PPP Loans

2021 Paycheck Protection Program

The President signed the Economic Aid Act into law on December 27, 2020, which included provisions for another round of Paycheck Protection Program (PPP) loans. First Midwest Bank will continue our participation in the program to provide ongoing support to our communities. The Small Business Administration (SBA) will accept applications from January 15 through March 31, 2021. We will continue to update this page as information becomes available.

The new PPP guidance includes significant changes to the program, including additional funding for first-time PPP borrowers, the option for second-draw loans, additional qualified expenses, and a more simplified forgiveness process. A summary of requirements for First and Second Draw PPP Loans is located below. We encourage you to visit the SBA website for complete information about these programs.

Second Draw PPP Loans

  • The Second Draw PPP Loan is for certain eligible borrowers who have previously received a PPP Loan. Borrowers must meet the following criteria:

    • Previously received a First Draw PPP Loan and will, or has, used the full amount only for authorized uses on or before the expected disbursement date of the Second Draw PPP Loan;
    • Has no more than 300 employees; and
    • Can demonstrate at least a 25% reduction in gross receipts between a minimum of any one 2020 quarter compared with the same quarter in 2019.

    See the Interim Final Rule on Second Draw PPP Loans for complete requirements.

  • The maximum loan amount for Second Draw PPP Loans is $2 million. Generally, a borrower may receive a loan for 2.5 times their average total monthly payroll costs paid during 2019 or 2020. Hotels and food service borrowers (NAICS 72 entities) may receive a loan for 3.5 times their average monthly payroll costs during 2019 or 2020.

  • At least 60% of all PPP Loan funds must be spent on payroll expenses. The remaining funds may be spent on eligible expenses like most mortgage interest, rent and utility costs. The Economic Aid Act added additional eligible expenses including:

    1. Covered Operations Expenditures: such as business software or cloud computer service, delivery, payment processing, human resources, and accounting needs.
    2. Covered Property Damage Cost: cost related to property damage due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.
    3. Covered Supplier Cost: a purchase order or order for goods made prior to receiving a PPP loan that’s essential to a borrower’s operations.
    4. Covered Worker Protection Expenditure: any PPE (masks, gloves, etc.) or property improvements made on or after March 1, 2020 in order to comply with federal, state and health officials’ orders and requirements regarding COVID-19.
  • Second Draw PPP Loans made to eligible borrowers may qualify for full loan forgiveness if during the 8 to 24 week period following loan disbursement:

    • Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan
    • The loan proceeds are spent on payroll costs and other eligible expenses; and
    • At least 60% of the proceeds are spent on payroll costs

    The new legislation also included a more simplified forgiveness application process for loans $150,000 or less. Additional guidance and a new forgiveness application is expected.

First Draw PPP Loans

  • First-time PPP borrowers must meet the following criteria:

    • Businesses with 500 or fewer employees (unless otherwise exempted by SBA guidance)
    • Independent contractors, eligible self-employed individuals, and sole proprietors
    • 501 (c)(3) Non-profits, 501 (c)(19) tax-exempt veterans organizations, and Tribal businesses
    • FCC license holders and news organizations
    • 501(c)(6)s, housing cooperatives, and destination marketing organizations with 300 or fewer employees

    Businesses must have been in operation on February 15, 2020 to be eligible. See the Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act for complete requirements.

  • The maximum loan amount for First Draw PPP Loans is $10 million. Generally, a borrower may receive a loan for 2.5 times their average total monthly payroll costs paid during 2019 or 2020. Hotels and food service borrowers (NAICS 72 entities) may receive a loan for 3.5 times their average monthly payroll costs in 2019 or 2020.

  • Covered Expenses

    At least 60% of all PPP Loan funds must be spent on payroll expenses. The remaining funds may be spent on eligible expenses like most mortgage interest, rent and utility costs. The Economic Aid Act added additional eligible expenses including:

    1. Covered Operations Expenditures: such as business software or cloud computer service, delivery, payment processing, human resources, and accounting needs.
    2. Covered Property Damage Cost: cost related to property damage due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.
    3. Covered Supplier Cost: a purchase order or order for goods made prior to receiving a PPP loan that’s essential to a borrower’s operations.
    4. Covered Worker Protection Expenditure: any PPE or property improvements made on or after March 1, 2020 in order to comply with federal, state and health officials’ orders and requirements regarding COVID-19.
  • PPP Loans made to eligible borrowers may qualify for full loan forgiveness if during the 8 to 24 week period following loan disbursement:

    • Employee and compensation levels are maintained
    • The loan proceeds are spent on payroll costs and other eligible expenses; and
    • At least 60% of the proceeds are spent on payroll costs

    The new legislation also included a more simplified forgiveness application process for loans $150,000 or less. Additional guidance and a new forgiveness application is expected.

If you have questions about your eligibility for a PPP loan or want to know more about how First Midwest Bank can help you navigate the process of applying for one, contact us today or visit your local branch!

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