Ridgewood is committed to helping the small business community.
Paycheck Protection Program
We're ready for the next round of PPP
At the end of 2020, lawmakers passed the Consolidated Appropriations Act, 2021, which included new funding for the Paycheck Protection Program (PPP) in response to economic challenges caused by the COVID-19 pandemic. PPP provides eligible small businesses with low-interest business loans, which may be eligible for forgiveness* upon the business meeting certain criteria. In addition to providing funds for the original PPP program this new legislation updates the program in several important ways. Most notably, the updated PPP program allows certain borrowers to apply for a second PPP loan, in addition to accepting applications from first-time borrowers.
The PPP will continue to emphasize each borrower’s payroll expenses. Both the formula to calculate loan amounts (based on average monthly payroll) and loan forgiveness requirements are staying the same. But there are some important updates:
- The recent legislation has clarified that covered business expenses paid with PPP funds are generally tax deductible, even for borrowers who already applied for forgiveness. (This overrides an earlier statement from the IRS that expenses paid with forgiven PPP funds were not deductible.) A borrower’s loan forgiveness amount is still not taxable income.
- A second PPP loan for eligible borrowers. Borrowers must meet more strict requirements to qualify for a “second draw” PPP loan (see the next section).
- Simplified forgiveness process for loans up to $150,000. Previously, a streamlined process was available for loans up to $50,000.
- No forgiveness reduction for borrowers with an EIDL grant. Previously, participants who also received an EIDL grant had their loan forgiveness amount reduced by the grant amount.
- More flexible covered period. Instead of using their PPP funds during either an 8- or 24-week covered period, borrowers can choose a covered period that is any amount of time from eight to 24 weeks from when the funds are disbursed.
- Expanded list of eligible expenses. More business expenses can now be paid for with PPP funds (and are eligible for forgiveness). These are primarily expenses related to helping businesses operate during the pandemic. This expanded list does not apply to borrowers who already submitted a loan forgiveness application for their initial PPP loan.
In this second round of PPP funding, known as “PPP2,” borrowers who already received a PPP loan can apply for a second loan of up to $2 million (based on the amount of their payroll) if they meet certain requirements (reduced from a limit of $10 million for first-time PPP borrowers). To apply for a second loan, the borrower must have:
- 300 or fewer employees
- Used or will use the full amount of their first PPP loan
- Experienced a 25% decline in gross revenue during any quarter in 2020 compared with the same quarter in 2019, or has experienced an annual 2019 vs 2020 reduction in gross revenue of 25%.
PPP2 will also allow new first-time borrowers, including:
- Companies with 500 employees or fewer, even if they are eligible for other SBA 7(a) loans
- Sole proprietors, independent contractors, and self-employed individuals
- Not-for-profit organizations including churches
- Eligible businesses in the accommodation and food services industry with fewer than 300 employees per location (these borrowers can also apply for a loan up to 3.5x their average monthly payroll, rather than 2.5x that amount as for other businesses)
Helpful resources to provide you with additional information:
Please take a look at the Press Release from the U.S. Department of the Treasury.
PPP Loan Application Interest Form
If you have any questions, please email our Business Banking team at [email protected]. Should you wish to speak with someone, please contact us at (844) 772-4722 and we will return your call in the order it was received. Due to the higher than normal call volume, we suggest that you email us to get a faster response.
You must submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099- MISC, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount.
Loan forgiveness is not automatic and is based on the borrower maintaining or quickly rehiring employees and maintaining salary levels. Loan forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The borrower will be responsible under the loan for any amounts not forgiven. The SBA may limit the timeframe by which you’ll need to ask for forgiveness.
Please note that this page provides general information and Ridgewood Savings Bank makes no representations or warranties with respect to the information provided, your eligibility for a loan or its related forgiveness. We encourage you to seek professional advice with respect to the PPP, the loan forgiveness process, and all related tax matters. This program is subject to change at any time without notice.