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General Q&A: Paycheck Protection Program (PPP) First Draw

These questions and answers are a compilation of the participant Q&A from YPTC and Network for Good’s webinar on Feb. 15, 2021.

What does first draw mean?  Does that mean from the spring?

First draw is the first PPP Loan round.

Can you clarify first draw vs. second draw?

First draw refers to the first round of PPP which most orgs have taken advantage of though some are newly eligible.  Second draw is this second round of PPP that has opened up.

Are churches eligible to apply?

Yes, generally faith-based organizations are eligible to apply. The SBA released a helpful document on this question, and it can be found here: https://www.sba.gov/document/support-faq-regarding-participation-faith-based-organizations-ppp-eidl

If an organization never applied for the PPP, they could receive it this time if they are eligible?

Yes!

If an org was ineligible for Round 1 based on old rules, but based on changes in Round 2 would be eligible now, may they apply under Round 1 today?

Yes!

If an organization or business did not request PPP in round 1, but requests it now, are the rules that apply the same ones for round 1 and thus money can only be spent on payroll?

You can use it on all eligible forgivable expenses, payroll and nonpayroll (mortgage interest, rent/lease payments, utilities, PPE, and some other covered costs – see a loan forgiveness app for more details). Remember, though that you must use at least 60% on payroll costs in order to receive full forgiveness.

Do high levels of liquidity adversely impact an application?

It involves judgment by management.  Management, in good faith, needs to be able to make the application certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

We had scheduled fundraisers in 2020 which would have generated funds for paying the ED. Can we still apply for the PPP?

If your company’s management can, in good faith, make the application certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

Our organization changed tax ID numbers to become a 501c3 non-profit after receiving a first draw PPP loan which was fully forgiven.  We can show a revenue loss between the old and new tax ID’s from 2019 to 2020, but not on our current operating Tax ID.  Do you have any guidance on our eligibility?

Perhaps your entity would be eligible to apply for a first draw under the new tax ID number. We recommend reaching out to a lender for guidance.

The link to our lender is not working.

The SBA may have updated the link.  Try this: https://www.sba.gov/funding-programs/loans/lender-match

I started a sole proprietorship back in 2003 that I’m ready to bring to life.

Do and or can I apply for PPP? It’s just me at the moment so I’m not ask for much funding.

Sole proprietors are eligible to apply for PPP loans.

Does a non- profit in Ghana qualify to participate in this program? Are there any participation fees attached?

No, PPP loans are intended to support workers whose principal place of residence is in the United States.  There are no borrower fees for PPP loans.

We are moving from all volunteer/ self- funded, to hiring several employees. Can we qualify for PPP? P.S. we hired a company to find employees for us. We would spend the money for their fees. and the employee pay.

It’s our understanding that only sole proprietors, independent contractors, or self-employed individuals can apply as entities without employees.  Otherwise, you need to have employees in order to calculate the maximum loan amounts, which are based on payroll costs.  Contractor fees do not count as eligible payroll costs for PPP loans.

If we applied for the first round of PPP last year but did not get approved, should we be considering applying to the first or second draw PPP for 2021?

It sounds like you would be reapplying for the first draw.

Are PPP funds available to cover expenses through June 30 and not after June 30?

It depends on the end of your covered period.  In general, PPP funds will be used for eligible expenses paid or incurred during your covered period.  Your covered period does not begin until the loans proceeds are disbursed to you, and then lasts 8-24-weeks.

I didn’t see B or Benefit Corp on list.  Are they also eligible?

You are correct, a B Corp. is not one of the entity types listed on the PPP borrower application.  You should check with your lender regarding how to apply.

On the PPP Loan Application for First Draw, it asks for monthly payroll costs plus EIDL.  Does the EIDL amount refer to the Advance or Loan?

It does not refer to an EIDL advance.  It refers to any amounts of an EIDL loan made between 1/31/20 and 4/03/20 that the borrower seeks to refinance using PPP funds.

If we applied for a PPP loan in 2019 for the first round but did not get approved should we be looking at applying to the first or second draw this time around?

It sounds like you would be reapplying for the first draw.

Can non-profits without employees (only volunteers) apply for 1st time PPP loan? Do payments to an independent contractor count as payroll costs?

No, you have to have employees for the PPP and contractors do not count.

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