At St. Mary’s Credit union, helping local businesses is at the heart of what of we do. In these uncertain times, we are honored to be a trusted resource and partner for you and your business.
We are pleased to announce that we are participating in the Small Business Administration’s (SBA) Second Draw of the Paycheck Protection Program (PPP) following the Interim Final Rule (IFR), which is summarized below. Please read the IFR and consult your tax professional regarding the rules of the PPP and how they apply to your business.
PPP Loans Through St. Mary’s Credit Union
St. Mary’s Credit Union is now accepting PPP Loan applications for qualifying small businesses that either a) did not receive a First Draw PPP loan in 2020, or b) meets the eligibility requirements below for a Second Draw PPP Loan. To submit an application for a Second Draw PPP Loan, please contact a member of our Commercial Lending Team.
PPP Second Draw Loan Eligibility Requirements
To receive a PPP Second Draw Loan you must be a business, independent contractor, eligible self-employed individual, sole proprietor, nonprofit organization, veteran’s organization, tribal business concern, housing cooperative, small cooperative, eligible 501(c)(6) organization or eligible nonprofit new organization that:
- Has 300 or fewer employees;
- Experienced a revenue reduction of 25% or greater in at least one quarter 2020 relative to that same quarter of 2019, or annually in 2020 compared to 2019, and can provide proof of that comparative revenue reduction with financial statements deemed satisfactory to St. Mary’s Credit Union. See “25% Revenue Reduction Requirement” below;
- Used the full amount of your First Draw PPP Loan prior to receiving funds from a Second Draw PPP Loan, and can provide proof of exhausting the First Draw PPP funds;
- Does not have a First Draw PPP Loan forgiveness application “Under Review” by the SBA.
25% Revenue Reduction Requirement:
To qualify for a Second Draw PPP Loan, you must provide proof of a 25% or greater reduction in 2020 “gross receipts” compared to 2019. Gross receipts are defined as “all revenue received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees or commissions, reduced by returns or allowances”. For sole proprietorships, independent contractors or self-employed individuals you can look to “gross income” on your Schedule C.
You can compare your quarterly gross receipts for any one quarter in 2020 with gross receipts for the corresponding quarter of 2019. Alternatively, if you were in business for all four quarters of 2019, you can qualify if your 2020 annual gross receipts show a 25% or greater reduction compared to 2019.
For businesses that were not in operation during the first, second or third quarter of 2019 but were operating in the fourth quarter, and were in operation for any quarter in 2020, you can still qualify if you can prove a 25% or greater reduction in gross receipts compared to the fourth quarter of 2019.
Example: “A Borrower with gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020 has experienced a revenue reduction of 40% between the quarters and is therefore eligible for a Second Draw PPP loan”. Please refer to the IFR for further information.
Forgiven amounts of your First Draw PPP loan should not be included in 2020 gross receipts.
Second Draw PPP Loan Amounts:
The maximum amount of a Second Draw PPP Loan is the lesser of 2.5 months of your average monthly payroll costs or a $2 million cap. If your business has a NAICS code that begins with 72, Accommodation and Food Services, you may be eligible for 3.5 months of your average monthly payroll costs. The amount of your Second Draw PPP Loan will be verified and approved by a St. Mary’s Credit Union lender before your application is submitted to the SBA.
Using PPP Second Draw Loan Proceeds
If you receive a Second Draw PPP Loan, you will have up to 24 weeks to use at least 60% of the loan proceeds on payroll, and no more than 40% on other eligible expenses like rent, utilities, worker protection costs (PPE) related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
Documentation Required to Apply for a Second Draw PPP Loan Completed by a CPA:
- PPP Second Draw Borrower Application Form, SBA Form 2483-SD
- Financial statements from 2019 and 2020 showing a 25% or greater reduction in gross receipts in at least one quarter of 2020 compared to 2019, or a 25% or greater reduction in annual gross receipts in 2020 compared to 2019;
- Payroll documents from either a) the calendar year of 2020, b) the exact twelve-month period prior to applying for the Second Draw PPP Loan, or c) the calendar year 2019.
- If you are not self-employed: submit quarterly Form 941s or annual Form 940 and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever was used to calculate payroll), as applicable, or equivalent payroll processor records, along with evidence of any retirement and employee group health, life, disability, vision and dental insurance contributions. Partnerships must also submit IRS Form 1065 K-1s.
- If you are self-employed and you have employees: submit either your 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1040 Schedule C, quarterly Form 941s or annual Form 940 and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever was used to calculate loan amount), along with evidence of any retirement and employee group health, life, disability, vision and dental insurance contributions.
- If you are self-employed and do not have employees: submit either your 2019 or 2020 (whichever was used to calculate loan amount) Form 1040 Schedule C, your 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1099-MISC detailing nonemployee compensation received (box 7), and an invoice, bank statement, or book of record that establishes proves that you are self-employed at the time of application, along with a 2020 invoice, bank statement, or book of record to prove that your business was in operation on February 15, 2020.
Terms and Conditions of the Second Draw PPP Loans
The terms and conditions of the Second Draw PPP loans are subject to the same terms and conditions as First Draw PPP Loans. These include but are not limited to:
- The SBA will guarantee 100% of all PPP Loans
- No collateral is required
- No personal guarantees are required
- All PPP Loans have an interest rate of 1%
- All Second Draw PPP Loans will have a maturity of 5 years
- All Second Draw PPP Loans will be eligible for forgiveness on the same terms and conditions as First Draw PPP loans
Economic Injury Disaster Loan (EIDL) Advances & First Draw PPP Loans
The SBA will no longer deduct EIDL Advances from forgiveness payments remitted to PPP Lenders. For those loans where SBA remitted a forgiveness payment to SMCU (St. Mary's Credit Union) that was reduced by an EIDL Advance, SBA will automatically remit a reconciliation payment to SMCU for the previously deducted EIDL Advance amount plus interest through the remittance date. SMCU will notify you of the reconciliation payment. If the amount remitted by SBA to SMCU exceeds the remaining principal balance of your PPP loan (if you made a payment on the loan), SMCU will remit the excess amount, including accrued interest paid back to you.
First Draw PPP Loan Applications
If you did not apply for or receive a First Draw PPP Loan in 2020, you may be eligible to receive a First Draw PPP Loan now. Please contact a member of our Commercial Lending Team to discuss your business’s eligibility and application requirements.
Contact Us & Submit a PPP Loan Application
St. Mary’s Credit Union understands how important the Paycheck Protect Program is to your business and our community. We will accept, review and process all PPP Loan applications as quickly as possible in the order that they are received. If you have any questions about the PPP Second Draw, please review the SBA’s IFR, speak with your CPA or tax professional, or contact our Commercial Lending Team.
If you received a First Draw PPP Loan from St. Mary’s Credit Union, please contact the member of our Commercial Lending Team that handled your First Draw PPP Loan application. If you are applying with St. Mary’s Credit Union for the first time, complete the Request Info form below and a Commercial Lender will reach out to you with application details.
Thank you for your membership with St. Mary’s Credit Union. It is our pleasure to serve you.