PPP First Draw Loans

First-time PPP borrowers may be eligible for the PPP First Draw loan.

Eligibility

500 or fewer employees.
In operation on February 15th, 2020
Never received a PPP loan
Includes Corporations, LLCs, Sole proprietors, independent contractors, and eligible self-employed individuals
(those that are NOT in restricted industries. See www.SBA.gov for the complete list of ineligible businesses)
Non-profits, including churches and 501(c)(6) membership organizations.

NEW! Eligibility changes and clarifications announced Feb. 22, 2021

Lawful US residents with only an Individual Tax Identification Number (ITIN) may apply. This includes refugees and those with asylum status.
Borrowers with delinquent student loans may now apply.
Borrowers with past non-fraud felony convictions may now apply.

Ineligible Businesses (not comprehensive)

Businesses that are permanently closed are not eligible for a PPP loan.
If the applicant is the debtor in a bankruptcy proceeding, or have defaulted on a SBA-guaranteed loan, they are ineligible.
Businesses in certain industries, including but not limited to gun sale, gambling, lobbying, etc., are not eligible.

Jenka Rojas Real Estate, Lawrence, MA

Jenka Rojas, who launched her real estate business in 2017, applied for and secured two PPP loans to keep her business afloat with support from MEPPPAI partners Mill Cities Community Investments (MCCI) & Reading Cooperative Bank. Her first PPP loan was 100% forgiven and she is confident the second will be as well.

“Aaron [of MCCI] guided me through the whole process and for the forgiveness application. I attended one of MCCI’s webinars, and they were able to answer my questions and explain the steps I had to take to request it. Soon after I applied for forgiveness, it was approved.”

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Required Documents

Government-issued photo-identification.
Most recent tax returns for 2019 and management prepared financials for 2020.
Bank statements or other evidence that you were in business on February 15, 2020.
Ownership information (for all owners with 20% or more interest).

Documentation sufficient to demonstrate the qualifying payroll amount might include the following depending on the type of business.

Documents required for certain business types:

S-Corp, C-Corp, Partnerships, multi-member LLC, choose one:
- IRS Form 941
- IRS Form 944
- 2019 or 2020 Form W2 for all employees
Eligible Self-Employed Individuals, Independent Contractors:
- IRS Form 1099-MISC
- 1040 Schedule-C
Sole proprietors or single-member LLCs:
- 1040 Schedue C
- IRS Form 941s, IRS Form 944 or W2 for all employees (if business has payroll)
Nonprofits, Veterans, and Tribal Organizations, choose one:
- IRS Form 941
- 2019 IRS Form 990 Part IX
- IRS Form 944 (if 944 is selected, also ask for IRS 944 Written Permission)
- 2019 or 2020 Form W2 for all employees

PPP Loan Terms

Loan is fully or partially forgivable (does not require paying back) if at least 60% is used on payroll.
If not fully forgiven, the loan becomes a 5-year, 1%-APR term loan. Payment is deferred for 12 months.
For loans less than $250,000, no personal guaranty is required.
All FAQ's from the original round of PPP loans apply here except as otherwise stated below.

Definitions

Eligible uses include payroll, payments for mortgage interest, rent, utilities, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures 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. Additionally, eligible costs now include operating costs for software and cloud computing services and accounting needs and property damage costs related to property damaged and vandalism or looting due to public disturbances that occured during 2020 that was not covered by insurance or other compensation

* Updates to the program announced in February 2021 expanded eligible uses. See the latest updates at Equitable PPP Home.
Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state or local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.

How to Calculate Your Loan Amount

STEP 1: Add payroll costs (defined below) from the last twelve months for employees whose principal place of residence is the United States, with a $100,000 cap on each employee. For Sole Proprietor or Single-member LLC, use Gross Profit on Schedule C LINE 7 ("Owner's Compensation Replacement", or "OCR") as the basis for annual payroll for the owner. Add the OCR to the actual payroll for employees, if any.

STEP 2: Calculate average monthly payroll costs (divide the amount from Step 1 by 12).

STEP 3: Multiply the average monthly payroll costs from Step 3 by 2.5. (x 3.5 if a restaurant or any business with a NAICS classification started in "72")

STEP 4: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of the EIDL "advance" received.

Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee brenefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employement or compensation.

Loan Calculators

Application Form (updated March 3, 2021)

For corporations: Form 2483
For Sole Proprietors, Independent Contractors, Self-employed, Schedule-C filers: Form 2483-C

Workshops

Loan Forgiveness

Information on Loan Forgiveness

Helpful Documents

Paycheck Protection Program Re-launch Overview Presentation (PDF)

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