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#30: Several PPP Related Provisions for First and Second-Draw Small Business Borrowers

On 12-27-20 President Trump signed the most recent stimulus bill into law. There are several PPP related provisions in the new law which will allow borrowers an opportunity to obtain a first PPP draw if they did not take one in 2020, and also makes a Second Round PPP draw available to borrowers who did. The SBA is currently working on the portal to receive applications and is also issuing guidance and clarifications to assist banks and borrowers.  We will seek to send out up to date information as soon as it becomes available.

While it is reported that the application portal will open on 1-11-21, the SBA is giving preference to “Community Financial Institutions” in an attempt to make sure that underserved communities are able to access the program.  Commercial banks including Citizens Bank will not have access to the loan portal until later in the week, or perhaps the following week.

Citizens Bank will be participating in the Second Round PPP, and we will begin processing applications as soon as possible.

Following are the broad details of the recently released guidance:

  • Borrowers who did not receive a PPP loan in 2020 will have the opportunity to obtain one now under the same rules that have already been published and amended for the first draw program.
  • Borrowers who took a first-round draw are eligible for a second-round draw if they can demonstrate a 25% reduction in gross revenues in any quarter of 2020 compared to the same quarter in 2019 or can show a full year reduction of 25% in 2020 over 2019.
  • Applicants will be required to submit supporting documentation of the reduction with their application. That documentation may include CPA or borrower prepared financial statements, quarterly IRS tax submissions or other similar reports.
  • Most borrowers will be eligible for a PPP Second Draw of 2.5 times their monthly payroll as a maximum loan amount. Borrowers in the 72 NAICS Code (Accommodation and Food Service) can receive up to 3.5 times their monthly payroll.
  • Borrowers can select anything between 8 and 24 weeks as their covered period.
  • New categories of expense are now eligible for forgiveness on both the first and second draw PPP. Things such as expenses for PPE or modifications to real property are eligible if required by a federal, state or local municipality in order to operate.  Expenses for damage caused by civil unrest are also potentially eligible for forgiveness.
  • A borrower must have used 100% of their first draw PPP funds in order to apply for a second draw.

Following are several useful links for your use:

As always, we stand ready to answer your questions about the PPP using the best available information. 

Citizens Bank recommends however that you consult your outside advisors and experts in all matters relating to the PPP and loan forgiveness.  We will work to provide you timely and accurate information, but the burden for obtaining forgiveness rests on the borrower. All information provided in this format or any other communication regarding the program is believed to be accurate, but no guarantee is or can be made by any Citizens Bank representative.

Please submit your questions to pppquestions@citizens-banking.com.  Include the name of your business in your e-mail.  We will endeavor to answer in a timely way with the best information currently available.


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