SBA Provides New Paycheck Protection Loan FAQs

March 4, 2021

SBA Provides New Paycheck Protection Loan FAQs

On March 3, 2021, the Small Business Administration (SBA) released several new Paycheck Protection Program (PPP) Loan frequently asked questions (FAQs).

New FAQs 57 – 65 address the following:

  • Clarification on the eligibility of 501(c)(6) organizations and destination marketing organizations for First Draw and Second Draw PPP loans.
     
  • First and Second Draw PPP loans may not be used for lobbying activities.
     
  • First Draw PPP loan recipients who file for bankruptcy protection after receiving their loan are still eligible for forgiveness.
     
  • First Draw PPP loan recipients who file for bankruptcy protection after receiving their loan are not eligible to apply for a Second Draw PPP loan.
     
  • A First Draw PPP loan recipient must use all of its loan proceeds for eligible expenses, but is not required to have used at least 60% of the proceeds for payroll costs to apply for and receive a Second Draw PPP loan. However, this does not change the requirement that to receive full forgiveness of the First Draw PPP loan, the borrower must use at least 60% of the loan proceeds for payroll costs.
     
  • Second Draw PPP loan applicants may not use the SBA’s established size standards (either revenue-based or employee-based) or the SBA’s alternative size standard to qualify for a Second Draw PPP loan.
     
  • An owner of an applicant, or a sole proprietor, self-employed individual, or independent contractor who has an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number (SSN) can use the ITIN on the Borrower Application Form for a PPP loan and the forms to apply for loan forgiveness.
     
  • Recipients of a First or Second Draw PPP loan who otherwise qualify for the Employee Retention Credit (ERC) may apply for the ERC. However, when applying for the ERC they may not use payroll costs that are otherwise qualified wages if they were used to apply for PPP loan forgiveness.
Most of the original FAQs were also edited to conform to changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (a division of the Consolidated Appropriations Act of 2021) and various Interim Final Rules.

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