Compliance with PPP - CARES Act II
The PPP will be open to certain eligible businesses which (1) have already received and spent the proceeds of their original PPP loans (Second Draw Loans); and (2) have not yet received an SBA loan under this program (First Draw Loans). While the legislation is similar to the first round of the program, there are a number of significant changes, including the following:
- Maximum Loan Amount: Borrowers of a Second Draw PPP loan have an option to calculate the maximum loan amount by multiplying the borrower's average total monthly payroll in (a) the one-year period prior to the date on which the loan is made, or (b) calendar year 2019, by 2.5x. The maximum loan amount has been reduced from $10 million in the first round to $2 million. Similar to the first round, seasonal employers and new businesses may calculate their maximum loan amount differently; however, businesses must have been in operation as of February 15, 2020. Note that the $2 million maximum does not apply to borrowers for First Draw Loans, that maximum remains at $10 million.
- Maximum Loan Amounts for the Hospitality Industry: Borrowers of Second Draw Loans that have NAICS Code 72 (restaurants and hotels) are permitted to use a 3.5x multiplier of their average monthly payroll costs to calculate their maximum loan amount, subject to a $2 million maximum. The "waiver of affiliation rules" from the first round of the program still apply for these entities.
- Choose Your Covered Period: Borrowers are now able to choose the length of their covered period so long as it is at least eight weeks and is not longer than 24 weeks. Similar to the first round, the covered period begins on the origination date of the loan.
- Use of PPP Funds: Congress expanded the types of expenses for which all PPP loans can be used. This expansion applies to existing PPP loans (except in the event forgiveness has already been obtained) and First and Second Draw Loans. Specifically, proceeds may now be used for:
- Covered Operations Expenditures: payments for business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment or tracking of payroll expenses, HR and billing functions, or account or tracking of supplies, inventory, records and expenses;
- Covered Property Damage Costs: costs related to property damaged and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation;
- Covered Supplier Costs: expenditures to a supplier of goods that are essential to the operations of the entity at the time at which the expenditure was made and is made pursuant to a contract or order in effect at any time before the covered period or, with respect to perishable goods, in effect at any time during the covered period; and
- Covered Worker Protection Expenditures: operating/capital expenditures that allow a business to comply with requirements or guidance issued by the CDC, HHS, OSHA or any state or local government during the period beginning March 1, 2020 and ending on the date which the national emergency declared by the President expires related to the maintenance of standards for sanitation, social distancing or any other worker or customer safety requirement related to COVID-19. These expenses include PPE, physical barriers that were put in place, expansion of indoor/outdoor space, ventilation or filtration systems and drive-through windows.
For a full list of changes, we encourage you to click here to visit the SBA's website directly. We also encourage you to reach out to your attorney or accountant, who can also provide you additional insight.
To expedite the second round of PPP funding, please access the PSBT online portal to complete your application and upload the required documents. We will continue to update our website with the latest information and communicate with you directly by email.
TO APPLY NOW, CLICK HERE*
*We are only accepting PPP loan applications from customers in our market area.
Please continue to utilize our PPP Forgiveness Loan Recipient Resources page for more information on how to process the "round one" PPP Borrower forgiveness application.
Paycheck Protection Program Agent Notification
This notification is intended to inform Peoples Security Bank and Trust ("Peoples") customers that Peoples is willing to pay agent fees to agents who assist borrowers in applying for second round Paycheck Protection Program ("PPP") loans in accordance with recent legislative amendments to the PPP and the Small Business Administration's ("SBA") Interim Final Rule as of January 6, 2021. To view the SBA's Interim Final Rule, click here.
The agent fee will be available to all customers' agents who assist borrowers in preparing an application for a second round PPP loan (including referral to Peoples) and who execute a fee agreement to be signed by Peoples, the customer, and the customer's agent. The agent must also execute an SBA Fee Disclosure and Compensation Agreement ("SBA Fee Agreement") upon the completion of services. To view the SBA Agreement, click here.
Per the January 6, 2021 Interim Final Rule, the total amount that an agent may collect from the lender will be in accordance with the following:
- Loans of $350,000 or less: 1.0%
- Loans between $350,001 and $1,999,999: 0.5%
- Loans $2 million and greater: 0.25%
The fee charged must be reasonable and for actual services performed. Additionally, agents must provide itemization and supporting documentation, including (1) a detailed explanation of the work performed; and (2) the hourly rate and the number of hours spent working on each activity.
Customers interested in applying for a second round PPP loan should provide a copy of the Peoples' Agent Fee Agreement to their agents at the beginning of the application process to ensure that agent fees can ultimately be paid, subject to a review by Peoples and completion of the SBA Fee Agreement. To view a copy of the Peoples' Agent Fee Agreement, click here.