PPP Loan Eligibility
PPP loans will be available to first-time qualified Borrowers and to businesses that previously received a PPP loan.
Eligibility has been expanded to include:
- Tax-exempt veterans organizations and 501(c)(19) organizations
- Tribal businesses described in 31(b)(2)(C) of the Small Business Act
- News organizations (those with North American Industry Classification System (NAICS) codes 511110 or 5151)
- Sole proprietors, independent contractors, and eligible self-employed individuals
- Not-for-profits, including churches and 501(c)(6) membership organizations, such as chambers of commerce, provided they do not receive more than 15% of their funds from lobbying
- Accommodation and food service operations (those with NAICS codes starting with 72) with fewer than 300 employees per physical location
If you have not previously received a PPP loan the parameters are:
- The loan request must be $10 million or less
- The business size can be 500 or fewer employees
- Your organization has to have been in operation on or before February 15, 2020
If you already received a PPP loan, you may apply for another PPP loan (called a "Second Draw") if ALL of the following conditions apply:
- The current economic uncertainty makes the PPP loan necessary to support ongoing operations
- The loan you request is $2 million or less
- The business has 300 or fewer employees
- The business used, or will use, the full amount of their first PPP loan on or before the expected date on which the Second Draw PPP Loan is disbursed to you
- The business can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019
- An example of this calculations is:
You have gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020. This means you have experienced a revenue reduction of 40% between the quarters, and are therefore eligible for a Second Draw PPP loan (assuming all other eligibility criteria is met).
- Documentation requirements to substantiate the 25% gross receipts reduction
- If you have not yet filed a tax return with the IRS for 2020, you must complete the return forms, calculate the relevant gross receipts value, and sign and date the return
- If you have filed your tax returns, you must submit signed copies of those returns
- If you are providing quarterly financial statements (showing one quarter in 2019 compared to the same quarter in 2020), then you must sign and date the first page of the statements, and initial all other pages.
- If you are providing quarterly or monthly bank statements, then you must note which deposits listed on the bank statement reflect gross receipts.
- If you are referencing annual revenue decline (as opposed to one quarter in 2019 compared to the same quarter in 2020), then your annual returns are required.
Your business is not eligible if:
- The business was created in or organized under the laws of the People’s Republic of China or the Special Administrative Region of Hong Kong, or has significant operations in the People’s Republic of China or the Special Administrative Region of Hong Kong owns or holds, directly or indirectly, not less than 20% of the economic interest of the business concern or entity, including as equity shares or a capital or profit interest in a limited liability company or partnership
- Retains, as a member of the board of directors of the business, a person who is a resident of the People’s Republic of China
Applying for a PPP Loan:
- You will need to access the new Rockland Trust PPP loan portal on our PPP Guidance webpage
- Your Rockland Trust Business Checking account number (so that we are able to deposit your PPP funds)
- Proof of entity type (LLC, S-corp, sole proprietor, etc.)
- Schedule of Ownership (names and percentages) for the business - the ownership percentage must add up to 100%
- Your 2020 & 2019 payroll tax reports (941, 940, or 944)
- You cannot account for gross pay that is over $100,000
- Payroll reports (many payroll providers will calculate reports for this program)
- Documentation showing the health insurance premiums paid by the business
- Documentation of the sum of all retirement plan funding that was paid by the business
- Do not include funding that came out of employee paychecks
For Sole Proprietors
- You’ll need your 2019 or 2020 (whichever you used to calculate loan amount) Form 1040 Schedule C
- 2019 or 2020 (whichever you used to calculate loan amount) IRS Form 1099-MISC detailing nonemployee compensation received (box 7)
- Invoice, bank statement, or book of record that establishes you are self-employed
- If using 2020 to calculate loan amount, this is required regardless of whether you have filed a 2020 tax return with the IRS
- You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or before February 15, 2020
If you received a First Draw loan in 2020 from another financial institution, and would like to apply for your Second Draw at Rockland Trust, you will need your SBA Authorization number from your First Draw loan when applying with Rockland Trust for your Second Draw.
- You’ll need your 2019 or 2020 (whichever you used to calculate loan amount) IRS Form 1040 Schedule F Line 9 gross income (if you are using 2020 and you have not yet filed a 2020 return, fill it out and compute the value)
Additional information may be required.
Calculating the Loan Amount:
You can receive a loan amount of up to 2.5 times your average monthly payroll costs in the year prior to the loan or the calendar year, the same as the previous PPP round. But the maximum loan amount allowed for this round is now $2 million. PPP Borrowers with NAICS codes starting with 72 (accommodation and food service) can receive up to 3.5 times their average monthly payroll costs up to $2 million.
Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020.
Seasonal businesses are categorized as businesses that operate for no more than 7 months or 75% of revenue occurs in 6 months or less.
Please note: Individual contractors do not count as employees for purposes of PPP loans as they have the ability to apply for a PPP loan of their own.
Borrowers are now able to choose the length of their covered period so long as it is at least eight weeks and is not longer than 24 weeks.
Use of PPP Funds:
Congress expanded the types of expenses for which all PPP loans can be used. This applies to existing PPP loans (except in the event Forgiveness has already been obtained) and new loans. In addition to payroll, rent, covered mortgage interest and utilities, the PPP now allows proceeds to be used for:
- Covered worker protection and facility modification expenditures incurred on or after March 15, 2020, including personal protective equipment to comply with COVID-19 federal health and safety guidelines
- Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations
- Covered operating costs such as software and cloud computing services and accounting needs
- Covered property damage costs related to property damaged and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation
Has PPP Forgiveness been impacted?
The new law creates a simplified Forgiveness application process for both existing PPP loans as well as Second Draw loans of $150,000 or less.
This means a Borrower will receive Forgiveness if they sign and submit a one-page certification and no other documentation is required. This new simplified Forgiveness application was released by the SBA on January 19, 2021, called the 3508S. To view a walkthrough of how to apply for Forgiveness using the 3508S click here.
Borrowers are required to retain relevant records related to employment for 4 years and other records for 3 years, as the SBA may review and audit these loans.
In addition, EIDL Advances do not reduce Forgiveness and the SBA has indicated that any Borrowers that already received Forgiveness and had their EIDL Advance deducted from such Forgiveness may be able to amend their Forgiveness applications. Further guidance is expected to be issued.
Please stay tuned for more information regarding the latest Paycheck Protection Program round. We encourage you to visit our PPP Guidance webpage often. If you have further questions, please reach out to your relationship manager or call our Customer Information Center at 508.732.3826.
Thank you for banking with Rockland Trust. Your relationship is truly important to us.
Since each individual’s facts and circumstances will vary, the guidance on some of these pages may not be accurate for you. Therefore, you should consult with your legal, tax, and/or accounting advisors for advice on your specific situation.