Paycheck Protection Program (PPP)
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Chelsea Groton Bank, a preferred SBA lender, worked with the Small Business Administration (SBA) to provide relief funding through the Paycheck Protection Program (PPP) to over 500 area businesses in 2020. The PPP program was designed to provide a direct incentive for small businesses to keep their workers on the payroll. On Sunday, December 27, 2020, the federal government approved a $900 billion stimulus package to deliver economic relief to small businesses and Americans impacted by the pandemic.
The Small Business Administration (SBA) re-opened the PPP program to Chelsea Groton Bank on Tuesday, January 19, 2021.
Borrowers can begin the application process by printing and completing the First Draw or Second Draw application to use as a guide when entering information into the Bank’s online application portal. There are two ways to access the link to Chelsea Groton Bank’s online PPP loan portal:
- Please contact the Chelsea Groton loan officer that you worked directly with when you obtained your First Draw PPP Loan in 2020 OR
- Call our PPP Hotline 860-448-4193.
Both PPP programs require supporting documentation whether you are applying for a First or Second Draw PPP Loan; the supporting documentation required may be different based on the type of PPP loan that you are applying for and your business legal structure. Here is a recommended list of supporting documentation that you should begin compiling before applying:
- 2019 Business Tax Returns complete with all schedules
- 2019 and 2020 State payroll forms, all four quarters (form 941)
- Verification of the number of employees and payroll incurred in 2019 and in 2020; payroll reports must be by employee and must identify employees with payroll compensation in excess of $100,000 annually.
- For self-employed individuals with no employees, forms 1099-Misc for 2019 and 2020 or Schedule C for 2019 and 2020 (2020 draft).
- For second-draw PPP loans only*: 2019 and 2020 Financials by quarter; and/or quarterly sales reports reflecting your by-quarter top line revenue used to demonstrate a 25% reduction in top line revenue.
To be eligible for a first-draw PPP loan (for those that did not receive PPP funding in 2020):
- Your business has less than 500 full-time, part-time, or seasonal employees.
- Your business was operational before February 15, 2020 and remains operational.
To be eligible for a second-draw PPP loan (for those that received PPP funding in 2020)*:
- Your business has less than 300 full-time, part-time, or seasonal employees; if you have multiple locations, you may not have more than 300 employees per location.
- You are able to demonstrate a revenue reduction of at least 25% in at least one quarter of 2020 (when compared with the same quarter in 2019).
- You have used or will use the full amount of the first-draw PPP.
- Your business was operational before February 15, 2020 and remains operational.
Businesses eligible for first- and second-draw PPP loans also include:
- Sole proprietors
- Independent contractors
- Self-employed individuals
- Certain non-profits (the new bill has expanded eligible businesses to include certain 501(c)(6) non-profit organizations
- Seasonal employers; the new bill has clarified the definition of these to be businesses that operate no more than seven months within a year or earn no more than a third of gross receipts within a six-month period
- Faith-based organizations that have less than 150 employees
- Housing cooperatives that employ less than 300 people
The following businesses remain ineligible for PPP loans:
- Lobbying organizations
- Organizations involved in political activities or public policy
- Lenders or financial services businesses
- Cannabis businesses (or any other businesses that deal with products that are illegal at the federal level)
- Household employers (such as those who employ housekeepers or nannies)
- Businesses that have defaulted on SBA or federal loans
- Any business that is at least 20% owned by someone who is currently incarcerated, on probation, on parole, or subject to an indictment
- Any business that is at least 20% owned by someone who has been convicted of a felony within the last five years
- Entities affiliated with the People’s Republic of China or Hong Kong or that have a member on their board of directors that is a resident of the People’s Republic of China
- Registrants under the Foreign Agents Registration Act
- Entities that have received or will receive a grant under the Shuttered Venue Operator Grant program
Additional PPP Loan guidance can be found on the SBA website.
The Connecticut Small Business Development Center (SBDC) will host multiple webinars to help you understand what information you may need to apply for a PPP loan. Click here to register for one of the webinars.
How and when do I apply for Forgiveness from the first round of PPP loans?
Chelsea Groton Bank established procedures and instructions for accepting SBA PPP forgiveness applications online. We will email you a formal instruction package which will include an electronic means of providing us your completed application when you are ready to apply. We will be encouraging all borrowers to submit their application and supporting documentation through a secure link. Please contact your PPP lender to begin the application process.
There is a lot of confusion about the PPP Forgiveness application deadline for borrowers to apply for forgiveness partly due to the PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) displaying an expiration date of 10/31/2020 in the upper-right hand corner. We looked to the SBA PPP Forgiveness guidance and this is the response from the SBA about the PPP Forgiveness application deadline: “Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period (8 or 24 weeks), loan payments are no longer deferred and the borrower must begin making payments on the loan. For example, a borrower whose covered period ends on October 30, 2020 has until August 30, 2021 to apply for forgiveness before loan repayment begins. The expiration date in the upper-right corner of the posted PPP loan forgiveness application forms is displayed for purposes of SBA’s compliance with the Paperwork Reduction Act, and reflects the temporary expiration date for approved use of the forms. This date will be extended, and when approved, the same forms with the new expiration date will be posted."
The latest SBA PPP Forgiveness guidance can be found here. For additional questions please contact us at 860-448-4200.
Here are action steps we recommend and a list of documents you should start collecting:
- Become familiar with the two PPP Forgiveness Applications and Instructions now - a new “EZ’ form was introduced for select borrowers.
- Document how all loan proceeds were spent:
- List and provide supporting evidence of all employees on payroll for the 8 or 24 weeks following the loan disbursement with the dollar amount of payroll costs (defined below).
- Evidence of mortgage interest payments, rent payments and utilities paid during the 8 or 24 weeks following the loan; include copies of canceled checks and/or bank statements with ACH info and copies of utility and mortgage statements/lease agreement
- Evidence of payroll costs, utilities, rent/lease payments, and mortgage interest paid before February 15, 2020, to compare to what is paid or incurred during the 8 or 24 weeks following the loan closing to ensure it aligns. If self-employed, these expenses are allowed to the extent they are deductible on Form 1040 Schedule C.
- Copy of EIDL loan if refinanced with PPP loan (be sure to identify how much was an advance that does not have to be repaid)
- If you used PPP to refinance an EIDL loan, only the funds used for payroll costs will be forgiven, so be prepared to provide the documentation listed above for the EIDL loan, too.
As a reminder:
The Connecticut Small Business Development Center (CTSBDC) offers no-cost advisory assistance for small businesses that may not have a formal payroll system, a team of accountants, or even advisors familiar with the PPP loan forgiveness process. CTSBDC advisors will provide guidance to date from the Small Business Administration on forgiveness, tips to maximize forgiveness, and other available resources.
CTSBDC COVID-19 Request for advising