of your Covered Period to apply for Forgiveness before you will start being billed for monthly payments. For this deadline calculation, the SBA allows the maximum 24-week Covered Period even if you elect to use a shorter Covered Period in your Forgiveness Application. The beginning of your Covered Period is determined by the SBA and is based on the Loan Disbursement Date and cannot be changed. For Second Draw (PPP2) Forgiveness Applications, you must have already received a Forgiveness Decision from the SBA on your First Draw (PPP1) loan before you file for Second Draw (PPP2) Forgiveness.  First Bank of the Lake has 60 days to review a completed application.  Once the completed application has been reviewed and sent to the SBA, the SBA has 90 days to render their decision. 

      We’re here to answer your questions.

      Who is eligible to receive a PPP Loan?

      Who is eligible to receive a PPP Loan?

      Only certain businesses are eligible to receive a PPP loan, and these specifications are different for first-time loan recipients and second-draw recipients.

       

      To be eligible for a first-draw PPP loan:

      • Your business has less than 500 full-time, part-time, or seasonal employees.
      • Your business was operational before February 15, 2020 and remains operational.

      To be eligible for a second-draw PPP loan:

      • Your business has less than 300 full-time, part-time, or seasonal  employees; if you have multiple locations, you may not have more than 300 employees per location.
      • You are able to demonstrate a revenue reduction of at least 25% in any quarter of 2020 (when compared with the same quarter in 2019).
      • You have used or will use the full amount of the first-draw PPP.
      • Your business was operational before February 15, 2020 and remains operational.

      Businesses eligible for first- and second-draw PPP loans include:

      • Sole proprietors
      • Independent contractors
      • Self-employed individuals
      • Certain non-profits (the new bill has expanded eligible businesses to include certain 501(c)(6) non-profit organizations)
      • Seasonal employers; the new bill has clarified the definition of these to be businesses that operate no more than seven months within a year or earn no more than a third of gross receipts within a six-month period
      • Faith-based organizations that have less than 150 employees
      • Housing cooperatives that employ less than 300 people
      What are the eligibility requirements for PPP2?

      You must have previously received a PPP loan and have used or will use the full amount of this loan before the expected date of disbursement for a PPP2 loan. To ensure compliance with this statute, we ask you to only complete a PPP2 loan application if you have already used the full amount of your PPP loan. There are two additional requirements further limiting the pool of eligible applicants:

      1. You must have 300 or fewer employees
      2. Have experienced a decrease in gross receipts of at least 25% in any quarter of 2020 relative to that quarter of 2019. In other words, your gross receipts in 2020 for any quarter must be 25% or more below the gross receipts from the corresponding quarter of 2019. Anyone with annual gross receipts for 2020 that are 25% below 2019 annual gross receipts for 2019 is eligible as well. There are additional guidelines for those who began operations midway through 2019. Both cash and accrual accounting are permitted for these calculations, however, the accounting method must be consistent between periods. These guidelines, along with the full list of program requirements can be found on page 20 of the attached program guidelines from the SBA.

      (SBA 13 CFR Parts 120 and 121, Paycheck Protection Program Second Draw Loans)

      What has changed with round 2 of PPP?

      Here’s PPP under the Consolidated Appropriations Act, 2021 at-a-glance:

      • $284 billion has been allocated to PPP (including $138 billion of unspent loans from the first round that were reinvested) and the program has been extended to March 31, 2021
      • Second-draw loans are available for businesses with under 300 employees
      • Businesses eligible for PPP loans has been expanded
      • Loan limitations have been expanded for certain businesses
      • Forgiveness for loans under $150K have a new, simplified one-page application
        • While expenses eligible for forgiveness still require a 60/40 split of payroll costs/other eligible expenses, group health insurance benefits are now included in payroll costs (and these entail life insurance, disability benefits, vision, and dental insurance)
      • Eligible expenses for forgiveness have been expanded (for first-draw loans that have not yet been forgiven and for second-draw loans)
      • Borrowers are allowed to choose a covered period that is any period of time between eight and 24 weeks
      • PPP funding includes dedicated set-asides for community lenders (CDFIs and MDIs) and business that operate in low-income areas
      • A clarification has been made indicating that interest rates on PPP loans are non-compounding and non-adjustable 
      • A clarification has been made indicating that forgiven PPP loans are not taxable and forgiven expenses are tax-deductible

      Should I apply for PPP1 or PPP2?

      In order to be eligible for PPP2, you must already have applied for PPP1 and have used all of your disbursed funds. If you have not done so, you should apply for PPP1, assuming you meet the program requirements. (See “Who is Eligible?” above)

      What are the terms for PPP2 loan? Are they the same as PPP1?

      The terms for PPP2 loan are generally the same as for PPP1 loan. No collateral or personal guarantees are required, the interest is 1% and the maturity is five years. The loan amount is 2.5 months of payroll costs (3.5 months for businesses under NAICS code 72). While there are exceptions to this rule, they are identical between the two programs. Rules governing covered expenses and seeking forgiveness have been harmonized between the two programs as well. For further details, please see page 4 of the guidelines released by the SBA.

      (SBA 13 CFR Parts 120 and 121, Paycheck Protection Program Second Draw Loans)

      What can PPP loan funds be used for?

      • Payroll costs, including compensation, employee benefits, and employer-paid taxes
      • Rent or lease payments
      • Mortgage interest payments
      • Utilities
      • Personal protective equipment (PPE) and facilities updates to operate safely during the COVID-19 pandemic
      • Software or cloud computing costs for business operations
      • Costs related to property damage and vandalism or looting due to public disturbances not covered by insurance or other compensation
      • Costs of the supply of goods that are essential to business operations
      • Covered worker protection expenditures that help adapt business activities to COVID safety requirements

      Are there any changes to covered expenses for PPP2?

      The SBA released a new list expanding the eligible expenses for both the PPP2 and PPP1 programs. This allows a wider range of expenses to be eligible for forgiveness during the covered period. This new list of expenses includes payroll costs, costs related to employee benefits, mortgage interest payments, rental payments, utility payments, interest payments incurred before February 15, 2020, refinancing an SBA EIDL loan, covered operations expenditures, certain property damage expenses, covered supplier costs as well as costs relating to employee health protections. The full list of covered expenses can be found starting on page 48 of the amended guidelines to the PPP program. Borrowers with existing loans through PPP1 are eligible to use this expanded list provided they have not already sought loan forgiveness.

      (See SBA 13 CFR Parts 113, 120 and 121 -Paycheck Protection Program as Amended by Economic Aid Act)

      What are the PPP loan maximums and limitations?

      First-draw PPP loan limitations:

      The maximum amount a business that has not yet received a PPP loan can borrow is the lesser of:

      • 2.5 times the average monthly payroll costs and healthcare costs
      • $10 million

      There may be exceptions to these limits for restaurants and other hospitality businesses.

      Second-draw PPP loan limitations:

      Any business that is applying for a second draw will be subject to more stringent limitations. The maximum second PPP loan amount is the lesser of:

      • 2.5 times the average monthly payroll costs and healthcare costs in the year prior to when the loan was received or within the calendar year
      • 3.5 times the average monthly payroll costs and healthcare costs in the year prior to when the loan was received or within the calendar year for any business that is classified under Code 72 by the North American Industry Classification System (NAICS). (This is a list of hospitality and entertainment businesses like restaurants, hotels, and casinos; click the link to get the full list.)
      • $2 million

      What documents do I need to begin to gather?

      • 2019 Tax Return and Employment Tax Form
        • S Corporation: Form 1120S and Form 941 (4 quarters)
        • C Corporation: Form 1120 and Form 941 (4 quarters)
        • LLC / Partnership: Form 1065 and Form 941 (4 quarters)
        • Sole Proprietor or Independent Contractor: Form 1040 Schedule C
        • Non-profit: Form 990 and Form 941 (4 quarters) or 944
      • A payroll report covering the pay period February 15, 2020 OR a bank statement for February 2020.
      • If you are a limited liability company or corporation, please include Articles of Organization (for LLCs) / Articles of Incorporation (for corporations).
      • Voided Check
      • Driver's License or Other Form of Identification
      • If you are applying for a PPP2 loan, you will need your PPP First Draw SBA loan number and loan amount.

      Are there any additional documentations required for the PPP2 program?

      You will need the same documentation supporting your calculation of payroll costs that were required for PPP1. You can choose to apply using your 2020 payroll costs. For PPP2, applicants must also provide documentation supporting their eligibility based on a 25% decline in gross receipts. Such documentation may include tax forms or quarterly financial statements. This documentation is often not required for borrowers applying for less than $150K, but may be requested. Please note, borrowers will need to supply this documentation at the time they seek loan forgiveness. Click here to learn more about how to simplify your payroll calculations with a payroll report from your payroll provider.

       

      If you are applying for a PPP2 loan, you will also need your PPP First Draw SBA loan number and loan amount.

      Where can I find my PPP First Draw SBA loan number and loan amount?

      PPP SBA Loan Number

      This is your number that the SBA generated for you at the time of your loan approval. Each business gets one SBA loan number per PPP loan. If you have multiple businesses and multiple PPP loans, you will have more than one SBA loan number. Note that you may have also been assigned a “lender loan number” as well, which is not the same as your SBA loan number. You can typically find your SBA loan number at the top of or within your PPP loan promissory note.

       

      PPP Loan Amount

      This is the full loan amount you received. You can confirm this amount in your bank records, PPP loan agreement, or in a confirmation email from your lender. You can typically find your SBA loan number at the top of or within your PPP loan promissory note.

      What can I expect when I apply?

      First Bank of the Lake's borrower-friendly application makes it simple for you to input your information and upload the required documentation. You can also save and access your application at a later time via your secure link and PIN.

      How do I calculate my payroll costs?

      One of the most important components of the Paycheck Protection Program (PPP) loan also happens to be one of the most difficult ones for business owners to analyze: your payroll. This number is used to determine your total PPP loan amount.

      Many payroll providers are now offering a “CARES Act Report” or “PPP Report” that tells you everything you need to know for your PPP loan application. These reports include gross pay, adjusted gross pay, net pay, and employer taxes and contributions for each employee. Let a report from your payroll provider do the heavy lifting for you, so you don’t have to worry about the calculation. Plus, this handy report is all that is needed to support your payroll calculation, helping our underwriters review your loan quicker!

      Click here to learn more about how you can get a payroll report from your payroll provider.

      I wasn’t able to get a first-round PPP loan. Should I try for one in the second round?

      Yes, as long as you are eligible and can adhere to the terms of the loan. With the creation of the new bill, Congress has set aside allocations for community lenders and institutions that can help smaller businesses, businesses owned by POC, and those who operate in lower-income areas access capital. 

      A portion of funding is being directed to Community Development Financial Institutions (CDFIs) and Minority Depository Institution (MDIs). These are community lenders who have committed to expanding economic opportunity for underserved people. Not only are portions of the PPP allocated for these lenders, but also outside of PPP funds; $12 billion is being routed to CDFIs and MDIs. This means that even if the community lenders in your area aren’t supporting PPP, they may be offering other loans with federal funds under the Consolidated Appropriations Act, 2021.

      I returned part or all of my PPP loan. Can I apply for another PPP loan?

      Yes. Within 17 days of the enactment of this bill, the SBA is required to release guidance to lenders on allowing borrowers who have returned loans to access PPP capital. 

      Who is considered a Beneficial Owner?

      A Beneficial Owner is each individual or business entity, if any, who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25% or more of the equity interests of the legal entity. An additional Certification of Beneficial Ownership must be completed for every business Entity Owner until human ownership is established. This could be an individual or another business entity.

      You will be required to provide the following information for each beneficial owner:

      • Name
      • % of Ownership
      • Date of Birth
      • Address (Residential or Business Street Address)
      • For U.S. Persons: Social Security Number
      • For Foreign Person: Passport Number and Country of Issuance, or other similar identification number*

      *In lieu of a passport number, foreign persons may also provide an alien identification card number, or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

      If my business is owned by another business, who are my Beneficial Owners?

      Beneficial ownership should pierce through corporate layers down to the individual. Multiply the percentages owned of each company to find each individual indirect ownership percentage in the applicant business. Anyone with 25% or more direct or indirect ownership would be a Beneficial Owner of the applicant business.

      The following graphic is an example of calculating Beneficial Ownership when owned by another business.

      Who is the individual with significant responsibility for managing the legal entity?

      The one individual with significant responsibility for managing the legal entity listed in item, such as: an executive officer or senior manager (e.g. Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, Treasurer); or Any other individual who regularly performs similar functions. 

      You will be required to provide the following information for this individual:

      • Name/Title
      • Date of Birth
      • Address (Residential or Business Street Address)
      • For U.S. Persons: Social Security Number
      • For Foreign Person: Passport Number and Country of Issuance, or other similar identification number*

      *In lieu of a passport number, foreign persons may also provide an alien identification card number, or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

      What about loan forgiveness?

      When you’re ready to apply for loan forgiveness, First Bank of the Lake's integrated application allows you to use your securely stored financial information to ensure a fast turnaround.

      Will my EIDL advance be deducted from my PPP forgiveness amount?

      No. Per the guidance received from the SBA (Procedural Notice effective 1-08-2021), the SBA will no longer deduct EIDL advances from forgiveness payments remitted to PPP lenders.

      I haven’t applied for forgiveness on my first loan yet. Can I apply for a second loan?

      Yes, borrowers that meet eligibility criteria for a second loan can apply for a second loan before applying for forgiveness for their first PPP loan. However, borrowers must have spent all proceeds from their first PPP loan prior to disbursement of the second loan.

      Does my first PPP loan count as revenue in the quarter I received it?

      No. The PPP loan would appear on your balance sheet and not count as income in the quarter received.

      Why do people love First Bank of the Lake?

      Here’s what some of our customers have to say about our PPP team.

      When I got the email that the First Bank of the Lake approved my loan and was set to be funded, I wanted to personally let you know how grateful I am and how this is going to help. 

      I suppose it took something like this to realize how important it is to be connected with banks like yours. Banks who care about their customers, who care about their customers’ businesses and can appreciate the struggles of small businesses in times like these. Thank you all again for your hard work and help.

      — A PPP Loan Customer

      [This loan] is a LIFESAVER for our organization and I thank FBOL for processing my application in a professional manner and, especially being able to help us, as our own home bank did nothing for small businesses.

      I can’t wait to change not only our bank, but my own personal accounts as well.

      — A PPP Loan Customer

      I wanted to THANK YOU from the bottom of my heart! Your kindness and willingness to work with us is a remarkable compliment to you on what a special person you are. As you know, we got approved last night, and my small business here in Annapolis has the funds to survive.

      — A PPP Loan Customer

      Four simple words, but they are at the core of everything we do.

      They are the difference that sets us apart.