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PPP Loans

NOTICE: Changes to the Paycheck Protection Program (PPP) were announced Feb. 22, 2021 to further promote equitable access to relief. Read the briefing from the Biden-Harris Administration regarding updates.

EXTENSION: The PPP application deadline formally changed from March 31 to May 31 on 3/30/21 when President Joe Biden signed the PPP Extension Act of 2021 into law.

PPP 2.0

On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, nonprofits, and venues Act (Economic Aid Act) became law. The PPP Extension Act pf 2021 extends the funding for Paycheck Protection Program (PPP) Loans through May 31, 2021. The act revises some requirements for First Draw Funding, and allows certain existing PPP borrowers for a Second Draw PPP Loan.

PPP Loans will be 100 percent guaranteed by the SBA, and the full amount of the loans may qualify for loans forgiveness, provided all requirements are met.

The information below is meant to summarize new interim final rules set forth by the SBA. For full details, please refer to SBA.gov to read ‘Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act’ and ‘Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans.’

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Please note, you will need to click ‘Sign up’ first in order to begin application (see highlighted above). In order to support streamlined processing, we are not accepting paper applications or supporting documents at this time. All information must the uploaded through the online application.

PPP First Draw Loans

Beginning the week of January 11, 2021 through May 31, 2021 (or until funds are exhausted), funds will be available to new PPP borrowers through PPP First Draw Loans.  If you have previously received PPP funding, please refer to Second Draw PPP Loans below.

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When can I apply for a First Draw PPP Loan?

Applications for Second Draw PPP Loans through SouthStar Bank will open Tuesday, January 19.  The deadline for application is May 31, 2021, or when the funds run out.

Who is eligible for a First Draw PPP Loan?

Businesses must meet the following requirements to be eligible for a First Draw PPP Loan:

  • Small Businesses, with limited exceptions, as defined by the SBA
  • Employ no more than 500 employees
  • In operation as of February 15, 2020
  • Ability to certify that economic uncertainty makes this loan necessary to continue operations
  • Business has not previously received proceeds from a PPP loan. If a borrower has already received a PPP loan, they may be eligible for a Second Draw PPP Loan (see details under Second Draw PPP Loans below).

What will I need to apply for a First Draw PPP Loan?

The following information will collected directly through our online application when it becomes available.

  • Form 2483- Will be downloaded directly from the Application Portal
  • Entity Documentation for Business Applicant
    • IRS EIN Letter SS-4
    • Certificate of Filing/Formation
    • Operating Agreement
    • Company Resolution
    • Partnership Agreement (as it applies)
    • Assumed Name Certificate (as it applies)
    • By-Laws and Corporate Resolution (Corporation)
  • 2019 IRS Quarterly 940, 941, or 944 payroll tax reports OR 2020 IRS Quarterly 940, 941, or 944 payroll tax reports
  • Payroll reports for the twelve-month period corresponding to the chosen year 2019 or 2020 being used for application
    • Gross wages for each employee, including officer(s) if paid W-2 wages
    • Paid time off for each employee
    • Vacation pay for each employee
    • Family medical leave pay for each employee
    • Taxes assessed on an employee’s compensation
    • Documentation showing total of all health insurance premiums paid by the company under a group health plan
    • Documentation the sum of all retirement plan funding that was paid by the company
  • If a Sole Proprietor or Independent Contractor
    • Schedule C for 2019 or Schedule C for 2020
      • If using 2020, the borrower must complete a “Draft” 2020 of what is anticipated to be filed with the IRS.
  • For Partnerships Filing Tax Form 1065- 2019 or 2020 K-1
  • Payroll Documentation for February 15, 2020 may include a payroll statement or similar documentation from the pay period that covered Febraury 15, 2020 to establish you were in operation on Febraury 15, 2020.

What are the terms of a First Draw PPP Loan?

The First Draw PPP Loan terms are as follows:

  • Guaranteed 100% by the SBA
  • No collateral required
  • No personal guarantee required
  • Interest rate of 100 basis points, or 1%
  • 5 year maturity
  • Eligible for forgiveness, provided all requirements set forth by the SBA are met

What is required for First Draw PPP Loan Forgiveness?

In order to receive loan forgiveness, the borrower will need to apply through their lender with documentation of how the loan proceeds were used. The amount of loan forgiveness can be up to the full amount of the loan and any accrued interest. All proceeds must be used toward qualifying expenses, and at least 60% used on payroll expenses, and employee and compensation levels must be maintained.

Note, EIDL advance amounts are no longer required to be deducted from forgiveness payment amounts. EIDL advance amounts will not reduce the amount of forgiveness to which the borrower is entitled.

What is the maximum loan amount for a First Draw PPP Loan?

The maximum loan amount for a First Draw PPP Loan is the lesser of either $10 million or an amount calculated by multiplying average monthly payroll costs by 2.5.

Note, borrowers may elect to use 2019 or 2020 as the base period for calculating the average monthly payroll cost.

For detailed instructions on calculations and examples, refer to the ‘Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act’ by the SBA.

Payroll expenses include: employee compensation; payment for vacation, parental, family, medical, or sick leave; severance pay; employee health insurance; and payment of state and local taxes assessed on compensation of employees. Please have documentation readily available when you begin the application.

Good news! Your maximum loan amount will be calculated automatically by completing required fields within our online application when it becomes available.

How can First Draw PPP Loan proceeds be used?

In order to receive forgiveness, at least 60 percent of the PPP loan proceeds must be used for payroll. The borrower will be required to document how proceeds were used in order to determine the amount of forgiveness. Assuming this requirement is met, funds may be allocated across the following:

  • Payroll
  • Group healthcare
  • Mortgage interest payments
  • Rent payments
  • Utility payments
  • Interest payments on debt obligations incurred before February 15, 2020
  • Refinancing an EIDL Loan made January 31, 2020-April 3, 2020
  • Covered operational expenditures
  • Covered property damage costs
  • Covered supplier costs
  • Covered worker protection expenditures

If PPP funds are used for expenses outside of those approved, the SBA will require you to repay those amounts. In addition, if you knowingly misuse funds, borrowers will be subject to additional liability such as charges of fraud.

Once the application is complete, how long will funding take for a First Draw PPP Loan?

Once an application is completed, it is up to the SBA to assign a loan number to the file. This can take 1-3 days for the SBA to issue, it is not immediate. After the loan number has been received, funds will be deposited into your SouthStar Bank account within 10 calendar days.

PPP Second Draw Loans

As a part of the Economic Aid Act, PPP Second Draw Loans were approved to provide continued assistance to small businesses that have been financially impacted by the ongoing Covid-19 pandemic. PPP Second Draw Loans are available to businesses who have already received and utilized initial PPP funding. In general, the requirements for Second Draw PPP Loans are similar but more narrow than First Draw.

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When can I apply for a Second Draw PPP Loan?

Applications for Second Draw PPP Loans through SouthStar Bank will open Tuesday, January 19.  The deadline for application is May 31, 2021, or when the funds run out.

Who is eligible for a Second Draw PPP Loan?

Eligibility requirements for Second Draw PPP Loans include:

  • Employ no more than 300 employees (or 500 within the Accommodations and Food Services Sector (NAICS code 72))
  • Have a revenue reduction of 25% or more in 2020 relative to 2019
    • Based quarter over quarter, or annually.
  • Received a First Draw PPP Loan AND has used, or will use, the full amount of the First Draw PPP Loan on or before the expected disbursement of the Second Draw PPP Loan

Similar to First Draw PPP Loan requirements, Second Draw PPP Loans also require that borrowers meet the following conditions:

  • Small Businesses, with limited exceptions, as defined by the SBA
  • In operation as of February 15, 2020
  • Ability to certify that economic uncertainty makes this loan necessary to continue operations
  • If you acquired an existing business after February 15, 2020, you may be eligible

What will I need to apply for a Second Draw PPP Loan?

The following information will be collected directly through our online application when it becomes available. Please have documents readily available when you begin the application.

  • Form 2483- SD Will be downloaded directly from the Application Portal
  • Entity Documentation for Business Applicant
    • IRS EIN Letter SS-4
    • Certificate of Filing/Formation
    • Operating Agreement
    • Company Resolution
    • Partnership Agreement (as it applies)
    • Assumed Name Certificate (as it applies)
    • By-Laws and Corporate Resolution (Corporation)
  • 2019 IRS Quarterly 940, 941, or 944 payroll tax reports OR 2020 IRS Quarterly 940, 941, or 944 payroll tax reports
  • Payroll reports for a twelve-month period corresponding to the chosen year 2019 or 2020 being used for application.
    • Gross wages for each employee, including officer(s) if paid W-2 wages
    • Paid time off for each employee
    • Vacation pay for each employee
    • Family medical leave pay for each employee
    • Taxes assessed on an employee’s compensation
    • Documentation showing total of all health insurance premiums paid by the company under a group health plan
    • Documentation the sum of all retirement plan funding that was paid by the company
  • If a Sole Proprietor or Independent Contractor
    • Schedule C for 2019 or Schedule C for 2020
      • If using 2020, the borrower must complete a “Draft” 2020 of what is anticipated to be filed with the IRS.
  • For Partnerships Filing Tax Form 1065- 2019 K-1 or 2020 K-1
  • Gross Receipts for Q1 2019, Q2 2019, Q3 2109, or Q4 2019 and the corresponding Quarter in 2020 reflecting a 25% reduction in Gross Receipts
    • Relevant Tax Documents
    • Profit and Loss Statement from the chosen quarter of 2020.  If the financial statements are not audited, the Applicant must sign and date the first page of the financial statement and initial all other pages, attesting to their accuracy. 
    • Profit and Loss Statement from the reference quarter of 2019. If the financial statements are not audited, the Applicant must sign and date the first page of the financial statement and initial all other pages, attesting to their accuracy. 
    • Additional reports to support monthly sales may be required
  • Proof of PPP Loan First Draw
    • Forgiven
    • Used
    • Or Intent to use prior to disbursement of Second Draw
  • Payroll Documentation for February 15, 2020 may include a payroll statement or similar documentation from the pay period that covered February 15, 2020 to establish you were in operation on February 15, 2020.

What are the terms of a Second Draw PPP Loan?

The Second Draw PPP Loan terms are the same as First Draw and include:

  • Guaranteed 100% by the SBA
  • No collateral required
  • No personal guarantee required
  • Interest rate of 100 basis points, or 1%
  • 5 year maturity
  • Eligible for forgiveness, provided all requirements set forth by the SBA are met

How do I prove revenue reduction for a Second Draw PPP Loan?

In order to receive a Second Draw PPP Loan, a borrower must prove a revenue reduction of 25% or more in 2020 relative to 2019. This may be done in one of two ways:

  1. Compare the borrower’s quarterly gross receipts for one quarter in 2020 with the borrower’s gross receipts for the corresponding quarter of 2019

Example: A borrower with gross receipts of $60k in Q2 2019 and gross receipts of $40k in Q2 2020, they have experienced 33 percent revenue reduction and therefore qualify

  1. Compare annual revenue in 2020 compared to 2019 be submitting annual tax return forms for each year

Note that any forgiveness amount that a borrower received from a First Draw PPP Loan will not be counted toward a borrower’s gross receipts.

What is required for Second Draw PPP Loan Forgiveness

We are awaiting final guidelines from the SBA with regard to Second Draw PPP Loan forgiveness. Please check back as we will update as soon as this information becomes available.

What is the maximum loan amount for a Second Draw PPP Loan?

The maximum loan amount for a First Draw PPP Loan is the lesser of either $2 million or an amount calculated by multiplying average monthly payroll costs by 2.5 (or by 3.5 for the accommodations and food services sector (NAICS code 72)).

Note, for Second Draw PPP Loans, the average monthly payroll calculation must use either 1) the twelve-month period prior to when the loan is made, or 2) calendar year 2019.

For detailed instructions on calculations and examples, refer to the ‘Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans’ by the SBA.

Payroll expenses include: employee compensation; payment for vacation, parental, family, medical, or sick leave; severance pay; employee health insurance; and payment of state and local taxes assessed on compensation of employees. Please have documentation readily available when you begin the application.

Good news! Your maximum loan amount will be calculated automatically by completing required fields within our online application when it becomes available.

Once the application is complete, how long will funding take for a Second Draw PPP Loan?

Once an application is completed, it is up to the SBA to assign a loan number to the file. This can take 1-3 days for the SBA to issue, it is not immediate. After the loan number has been received, funds will be deposited into your SouthStar Bank account within 10 calendar days.

Your Preferred SBA Lender

Our qualified team is dedicated to supporting local business. We will continue to update this page as new information becomes available from the SBA. Please note that all information is subject to change pending the latest guidelines. We encourage you to utilize this page as your most up to date resource. If you need to speak with a lender, please contact your local loan officer first.

SBA Lending Team

Left to Right: Amanda Aaron, Alexis Michael, Pam Barbeau

Alexis Michael, Senior Vice President | NMLS# 790782

Alexis Michael

Over a career spanning almost 20 years, Alexis Michael has built a reputation as a leader by being friendly, knowledgeable and approachable. It’s no wonder that her clients love working with her; and why so many of her existing customers refer friends, family members or their own clients. “That’s the biggest compliment I can receive… any banker can receive.” Her professional associations include Commercial Real Estate Women (CREW), past President (2017) and current committee chair. She is a member of the Leander, Cedar Park and Liberty Hill Chambers of Commerce.

Amanda Aaron, Vice President of Lending | NMLS# 1819235

Amanda Aaron joined the SouthStar Bank team in July 2019, bringing in over 15 years of financial experience specializing in SBA lending and conventional commercial loan financing. Her expertise and personable skills allow her to guide clients through the entire lending process, making them feel comfortable about what to expect during each stage of acquiring business loans. Amanda is a part of Commercial Real Estate Women (CREW) and had the opportunity to lead the Outreach Committee in supporting local charities. She is also a member of Central Texas Association of Government Guaranteed Lenders (CTAGGL).

Pam Barbeau, Assistant Vice President

Pam Barbeau, a 17-year professional in the finance industry, is Assistant Vice President and SBA Specialist. As part of the company’s SBA lending team, Pam enjoys helping small business owners fulfill their dreams by assisting them with the loan application so they can focus on their business. Pam is involved in a number of professional organizations including Financial Women in Texas and Texas Women in Business and is also a volunteer for the Georgetown Police Department.

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