MSB Blog

Monson Savings Bank was there to help our local business community when it mattered most at the start of the pandemic and through the initial round of the Paycheck Protection Program. We proudly helped many businesses navigate the uncharted waters of PPP the first time around and we are here now to continue to offer our support and guidance when it comes to round two of PPP funding. Please contact our Commercial Lending department at 413-267-1225 if you have any questions or email [email protected]. You can also contact a team member directly below.

Contact the Commercial Lending PPP Team

If you need assistance with PPP funding, please contact one of our PPP experts below. We are here and ready to help you through your PPP application process.

Who is eligible for a Second Draw PPP Loan?

The following applicants are eligible for Second Draw PPP Loans:

An application is eligible for a Second Draw PPP Loan if it is a business concern, independent contractor, eligible self-employed individual, sole proprietor, nonprofit organization eligible for a First Draw PPP Loan, veterans organization, Tribal business concern, housing cooperative, small agricultural cooperative, eligible 501(c)(6) organization or destination marketing organization, or an eligible non-profit news organization that:

1. Previously received a First Draw PPP loan in accordance with the eligibility criteria in the Consolidated First Draw PPP IFR;

2. Had used, or will use, the full amount of its First Draw PPP Loan (including the amount of any increase on such First Draw PPP Loan) on authorized uses under subsection (B)(11) of the Consolidated First Draw PPP IFR on or before the expected date on which the Second Draw PPP Loan will be disbursed;

3. Employs not more than 300 employees

4. Experienced a reduction in revenue in calendar year 2020 measured as follows:

a. The applicant had gross receipts during the first, second, third, or fourth quarter in 2020 that demonstrate at least a 25% reduction from the applicant’s gross receipts during the same quarter in 2019;

b. If the applicant was not in business during the first or second quarter of 2019 but was in business during the third and fourth quarters of 2019, the applicant had gross receipts during the first, second, third, or fourth quarter of 2020 that demonstrate at least a 25% reduction from the applicant’s gross receipts during the third or fourth quarter of 2019;  

c. If the applicant was not in business during the first, second, or third quarter of 2019, but was in business during the fourth quarter of 2019, the applicant had gross receipts during the first, second, third, or fourth quarter of 2020 that demonstrate at least a 25% reduction from the applicant’s gross receipts during the fourth quarter of 2019 ; or

d. The applicant was not in business during 2019, but was in operation on February 15, 2020, the applicant had gross receipts during the second, third, or fourth quarter of 2020 that demonstrate at least a 25% reduction from the gross receipts of the entity during the first quarter of 2020 

e. An applicant that was in operation in all four quarters of 2019 is deemed to have experienced the revenue reduction if it experienced a reduction in annual receipts of 25% or greater in 2020 compared to 2019 and the borrower submits copies of its annual tax forms substantiating the revenue decline.

How can you use your PPP Funds?

If you are approved for a Second Draw PPP Loan, PPP Funds can be used for the following over either an 8 or 24 week covered period:

• Payroll cost (60% minimum)
• Costs related to the continuation of group health care, life, disability, vision, or dental benefits during period of paid sick, medical, or family leave, and group health care, life disability, vision, or dental insurance premiums
• Mortgage interest payments
• Rent payments
• Utility payments
• Interest payments on any other debt obligations the were incurred before February 15, 2020
• Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020
• Other covered operational expenditures, as explained in the SBA IFR (link attached)

How do I calculate my PPP Loan Amount? 

The loan amount is solely based upon payroll expenses.  Please do not use rent expense, utility expense, etc. when calculating your loan amount. The payroll calculation is as follows:

• The Borrower can elect to use 2019 or 2020 payroll expenses to calculate the loan amount.  We recommend you review this with your accountant.
• This payroll figure will be divided by 12 and then multiplied by 2.5x.  (For businesses with a NAICS Code beginning in 72 (Accommodation and Food Services Sector) please multiply by 3.5x)

How do I submit an application for a Second Draw PPP Loan and what documentation must I provide to demonstrate eligibility?

1. The applicant must submit to the lender SBA Form 2483-SD (attached) and the documentation below:

2. At the time an applicant submits its loan application form, it must submit the following unless the documentation was submitted to the lender for the First Draw PPP Loan (i.e. the applicant used calendar year 2019 figures to determine both its First Draw PPP Loan amount and its Second Draw PPP Loan amount, and the lender for the applicant’s Second Draw PPP Loan is the same lender that made the applicant’s First Draw PPP Loan):

a. If the applicant is not self-employed, the applicant’s Form 941 (or other tax forms containing similar information) 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, must be provided.  A partnership must also include its IRS Form 1065 K-1s. 

b. If the applicant is self-employed and has employees, the applicant’s 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1040 Schedule C, Form 941 (or other tax forms or equivalent payroll processor records containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever was used to calculate loan amount), as applicable, or equivalent payroll processor records, along with evidence of any retirement and employee group health, life, disability, vision and dental insurance contributions, if applicable, must be provided. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish the applicant was in operation on February 15, 2020.

c. If the applicant is self-employed and does not have employees, the applicant must provide (a) its 2019 or 2020 (whichever was used to calculate loan amount) Form 1040 Schedule C, (b) a 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record that establishes that the applicant is self-employed; and (c) a 2020 invoice, bank statement, or book of record to establish that the applicant was in operation on or around February 15, 2020.

d. For loans with a principal amount greater than $150,000, documentation sufficient to establish that the applicant experienced a reduction in revenue of at least 25% (as described above) must be provided at the time of application, which may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicant’s quarterly income statements or bank statements.

e. For loans with a principal amount of $150,000 or less, the applicant must submit documentation sufficient to establish that the applicant experienced a reduction in revenue of at least 25% (as described above), on or before the date the borrower submits an application for loan forgiveness, or, if the borrower does not apply for loan forgiveness, at SBA’s request. Such documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicant’s quarterly income statements or bank statements.

Here is the information directly from the SBA: Interim Final Rule on Second Draw Loans (Released by SBA on 1/6/2021)