Overview of First Draw Loans
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Full Forgiveness Terms
First Draw PPP Loans made to eligible borrowers may qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are maintained;
- The loan proceeds are spent on payroll costs and other eligible expenses (business mortgage interest payments, business rent or lease payments, business utility payments, etc.); and
- At least 60 percent of the proceeds are spent on payroll costs.
Limits on forgiveness:
- For borrowers who select a 24 week period:
- Forgiveness amount does not exceed 2.5 months worth of 2019 compensation for any owner employee or self-employed individual/general partner, capped at $20,833 per individual
- For borrowers who select an 8 week period:
- Forgiveness amount does not exceed 8 weeks worth of 2019 compensation for any owner employee or self-employed individual/general partner, capped at $15,385 per individual
Who Can Apply for First Draw PPP Loans
The following entities affected by Coronavirus (COVID-19) may be eligible:
- Sole proprietors, independent contractors, and self-employed persons
- This includes persons who file a tax return 1040, Schedule C and persons who receive a 1099 for payments received as a contractor. For example, Uber drivers, DoorDash delivery drivers, and Instacart delivery drivers are considered contractors and may be eligible.
- This also includes self-employed farmers who file Schedule F as part of their tax return.
- This includes persons self-employed through Partnerships. Partnerships are eligible for PPP loans, but individual partners may not submit separate PPP applications for themselves. Instead, the self-employment income of general active partners may be reported as a payroll cost, up to $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred on a PPP loan application filed by or on behalf of the partnership. A partnership and its partners, and LLCs filing taxes as a partnership, are limited to one PPP loan.
- Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard)
- You can find out if your business qualifies as small by using the Size Standards Tool, or by referencing the SBA’s table of small business size standards. Both the tool and the table help you find the small business classification requirements according to individual NAICS codes.
- When you calculate the size of your business, you must include the annual receipts and the employees of your affiliates. When another person or business can control your business, they are an affiliate. This is true even if they don’t exercise their control.
- Direct Link to Size Standards table:
- If you’re not sure whether you or your business meets the size standard, we recommend you still apply! The PPP application process should quickly help you discover whether you’re eligible. You can also contact Womply support if you need additional help!
- 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
- This includes hotels, motels, bed & breakfasts, restaurants, Recreational Vehicle Parks and campgrounds, Food service Caterers, Mobile food services, Food trucks, Buffets, and drinking places that serve alcoholic beverages.
- Refer to the Census website for other examples of NAICS code 72 “Accommodation and Food Services”
Reapplying and Loan Increases
Existing PPP borrowers that did not receive loan forgiveness by December 27, 2020 may:
- Reapply for a First Draw PPP Loan if they previously returned some or all of their First Draw PPP Loan funds, or
- Under certain circumstances, request to modify their First Draw PPP Loan amount if they previously did not accept the full amount for which they are eligible.
How and When to Apply for First Draw PPP Loans
Borrowers can apply for a First Draw PPP Loan until March 31, 2021, through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP. All new First Draw PPP Loans will have the same terms regardless of lender or borrower.
Ensuring Access to First Draw PPP Loans for All
The Paycheck Protection Program re-opened on January 11, 2021 and at least $15 billion is being set aside for First Draw loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low- or moderate-income neighborhoods. FAQs about PPP Loans for underserved businesses.