In addition to the guidance the SBA and Treasury released concerning FSAs and Section 311 of the Economic Aid Act, both organizations have also released a guidance and Interim Final Rule regarding the changes made to the Paycheck Protection Program in order to extend the funds and amount of time allowed for small business to apply. This IRF consolidates and restates the following interim rules, stating: 

This interim final rule is intended to govern new PPP loans made under the Economic Aid Act, as well as applications for loan forgiveness on existing PPP loans where the loan forgiveness payment has not been remitted, and should not be construed to alter or affect the requirements applicable to PPP loans closed prior to its enactment. The Treasury exercises its authority under section 1109 of the CARES Act to allow borrowers of first draw PPP loans to use 2019 or 2020 to calculate their maximum loan amount.

While generally subject to the same terms and conditions as First Draw Loans, changes were made to eligibility, revenue reduction requirements, affiliations, excluded entities, payroll costs, maximum loan amount, and use of funds. 

The SBA states that 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

Additionally, the SBA states that First Draw Applicants (entities) affected by Coronavirus (COVID-19) may be eligible:

  • Sole proprietors, independent contractors, and self-employed persons
  • Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard)
  • Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
    • 500 employees, or
    • That meets the SBA industry size standard if more than 500
  • Any business with a NAICS code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location

To download the SBA’s Interim Final Law Concerning the Amendments made to the Temporary Changes to the Second Draw PPP Loan, please click on the button below.