As you are likely aware, the Small Business Administration (SBA) has launched a new round of financing for the Paycheck Protection Program (PPP). In the event that you missed our latest announcement about eligibility and how to apply, please read our post from January 15.
Since we began accepting new applications, two common questions/issues have arisen, and we would like to provide clarification here.
- What payroll figures should be used to calculate a requested Second Draw PPP Loan amount?
- You may use either 2019 or 2020 annual payroll figures to support your loan calculations.
- When calculating your requested PPP Loan amount, please refer to the section entitled Maximum Second Draw PPP Loan Amounts beginning on page 6 of this SBA document. Please read carefully, as the calculation varies by business type.
- You will also need to include payroll documentation to support your calculation, as well as a written statement describing how you calculated your average monthly payroll.
- What documentation is needed to show eligibility due to a 25% or greater single-quarter loss in revenue?
- The Second Draw Application notes that documentation showing a 25% or greater reduction in gross receipts during any single 2020 quarter versus the same quarter in 2019 is not required for loans under $150,000. However, Merrimack County Savings Bank has decided to validate the 25% loss in revenue with all applicants, regardless of PPP Loan amount requested. This is to help protect our borrowers from any potential loss of PPP Loan forgiveness. In short, we want to be sure you are calculating your revenue reduction amount correctly, so you have the best chance of having your loan forgiven.
- Therefore, regardless of your requested Second Draw PPP Loan amount, you’ll need to provide us with sufficient documentation, preferably a profit and loss statement for the applicable quarters, showing a reduction of 25% or more in gross receipts during any single quarter in 2020 compared to the same quarter in 2019. For further clarification on how to demonstrate revenue reduction, please refer to the section entitled Revenue Reduction beginning on page 1 of this SBA document.
Ready to Apply?
- Draw 2 Applicants: If you were a PPP customer with us for the first round of PPP Loans, you should have received an email containing a link to your customized application for Draw 2. You will not need your loan numbers as they were pre-populated for you. If you have not received the email or need it resent, please email us at PPPloan@themerrimack.com with the email address that you would like your application sent to, and we will re-send your link.
- Draw 1 Applicants: If you are an existing and established customer of ours and you want to apply for a Draw 1 PPP Loan, then please email us at PPPloan@themerrimack.com or call one of our offices to speak with a commercial lender, and we will send you a link to your application.
We encourage you to take your time to understand this round of the PPP Loan program, as it is a good opportunity for financial assistance during this challenging time.
Please direct any questions to PPPInquiry@themerrimack.com.
As your local bank, we are proud to help you with your PPP Loan. On behalf of all of us here at Merrimack County Savings Bank, we wish you, your staff and your family a safe and happy new year.
The Merrimack Commercial Lending Team