PPP Loan Program Update

As of February 23, 2021
Several reforms to the PPP Loan program were recently announced by the Biden-Harris administration to make funding more readily available to the smallest businesses, and those that have been left behind in previous relief efforts. Here’s what you need to know.

Focus on “Main Street” Businesses - From Wednesday, February 24 – March 9, 2021 only PPP Loan applications of businesses with fewer than 20 employees will be processed by the SBA. This focus on “Main Street” Businesses will help ensure small businesses obtain the funding they need.

We are still welcoming PPP Loan applications from business customers big and small at this time, but please note that if your business has more than 20 employees your application will not be submitted to the SBA until March 10, 2021.

Help for sole proprietors, independent contractors, and self-employed individuals  – The loan calculation formula for these applicants will be revised to offer more relief. At this time, the SBA has not provided guidance on the new calculation. We will provide that information as soon as it has been released.

Elimination of exclusionary restrictions - To expand access to PPP, the second restriction (the one-year look-back) will be eliminated, unless the applicant or owner is incarcerated at the time of the application. In addition, small business owners who are delinquent on their federal student loans will now be eligible to apply for a PPP loan.

Access for non-citizen small business owners who are lawful U.S. residents - Customers may now use Individual Taxpayer Identification Numbers (ITINs) to apply for a PPP loan. 

If you have questions, or would like more information on any of the revisions, please contact our PPP Loan team at ppploans@washtrust.com.

As of January 26, 2021
Washington Trust was one of Rhode Island’s top PPP lenders when the SBA distributed funds in 2020, helping many local businesses through the application and forgiveness processes. While the PPP loan forgiveness process continues for the SBA’s “first draw” loans, they recently announced that businesses that have already received a PPP loan may be eligible for what is called a “second draw” loan. In addition, businesses who have not yet received a PPP loan may be eligible for a “first draw” loan.

The SBA also released new information on Loan Forgiveness requirements and new categories of expenses that will be covered.

While businesses will still be required to allocate 60 percent of their loan proceeds to payroll costs, the remaining 40 percent can now go to a wider array of expenses. The Cares Act originally only covered rent, mortgage interest, and some utilities. Beginning March 8, 2021 new non-payroll expense categories will be available for selection through the online forgiveness application.

Those categories of covered expenses include:

  • Business operations -- anything from human resources expenses like payroll processing fees or benefits administration fees to accounting software expenses.
  • Property damage costs -- expenses related to protests or vandalism resulting from public unrest.
  • Certain supplier costs -- any supplier goods needed to run your company are eligible, as long as the contract or purchase order was in force prior to receiving the loan. Certain perishable goods may also be eligible, as long as they're deemed essential to the business.
  • Safety expenditures -- any cost associated with meeting public health guidelines, for example plexiglass shielding, sanitation stations, or providing mask and gloves.

Borrowers of loans of $150,000 and under will be required to submit a single, one-page form 3508S, which includes an attestation that they followed the forgiveness rules. Borrowers must also retain records to prove compliance for four years for employment records and three years of nonpayroll records. Washington Trust will send the simplified 3508S online application link the week of March 8, 2021 when the SBA begins to accept the updated application form.

If your business already received a PPP Loan through Washington Trust:

How do I apply for a “second draw” loan?

Washington Trust sent emails to "first draw" borrowers with a link to an application for additional funding. If you did not receive the link, please contact our PPP loan team at ppploans@washtrust.com.

What should I do about forgiveness on my “first draw” loan?

Regardless of whether your first draw loan has been forgiven, it will not affect your eligibility for a second draw loan. If you have not already applied for forgiveness, at this point it is best to wait until those new guidelines have been implemented.

Washington Trust already sent emails to all borrowers who received a PPP loan greater than $150,000 containing a link to a custom site on which to complete the Forgiveness application.

For borrowers with loans $150,000 and under, we will send a link to the SBA’s simplified form the week of March 8, 2021.

If your business did not previously receive a PPP Loan through Washington Trust:

If you are eligible and interested in applying for a Paycheck Protection Loan through Washington Trust, please complete this request form. If your business meets the criteria to receive an application, we will send you an email link to the secure application portal. Please note that borrowers will be required to have a business checking account. If you do not have a Washington Trust business checking account, you will need open an account and verify identification in person at a Washington Trust branch before the PPP loan application process will begin. Loan applications will be accepted from businesses in RI, MA and New London County, CT only.

About Second Draw Loans

Second Draw loans are targeted at smaller and harder-hit businesses with 300 or fewer employees that have used up, or have plans to use up, the full amount of their initial PPP loan.

  • The maximum second-draw loan amount is $2 million and small business will have until March 31, 2021 to apply.
  • To be eligible, a business (including an eligible sole proprietorship activity) must demonstrate at least a 25% decline in gross receipts in any quarter of 2020, compared to the corresponding 2019 quarter.
  • An eligible business can borrow up to 2.5 times its average monthly payroll costs in the year prior to the loan or the calendar year or 3.5 times payroll costs for businesses in the especially-hard-hit accommodations and food service industries.

Frequently Asked Questions about loan forgiveness

When can I apply for forgiveness?

Washington Trust will send you an email with a secure link to our online PPP forgiveness portal. Until you receive the email and link from Washington Trust, we recommend you do not complete the PDF application on the SBA's website, nor should you respond to any other requests to apply for forgiveness, as they could be fraudulent. As your PPP lender, Washington Trust is the only one that can process your forgiveness application.

There is no immediacy to applying for Forgiveness, as you have 10 months from the last day of your covered period to apply.

When do I have to make a PPP loan payment?

Your PPP loan payment will not be due until after you apply for Forgiveness. Once you apply for Forgiveness and your application is accepted by the SBA, we will inform you when the SBA renders a decision. If all, or a portion of the loan is not forgiven, we will inform you of when your first PPP loan payment is due.

If you don’t apply for loan forgiveness within 10 months after the last day of the covered period, then your PPP loan would no longer be considered “deferred” and you would be required to begin paying principal and interest on the PPP loan. We value our relationship with you and want to ensure that the PPP forgiveness process is as easy and convenient as possible.

How will the forgiveness application process work?

Our email link will take you to a secure online portal that will walk you through the process and make it clear what documentation is required.

  • After you have submitted your application via this portal, we will work with you to ensure it is complete.
  • Once your application is complete, we will finalize our review and transmit the application to the SBA.

Please note that SBA rules allow us 60 days, from the receipt of a completed application, to transmit it to the SBA. The SBA then has 90 days to complete its processing. While these are the formal “not to exceed” timelines, we will seek to handle applications more expeditiously, as will the SBA. However, this is a wholly unique process so it is best to assume it will take some time to navigate through it.

Note: The SBA has ninety days to review submitted applications.

What documents do I need to prepare for the forgiveness application?

Below are links to the required documents needed to apply for forgiveness. These documents must be uploaded to the forgiveness application portal before you can submit your forgiveness application. There are documents that are required for applying, AND a list of documents that should be retained after your application has been submitted.

The SBA set the proportion of PPP funding that must be used on payroll cost to qualify for full forgiveness at 60%. This means to qualify for full loan forgiveness, you must use at least 60% of your loan funds for eligible payroll costs. You can use up to 40% of your loan funds for eligible non–payroll costs. To prepare for loan forgiveness, it’s important to track and retain all documentation to support payments made with your PPP loan funds. To prepare for loan forgiveness, it’s important to track and retain all documentation to support payments made with your PPP loan funds.

Our Washington Trust team is always available to answer your PPP Loan questions.

For assistance with PPP Forgiveness: Please email Washington Trust’s PPP Loan Forgiveness team at pppforgiveness@washtrust.com For Assistance with New PPP Loans: Please call our PPP Loan team at 401-340-3466 or email ppploans@washtrust.com