The SBA has opened the portal for borrowers who did not receive a PPP loan last year. Borrowers now have the option to take a First Draw Loan under the same rules (as amended) as borrowers who did obtain a PPP loan in 2020.
First Draw PPP Loans can be used to fund payroll costs including benefits, business mortgage interest, business rent or lease payments, business utilities, worker PPE and related property modification costs required by State, Federal or Local authorities in order to operate, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
Eligibility Requirements and Details for a First Draw PPP Loan:
- Eligible borrowers include: Business entities, independent contractors, self-employed individuals, Sole proprietors, 501(c)(3) and 501(c)(19) non-profit organizations, 501(c)(6) housing cooperatives, tribal businesses, destination marketing organizations, and news organizations.
- Borrowers must have no more than 500 employees except for those in industries that meet SBA’s alternative size standard – contact your banker for details if you think this might apply to you.
- Borrower must have been in operation on February 15, 2020. A payroll statement or similar documentation from the pay period covering February 15, 2020 must be provided to establish you were in operation on that date.
- Maximum loan amount is 2.5x average monthly payroll costs from 2019 or 2020 for employees whose principal place of residence is the United States, less cash compensation in excess of $100,000 for any individual on an annualized basis, plus the outstanding amount of an Economic Injury Disaster Loan made between January 31, 2020 and April 3, 2020 that you seek to refinance (do not include the amount of any advance) up to $10 million.
- Maximum loan amount for Farmers who file Schedule F is 2.5x the gross income that is not more than $100,000, divided by 12. If borrower has employees, employee payroll costs in 2019 or 2020 may be included.
- Borrower must submit documentation to demonstrate the amount of qualifying payroll, which may include: payroll records, Form 1040 Schedule C and/or Schedule F, IRS Form 941 statements (or other tax forms containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever you wish to use to calculate your loan amount. Payroll reports from a third-party servicer may be submitted or required by the bank.
- If included in your loan amount, you must provide evidence of any retirement and medical insurance contributions, State unemployment taxes or SUTA as reported on state quarterly wage reporting forms.
- Borrowers who are not self-employed (sole proprietors and independent contractors) may use payroll records for the 1-year period prior to the loan date, or from 2019 or 2020 for purposes of calculating their maximum loan amount.
Documents Required to Apply for a First Draw Loan:
Your application will not be considered complete and will not be submitted to the SBA until all of the above items have been received. Based upon Citizens Bank underwriting you may be required to submit additional details or explanations.
Documentation can be sent securely to Citizens Bank using our secure file upload service.
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.