Paycheck Protection Program First Draw Application FAQs
Updated January 29, 2021
We are happy to support our existing customers who qualify for a first draw loan, made possible through legislation passed in December 2020. They will be contacted by us directly regarding details for submitting their application. We've worked hard to make the online application process simple, and we hope that the majority of your questions are answered here to save you time.
Who is eligible to apply for First Draw funding (subject to program requirements)?
- Sole proprietors, independent contractors, and self-employed persons
- Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard)
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) that either:
- Has no more than 500 employees, or
- Meets the applicable SBA industry size standard
- Any business with a NAICS code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs fewer than 500 employees per location
How much can I receive?
The maximum loan amount of a First Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs, up to $10 million. Here is a resource from the SBA for calculating max loan amounts and what documentation you'll need to provide.
What are the First Draw loan details?
All First Draw PPP Loans have a maturity of 5 years and an interest rate of 1% per annum. Loan payments are deferred until SBA remits the forgiveness amount to the lender, or 10 months after the end of the applicable covered period (an 8-week to 24-week period following loan disbursement, as selected by the borrower). No collateral is required, and no fees apply.
What expenses are covered?
First Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for certain costs for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
Are expenses paid with PPP loans tax deductible?
Otherwise deductible qualified business expenses paid with PPP loans (both First Draw and Second Draw) are tax deductible. (Previously the IRS had ruled otherwise).
What are the PPP First Draw forgiveness details?
SBA will forgive loans made to eligible borrowers if all employee retention criteria are met, the funds are used for eligible expenses during the 8 to 24-week covered period following loan disbursement, and at least 60 percent of the proceeds are spent on payroll costs.
I received an EIDL - is there anything special I need to consider?
For both First and Second Draw funding, we understand that the SBA will NOT deduct any EIDL advance amount you have received from your forgiveness amount.