COVID-19 Updates, CARES Act, Resources & Community Support
During this challenging and uncertain time, our priority is providing our customers with the best service and support. Since there are times that you can't come to our lobbies for guidance, we will bring the bank to you with the assurance that we're here for you, wherever you are.
We've put together this portal with useful information about the CARES Act, PPP Loans, resources for you and your business, as well as community support information and helpful tips from 417 Magazine about supporting local businesses, staying connected and working from home.
We are here for you, wherever you are.
PAYCHECK PROTECTION PROGRAM FIRST DRAW LOANS
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.
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.
Also eligible to apply for First Draw PPP Loans are businesses with a NAICS Code that begins with 72 (Accommodation and Food Services sector) or eligible news organizations with no more than 500 employees per physical location, as well as housing cooperatives, 501(c)(6) organizations, or destination marketing organizations with no more than 300 employees.
PAYCHECK PROTECTION PROGRAM 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.
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.
First Draw PPP Loans
Second Draw PPP Loans
Updated First Draw PPP Borrower Application
Updated Second Draw PPP Borrower Application
Schedule C Borrowers
The SBA has released new loan calculations for Schedule C borrowers. The borrower can elect to use Gross Income (Line 7) rather than Net Income (Line 31) when calculating the average monthly payroll. If the borrower elects to use Gross Income, they MUST complete a separate application. The SBA has revised all of the borrower applications for new PPP loans, see attached. Please start using these in place of all other applications.
Use these applications for ALL borrowers (including Sch C borrowers that elect to use NET INCOME)
· Form 2483 (First Draw - All other borrowers) https://www.sba.gov/document/sba-form--paycheck-protection-program-borrower-application-form
· Form 2483-SD (Second Draw - All other borrowers) https://www.sba.gov/document/sba-form-2483-sd-ppp-second-draw-borrower-application-form
Use these application for Sch C Borrowers, electing to use GROSS INCOME
· Form 2483-SD-C (Second Draw - Sch C Borrowers only, electing to use Gross Income) https://www.sba.gov/document/sba-form-2483-sd-c-ppp-second-draw-borrower-application-form-schedule-c-filers-using-gross-income
· Form 2483-C (First Draw - Sch C Borrowers only, electing to use Gross Income) https://www.sba.gov/document/sba-form-2483-c-ppp-first-draw-borrower-application-form-schedule-c-filers-using-gross-income
First Draw loans - what does your Sch C Borrower need to know if their Gross Income is more than $150,000?
The CARES Act requires each applicant applying for a PPP loan to certify in good faith “that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing obligations” of the applicant. Current guidance allows for a safe harbor providing that any PPP borrower, together with its affiliates, that received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
Schedule C borrowers electing to use gross income to calculate their first-draw PPP Loan with reported gross income greater than $150,000 are excluded from safe harbor concerning the necessity of the loan and will be subject to additional SBA review. SBA may review their certification that “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” If SBA determines that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA may determine that the borrower was not eligible for the loan, for the loan amount, or for loan forgiveness.
SBA is eliminating the loan necessity safe harbor for these borrowers as they may be more likely to have other available sources of liquidity to support their business’s operations than Schedule C filers with lower levels of gross income. SBA will review a sample of the population of First Draw PPP Loans made to Schedule C filers using the gross income calculation if the gross income on the Schedule C used to calculated the borrower’s loan amount exceeds the threshold of $150,000. If the borrower exceeds this threshold, then SBA will, for the sample drawn, assess whether these borrowers complied with the PPP eligibility criteria, including the good faith loan necessity certification. This will serve as an additional deterrent to fraud, waste, and abuse because higher income borrowers that elect to use gross income rather than net profit to calculate their loan amount will face the prospect of a heightened review, which would include a review of their good faith loan necessity certification.
SBA is not applying this safe harbor exclusion to Second Draw PPP Loans, because those applicants are required to certify that they have realized a reduction in gross receipts in excess of 25% relative to the relevant comparison time period.
Other changes effecting all borrowers: The IFR removes a restriction on business at least 20% owned by an individual who was arrested for or convicted of a felony related to financial assistance fraud in the previous five years or any other felony within the previous year from obtaining PPP loans. It also removes a restriction on businesses at least 20% owned by an individual who is delinquent on student loan from receiving PPP loans. (This is reflected in the new application forms.)
01/02/21 PPP UPDATE:
On Sunday, December 27, 2020, the COVID-19 relief bill was signed into law and includes another round of PPP loans. This PPP Second Draw Program provides an opportunity for small businesses to apply for a second PPP forgivable loan. The proposed bill provides the Small Business Administration (SBA) approximately two weeks to issue the necessary guidance, rules and official forms to process PPP applications. Until then, we will do our best to keep you informed of how to apply for the PPP Second Draw program with us.
In the meantime, here is the summary currently available on what to expect with this proposed second round of PPP:
- Employ not more than 300 employees;
- Have used or will use the full amount of their first PPP; and
- Demonstrate at least a 25% reduction in revenue in any quarter of 2020 relative to the same 2019 quarter.
- Borrowers may receive a loan amount of up to 2.5X the average monthly payroll costs in the one year prior to the loan or calendar year 2019.
- Entities in industries assigned to NAICS code 72 (Accommodation and Food Services) may receive loans of up to 3.5X average monthly payroll costs.
- No loan can be greater than $2 million.
- Borrowers of a PPP second draw loan would be eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. The 60/40 cost allocation between payroll and non-payroll costs in order to receive full forgiveness will continue to apply.
12/21/2020 PPP LOAN FORGIVENESS UPDATE:
The SBA and Dept of Treasury will be working as quickly as possible to clarify and implement the policies, procedures, mechanisms, and timelines needed for any newly passed COVID-19 legislation. It is critical that we provide accurate, timely information, and we are committed to doing so. Please keep in mind that proposed legislation must be passed by both houses of Congress and Signed by the President of the United States before it becomes law.
We understand that the PPP loan forgiveness process is important to your business. If you received PPP funding through OMB, you will need to submit your forgiveness application through us as well.
SBA Forgiveness Applications: To date, SBA has provided 3 applications for SBA Forgiveness:
- SBA Form 3508 – Borrower must use this form if they are not eligible to use Form 3508EZ or Form 3508S
- SBA Form 3508EZ – Simplified version for loans greater than $50M. To qualify, the borrower must be able to check at least one of the three boxes on page 1 of the Form 3508EZ Instructions. If the borrower is not able to answer one of the three boxes on page 1 of the instructions, they must use Form 3508.
- SBA Form 3508S – Streamline application for loans $50M and under.
- A borrower that, together with its affiliates, received PPP loans totaling $2 million or greater cannot use this form.
- SBA Form 3508S is exempt from any reductions in the borrower’s loan forgiveness amount based on reductions in full-time equivalent (FTE) employees or reductions in employee salary or wages, that would otherwise apply.
How to Prepare:
Please review the information below and contact your OMB Community Banker if you have additional questions:
- Understand the eligible cost (payroll, mortgage interest, rent payments and utilities)
- If Payroll Costs alone are sufficient to receive FULL forgiveness of the loan amount, you do not need to include Non-Payroll Costs in the calculation nor do you have to provide Non-Payroll documentation.
- Gather and keep records on eligible expenses – below is documentation that you will be required to submit to the bank with your forgiveness application.
Payroll: Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:
- Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
- Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:
- Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
- State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
- Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount.
Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.
- Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
- Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through Period verifying eligible payments.
- Business utility payments: Copy of invoices from February 2020 and those
Covered Period vs. Alternative Payroll Covered Period
- Covered Period – 8-week or 24-week period starting on the date of the loan disbursement.
- Loans approved prior to June 5th, borrower may elect to use 8-week or 24-week
- Loans approved on or after June 5th must use 24-week
- Alternative Payroll covered Period
- Applies to payroll cost only.
- Borrower may elect to use Alternative if they have biweekly or more frequent payroll.
- Alternative Payroll Covered Period: 8-week or 24-week period that begins on the first day of the first payroll cycle following the loan disbursement date.
Compensation per employee is limited to $100,000 on an annualized basis.
- 8-week a maximum of $15,385
- 24-week a maximum of $46,154
Owner Compensation (across all businesses): Those with a 5% or more ownership will be subject to the owner-employee compensation maximum.
- 8-week Covered Period – Capped at $15,385 or 8 weeks’ worth (8/52) of 2019 compensation (approximately 15.38% of 2019 compensation), whichever is less.
- 24-week Covered Period –Capped at 2.5 months' worth (2.5/12) of 2019 compensation (approximately 20.83% of 19 compensation, whichever is less.
Please note the following changes in accordance with the Paycheck Protection Forgiveness Flexibility Act (PPPFA)
- Drops the 75/25 payroll rule to 60/40
- Provides a five-year maturity for loans made on or after June 5, 2020, and provides an option for loans made prior to that date to extend maturity from two years to five years at the mutual agreement of the borrower and lender
- Extends the loan forgiveness period from eight weeks to 24 weeks (for loans made prior to June 5, 2020, borrowers may opt to keep the forgiveness period at eight weeks)
Please contact your OMB community banker if you have any questions. We will continue updating our website as more information becomes available.
OMB's Small Business Toolkit
Every day, we are committed to serving our small business customers. Now, when things are so uncertain, we want to support small businesses in every way we can. We have collected resources to help you navigate the changes, in easy-to-read downloadable guides - Learn More.