Paycheck Protection Program: Round 2 for Small Businesses

Updated Wednesday, January 20th

BankCherokee will be participating in the PPP Second Draw program for existing bank customers. We will begin processing applications online beginning Friday, January 15th. This post outlines some of the main eligibility and documentation requirements for the program. If you believe that you are eligible for a PPP Second Draw loan, contact your BankCherokee business relationship officer and request that an application link be sent out via email. All PPP Second Draw loan applications must be submitted using the online application. Loan terms and eligible uses of loan proceeds are generally the same as with PPP First Draw loans.

If you believe that you are eligible for a PPP Second Draw loan, contact your BankCherokee business relationship officer and request that an application link be sent out via email.

Generally, you are eligible to receive a PPP Second Draw loan if:

  1. Your business was in operation on February 15, 2020.
  2. You are a small business concern, independent contractor, self-employed individual, eligible non-profit organization, tribal business concern, housing or agricultural cooperative, destination marketing organization, or eligible non-profit news organization.
  3. You have previously received a PPP First Draw loan, and you have or will spend all of the loan proceeds on eligible expenses before receiving your PPP Second Draw loan.
  4. You employ not more than 300 people.
  5. You experienced a drop in gross revenues of 25% or greater in 2020 compared to 2019. Generally, the measurement can be made by comparing a quarter in 2019 with the same quarter in 2020. Applicants can also use an annual measurement comparing calendar years 2019 and 2020.

Your maximum loan amount will be the lesser of:

  1. $2,000,000 or
  2. 2.5 months of average monthly payroll during the base year selected (3.5 months for borrowers assigned a NAICS code 72 (restaurants))

Documentation requirements necessary to determine the loan amount:
Note: Borrowers have the option of calculating payroll based on either their 2019 or 2020 tax forms. Borrowers who chose to use 2019 for their calculation do not need to re-submit 2019 forms if those forms are already on file at BankCherokee in connection with the PPP First Draw loan.

  1. For all applicants, a completed and signed 2483-SD loan application submitted online via the emailed link provided by BankCherokee.
  2. For business concerns including self-employed individuals with employees, all 941 and state unemployment insurance wage filings for the base year selected, available payroll processor reports for the year selected, and evidence of any eligible retirement and employee group health, life, disability, vision, and dental contributions for the year selected. Partnerships must include the 1065 k-1 reports for the year selected.
  3. For all self-employed individuals, a copy of schedule C from the applicant’s 2019 or 2020 personal income tax return. If 2020 will be used as the base year, the applicant must submit a schedule C even if the full tax return is not complete. The applicant must also provide 1099s for the base year selected, along with available invoices and bank statements.
  4. For all applicants, a payroll report, bank statement, or other evidence that the business was in operation on February 15, 2020.

Documentation requirements to establish the 25% revenue reduction test:

  1. For business concerns, a quarterly financial statement (profit and loss statement) for either the 1st, 2nd, 3rd, or 4th quarter of 2019 (borrower’s option) along with a similarly formatted quarterly statement for the same quarter in 2020. The statements must be signed and dated with the applicant’s initials on each page. OR,
  2. For business concerns, annual tax income tax returns for 2019 and 2020
  3. For self-employed individuals, a quarterly financial statement (profit and loss statement) for either the 1st, 2nd, 3rd, or 4th quarter of 2019 (borrower’s option) along with a similarly formatted quarterly statement for the same quarter in 2020. The statements must be signed and dated with the applicant’s initials on each page. OR,
  4. For self-employed individuals, a copy of schedule C from your 2019 personal tax return along with a copy of schedule C from your 2020 personal tax return. In cases where the applicant’s 2020 personal tax return is not complete, a preliminary draft version of the 2020 schedule C can be submitted. In lieu of the 2020 schedule C, applicants can submit copies of bank statements for 2020 that annotate the gross receipts that were deposited along with a tally for the full year. Note: Final 2020 tax returns will be required when applying for loan forgiveness.

The requirements for the PPP Second Draw program are too extensive to list here in their entirety. Borrowers with special situations or unanswered questions should consult the SBA and Department of Treasury websites or consult with their BankCherokee business relationship manager. The SBA will continue to provide more detail and clarifying guidance as the program is rolled out. In most cases, applicants will later be required to submit additional documentation, such as final 2020 tax returns, in order to verify the 25% revenue drop and obtain loan forgiveness.

Additional Resources: