PPP Loans

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.

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).

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.

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

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.

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.

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 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.

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.

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

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.

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

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

2. 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.

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.

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 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.