02/03/2021: Small Businesses: SBA Changes, PPP Loans, Low Rates and our Community Bank Offer Pandemic Assistance
A new year is here but small businesses are still facing challenges from COVID-19. Thankfully, recent program changes and low rates are offering small businesses relief.
ONE OF THE BEST TIMES TO GET A LOAN
Three reasons why there’s never been a better time to obtain a business loan:
- SBA recently announced significant changes to loan programs that benefit business owners.
- PPP loans are still available with changes to better assist certain industries.
- Low loan rates along with quick, flexible decision-making from Wolf River Community Bank.
On January 27, 2021, SBA released an Information Notice announcing some significant changes to the guaranteed loan programs. This action is a part of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act). These modifications affect the 7(a) Loan Program, and include temporary increases in guaranty percentages and fee reductions on eligible 7(a) loans, as well as an increase in the maximum SBA Express loan amount and guaranty percentages.
These changes will remain through September 30, 2021.
SBA 7(a) Loan Program highlights:
- Increase of the guaranty percentage to 90%.
- No increase in the statutory aggregate guaranty per borrower of $3,750,000.
- The SBA Guaranty Fee and the Ongoing Service Fee are temporarily reduced to zero.
SBA Express Loan Program highlights:
- The Maximum Loan Amount of $1,000,000 currently in effect will be temporarily extended through September 30, 2021.
- The Guaranty Percentage on loans of $350,000 or less will temporarily increase from 50% to 75%.
- For SBA Express loans greater than $350,000, the maximum SBA Guaranty Percentage remains at 50%.
2ND DRAW PPP LOANS
The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan.
Second Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay 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.
Terms for Full Forgiveness
Second Draw PPP Loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered 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 percent of the proceeds are spent on payroll costs.
Who is Eligible to Apply?
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
- Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses; and
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Maximum Loan Amount
For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs.
For borrowers in the Food Services sector, the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs.
How to Apply for the PPP Loan
- You can apply for a Second Draw PPP Loan through Sunday, March 31, 2021.
- Complete the application and submit it along with supporting materials to your lender at Wolf River Community Bank.
In addition to these program changes, we are offering low loan rates.
Ready to apply or need more info? We are here to help. Talk to one of our commercial lenders at (920) 779-7000 or contact us online.