COVID-19 Update: Third Round Stimulus Checks

Paycheck Protection Program

posted on Monday, December 28, 2020

January 14th Update:

An overview of this information and a link to this page was sent to Midwest Heritage PPP loan customers on Wednesday, January 13, to the email address associated with their PPP loan applications.

The Payment Protection Program (PPP) is re-opening this week for both new (First Draw PPP Loans) and certain existing borrowers (Second Draw PPP Loans). The reopening is referred to as Phase Two.

Initially, in an effort to assure underserved and disadvantaged communities are assisted during this process, financial institutions designated as Community Development Financial Institutions and Minority Depository Institutions are the only ones able to process applications. It is anticipated that all other banks, including Midwest Heritage, will be authorized in the near future.

How the PPP programs will be structured going forward:

  • Customers who did not receive a loan under the original (Phase One) PPP are eligible to apply as First Draw PPP Loan borrowers in Phase Two. The rules are similar to Phase One, with the addition of 501(c)6 borrowers and the added deductibility of costs related to worker protection costs, uninsured property damage, looting or vandalism, as well as certain supplier costs.
  • Customers who did not receive the full amount of the eligibility of their Phase One PPP Loan may be able to obtain additional funds up to the original eligibility. This is meant primarily for those who did not get full eligibility due to changes in the calculations as the program changed.
  • PPP borrowers who received an EIDL Advance will no longer be required to deduct this Advance from PPP Forgiveness. These borrowers will receive the full amount of forgiveness they have been approved for in their application. Those who had the EIDL Advance deducted from their Forgiveness will receive a reconcilement payment from Midwest Heritage once it is released by the SBA.
  • The limit on the Simplified Forgiveness Application increased from $50,000 to $150,000. If you already have completed and submitted the Forgiveness Application for a loan amount greater than $50,000 but less than $150,000, it will fall under the previous rules for verification and documentation requirements. We cannot withdraw and resubmit under the new limit. 

Second Draw PPP Loans:

  • To be eligible as a Second Draw PPP Loan borrower, you will have received a Phase One PPP Loan and:
    • Have or will use the full amount only for authorized uses.
    • Have started the Forgiveness process.
    • Have no more than 300 employees.
    • Can prove at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020, or for the calendar year. This is a new eligibility requirement, but the loan amount will be based on 2.5 times monthly payroll costs, similar to Phase One PPP.
  • Borrowers who apply for a Second Draw loan and fall into the NAICS code starting with 72 (Hospitality and Food Service), may now be eligible for up to 3.5 times of monthly payroll.
  • Since the calculation of payroll costs is the same as in Phase One, the loan amount should be the same and we may not need to gather as much information.
  • The maximum loan amount for Second Draw Loans is $2,000,000 per borrower with a combined limit of $10,000,000 for First and Second Draw Loans.
  • The Forgiveness period will cover up to 24 weeks of eligible costs, i.e., Payroll (including health insurance, retirement, etc.), Interest on Real Estate, Mortgage or Rent, and Utilities. Also included are costs related to worker protection costs, uninsured property damage, looting or vandalism, and certain supplier costs.

General Items:

  • PPP Loan Amounts will not be taxed as income and, for tax purposes, borrowers can deduct the associated, reimbursed expenses forgiven.
  • Both PPP Programs (first and second draw) are set to expire on March 31, 2021

Resource Documents:

The new PPP applications and summary instructions are provided below, all links open in a new window.

Paycheck Protection Program Borrower Application (Form revised January 8, 2021) 
Paycheck Protection Program First Draw Loans Quick Facts 
Paycheck Protection Program Second Draw Borrower Application Form 
Paycheck Protection Program Second Draw Loans Quick Facts 

December 28th Update:

Over the weekend, President Trump signed a stimulus bill that will provide additional loans to qualified businesses through the Paycheck Protection Program.  As soon as the Small Business Administration (SBA) provides additional details, we will provide an update.

The Paycheck Protection Program is a relief program available to eligible small businesses. As part of the CARES Act of 2020, the Paycheck Protection Program (PPP) was enacted to provide small business financial relief in response to the economic impact the coronavirus pandemic is causing. 

The PPP is implemented by the U.S. Small Business Administration (SBA), with support from the Department of the Treasury, to provide customers relief by providing funding to help Americans employed by small businesses toward job retention and certain other expenses. PPP provides small businesses with funds to pay up to 8 weeks of payroll costs, including benefits, as well as mortgage interest, rent and utilities. 

For full terms of the program, visit www.sba.gov.

Contact Midwest Heritage at 1-800-782-0521 or [email protected] with any questions or for more information about the Paycheck Protection Program.