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Small Business Admin. answers Bristol Bay questions on 2nd round of Paycheck Protection Program

Izzy Ross/KDLG

The Small Business Administration answers the community's questions about who is eligible for federal assistance and how to apply. Applications for the second draw of PPP loans are open until March 31.

The Bristol Bay Native Association collected questions about the Paycheck Protection Program from small businesses in Bristol Bay, and the Small Business Administration answered.

Find out more about the program and how to apply at the SBA's website

Q: What restrictions exist on current PPP loan holders, i.e. must a loan recipient have already exhausted or applied for forgiveness before applying for round two?

A: Borrowers are eligible for a second-draw PPP loan of up to $2 million, provided they have:

  • 300 or fewer employees.
  • Used or will use the full amount of their first PPP loan on or before the expected date for the second PPP loan to be disbursed to the borrower. The IFR also clarifies that the borrower must have spent the full amount of the first PPP loan on eligible expenses.
  • Experienced a revenue reduction of 25% or more in all or part of 2020 compared with all or part of 2019. This is calculated by comparing gross receipts in any 2020 quarter with an applicable quarter in 2019, or, in a provision added in the IFR, a borrower that was in operation for all four quarters of 2019 can submit copies of its annual tax forms that show a reduction in annual receipts of 25% or greater in 2020 compared with 2019.

Q: Is a prospective second-round PPP recipient allowed to use a different calculation method than their first round?
A: Yes, borrowers are permitted to use payroll costs from either calendar year 2019 or calendar year 2020 for their Second Draw PPP Loan amount calculation.

Q: Are recipients of the AK Cares Act (state distribution funds) eligible to apply for the Second round of PPP?

A: Yes

Q: Are recipients of the SBA Economic Injury Disaster Loan funds eligible to apply for the Second round of PPP?

A: Yes

Q: What changes have been made for eligible expenses?

A: PPP borrowers can have their first- and second-draw loans forgiven if the funds are used on eligible costs. As with the first round of the PPP, the costs eligible for loan forgiveness in the revised PPP include payroll, rent, covered mortgage interest, and utilities. In addition, the following costs are now eligible:

  • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
  • Covered property damage costs related to property damage and vandalism or looting due to public disturbances in 2020 that were not covered by insurance or other compensation.
  • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
  • Covered operating expenditures, which refer to payments for any business software or cloud computing service that facilitates business operations; product or service delivery; the processing, payment, or tracking of payroll expenses; human resources; sales and billing functions; or accounting or tracking of supplies, inventory, records, and expenses.

To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period between eight or 24 weeks.
Q: Why hasn't there been outreach informing small businesses about these funds?

A: Weekly SBA – SBDC Webinar answers questions live:

Q: The instructions are not very specific. Exactly what information is needed for the application? 
A: Here's the PPP link on how to calculate maximum loan amount and documentation by business type.

Q: What about the businesses that have been alienated from accessing resources because they don’t have a credit relationship with a major bank or credit union?

A: Businesses can use the Lender Match platform on www.sba.gov to find participating PPP lenders.

Q: What is SBA doing differently to aid rural and remote businesses with improved access and support to ensure the businesses that need relief are getting it?

A: In addition to GovDelivery mentioned earlier, we’ve reached out to Alaska Regional Development Organizations (ARDORs) and Chamber of Commerce Offices to offer our service and support; we are schedule to participate in webinars with a few of these organizations later this month.  We are also in communication with the Alaska Sea Grant Marine Advisory Program to have a Q&A session for businesses in the fishing industry.  Of equal importance to partner with organizations such as KDLG to deliver the most up-to-date information to your business communities.

Q: Some businesses have had problems locating a non-traditional lender quickly, what recommendations do you have to ensure businesses can connect with CDFIs or FinTech companies timely?   

A: Lender Match helps you find lenders (sba.gov)

Q: Some businesses have had problems locating a non-traditional lender quickly, what recommendations do you have to ensure businesses can connect with CDFIs or FinTech companies timely?      

A: Lender Match helps you find lenders (sba.gov)

Q: What financial restrictions are there in this round compared to the first round?

A: For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5 x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector, the maximum loan amount for a Second Draw PPP Loan is 3.5 x average monthly 2019 or 2020 payroll costs up to $2 million.

Q: Are there application restrictions, such as credit score, tax years supplied,  business plans, or can businesses only use certain lenders?

A: To be eligible for the Second Draw PPP, an eligible business must:

  • Has used or will use the full First Draw PPP loan amount only for eligible expenses before the PPP Second Draw Loan is disbursed
  • Has no more than 300 employees
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

The type of supporting documents you will need to file with your PPP Second Draw application (SBA Form 2483-SD) will depend on the type of business structure you have.  The SBA and U.S. Treasury published the following document to assist borrowers: 
How to Calculate Revenue Reduction and Maximum Loan Amounts Including What Documentation to Provide

Q: What is the phone number for SBA Mentor to review an application before submitting it?

A: Alaska SBDC has business advisors to assist PPP applicants

Q: What is the application deadline?

A: You can apply for a Second Draw PPP Loan from January 13, 2021, until March 31, 2021. SBA is currently accepting Second Draw PPP loan applications from participating lenders.

Contact isabelle@kdlg.org or 907-842-2200.

Izzy Ross is the news director at KDLG, the NPR member station in Dillingham. She reports, edits, and hosts stories from around the Bristol Bay region, and collaborates with other radio stations across the state.