Paycheck Protection Program 2021

Paycheck Protection Program – 2021 Edition

The Coronavirus Response and Relief Supplemental Appropriations Act of 2021, included approximately $285 billion in new funding for both first-time loans under the original Paycheck Protection Program (“First Draw Loans”) and for businesses seeking a second loan under the Paycheck Protection Program loans (“Second Draw Loans”). Small businesses that have already received a PPP loan can apply again under the Second Draw Loan criteria, while a business that has not already received a PPP loan can apply under the First Draw Loan criteria.

SouthState is now accepting applications through our online platform. Existing PPP borrowers should have received an email invitation to apply on Tuesday, January 19.

For others who are interested in applying, complete a PPP Application Interest Form and SouthState will contact you to provide more information regarding the application process. For reference, we have prepared a PPP Loan Getting Started Guide to assist you with the Application.

Below are some preliminary details about First Draw and Second Draw Loans offered under the Paycheck Protection Program (PPP) and what steps to take to apply. Please note that these rules are subject to further interpretation and modification by the Small Business Administration (SBA) and the U.S. Department of the Treasury. We encourage you to check back often as we will continue to monitor any new information that becomes available and provide updated information below.

For more information about PPP loans, including terms, conditions and eligibility, visit the SBA PPP website.

Summary of Changes

Program expiration of March 31, 2021
$2 million maximum loan amount for Second Draw Loans
Means testing for Second Draw Loans – Businesses must show a 25% decrease in revenue for at least one quarter in 2020 compared to 2019
While the loan amount will remain sized at 2.5x eligible payroll, restaurant and hospitality businesses (those with a NAICS code beginning with 72) can qualify for 3.5x their monthly payroll for Second Draw Loans
Seasonal borrowers may elect ANY 12-week lookback period between February 15, 2019 and February 15, 2020 to determine payroll
EIDL advances will not be deducted from the Forgiveness amount
Businesses may deduct expenses covered by forgiven PPP loan proceeds on their taxes, superseding previous IRS guidance
Agent fees will only be paid by the lender when the lender directly contracts with the agent

First Draw and Second Draw Loan General Terms

Rate: 1% fixed interest rate APR for the entire loan term with a deferral period
Term: 5 year maturity
Fees: No fees will be charged to the borrower
Forgiveness: Eligible for 100% forgiveness if loan proceeds are used appropriately for qualified businesses, and no less than 60% of the proceeds are used on payroll during the Covered Period
Early payoffs: PPP loans can be repaid at any time and without penalty
Required Collateral or Guarantees: None

Use of Proceeds

The PPP loan may be used to pay for the following costs incurred or paid during the Covered Period:

payroll costs;
costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
employee salaries, commissions, or similar compensation which is not in excess of $100,000 per year annualized;
interest on mortgage obligations that were in place before February 15, 2020 (but not mortgage premiums);
rent under lease agreements in force before February 15, 2020;
utilities for which service began before February 15, 2020; and
payment of interest on certain pre-existing debt obligations.

The SBA has expanded the types of expenses in which businesses can use their PPP loan proceeds to include the following expenses, which are retroactive to any previous unforgiven PPP loans:

Worker Protection Expenditures: Operating or capital costs that the business had to spend to comply with requirements or guidance issued by the CDC, HHS, OSHA, or state/local government during the period beginning March 1, 2020. These costs can be related to sanitation, social distancing, or worker or customer safety to include employer-supplied personal protection equipment (PPE), physical barriers, expansion of indoor/outdoor space, ventilation, filtration, and drive-through/walk-up windows.

Operations Expenditures: Costs associated with product or service delivery or software/cloud computing service that facilitates: business operations, the processing, payment, or tracking of payroll expenses, HR and billing functions, or the accounting or tracking of supplies, inventory, records, and other related expenses.

Supplier Costs: Expenses related to the supply of goods that are essential to the operations of the entity at the time at which the expenditure was made and is made pursuant to a contract or order in effect at any time before the covered period or, with respect to perishable goods, in effect at any time during the Covered Period.

Property Damage Costs: Costs related to property damaged and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation.

Please visit the SBA PPP website for a full list of expenses that can be forgiven under a PPP loan.

PPP Details

Get Prepared

SouthState has prepared some tools and guides to assist you with applying for PPP.

Similar to the first round of PPP, applicants may need to include a variety of supporting documentation during the application process. To make this process easier, SouthState has developed a PPP Documentation Recommendations which you may access here. While an applicant may not need every document outlined, having them available in their PPP documentation file will speed up the application process and, in the event of a future SBA audit, will ensure that documentation is easily accessible. We encourage you to add supporting documentation in your application when applicable.

Additionally, review our PPP Loan Getting Started Guide, which you may access here, to help walk you through the process to apply online. To help answer specific questions, a dedicated PPP Care Team stands ready to assist as you begin the application process.

Online Chat
Call us: (833) 595-0609
Hours: Monday – Friday; 8 AM – 8 PM ET
Email: [email protected]

How Do I Apply?

SouthState is a SBA-approved lender, and we are participating in this round of the PPP program. The SBA has been phasing access to all banks and related lending entities, and SouthState stands ready to begin accepting applications through our online platform as early as Tuesday, January 19. Existing PPP Borrowers will receive an email invitation to apply beginning Tuesday, January 19.

For others who are interested in applying, complete a PPP Application Interest Form and SouthState will contact you to provide more information regarding the application process.

Eligibility Requirements - Second Draw Loans

Your business is eligible if you were operating prior to February 15, 2020, you had employees for whom there was paid salaries/payroll tax/contractors, you experienced a 25% decrease in revenue for one quarter in 2020 compared to 2019, and you meet one of the following criteria:

A small business with fewer than 300 employees (includes part-time employees as well)
A small business that otherwise meets the SBA’s size standard (Up to 500 employees)
A 501(c)(3) or 501(c ) 6 with fewer than 300 employees
A faith-based organization with 150 employees or less
An individual who operates as a sole proprietor
An individual who operates as an independent contractor
An individual who is self-employed who regularly carries on any trade or businessLegal gaming companies with under 300 employees
A Tribal business concern that meets the SBA size standard
Housing cooperatives with 300 employees or less
A 501(c)(19) Veterans Organization that meets the SBA size standard

Please refer to the SBA PPP website for more informatin on eligibility requirements.

Eligibility Requirements - First Draw Loans

Your business is eligible if you were operating prior to February 15, 2020, you had employees for whom there was paid salaries/payroll tax/contractors, you have not previously received a PPP loan, and you meet any one of the following criteria:

A small business with fewer than 500 employees (includes part-time employees as well)
An individual who operates as a sole proprietor
Independent contractors and self-employed persons
501(c)3 nonprofits, 501(c)(19) veterans organizations or Tribal business concerns affected by COVID-19, and certain news organizations may apply for a covered loan.
Housing cooperatives, eligible 501(c)(6) organizations, and eligible destination marketing organizations qualify if they employ 300 or fewer employees.

Please refer to SBA PPP website for more information on eligibility requirements.

Rule Modifications

If you are in the hospitality or food services sector (primary business is NAICS code of 72), the 300-employee rule is applied on a per physical location basis.
If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company, the normal affiliation rules do not apply.
Priority for processing will be given to businesses in under-served and rural markets, veterans-owned businesses, economically disadvantage owners, and businesses that are less than two years old.
Capital from an employee stock ownership plan (ESOP) does not trigger the application of affiliate rules.

Ineligible Businesses - First and Second Draw Loans

Publicly traded businesses and entities affiliated with the People’s Republic of China
Businesses that have closed and have no intention of reopening after receiving a PPP loan
Lenders or financial services business, including hedge funds and investment firms, unless a Community Development Financial Institution (CDFI) or Minority Depository Institutions (MDI)
Cannabis or other businesses that traffic in goods or services illegal at the Federal level
Businesses that have defaulted on SBA or Federal loans
Lobbying organizations or organizations involved in political activities or public policy
Any business that is at least 20% owned by someone currently incarcerated, on probation, parole, subject to indictment or convicted of a felony within the last five years
Registrants under the Foreign Agents Registration Act
Entities that have received or will receive a grant under the Shuttered Venue Operator Grant program
If the applicant or the owner of the applicant is the debtor in a bankruptcy proceeding, either at the time it submits the application or at any time before the loan is disbursed, the applicant is ineligible to receive a PPP loan

Please refer to SBA PPP website for more information on eligibility requirements.

Loan Requirements

Eligible businesses will need to meet the following criteria:

The business or non-profit was in operation as of February 15, 2020.
You are business with employees, an independent contractor, or a sole proprietor.
The impact of the COVID-19 pandemic makes the loan request necessary to support ongoing operations.
You will use the loan proceeds to retain workers and maintain payroll or make healthcare, mortgage, lease, and utility payments or for expenses required to keep the business in operation to include computing, data, accounting, and costs associated with keeping workers and customers safe from COVID-19.
You do not have an application pending for a similar loan with another institution.

Permitted Payroll Costs

For employers, Permitted Payroll Costs will include any compensation with respect to an employee that is:

salary, wage, commission, or similar compensation;
payment of cash tip or equivalent;
payment for vacation, parental, family, medical, or sick leave;
allowance for dismissal or separation;
payment required for the provisions of group health care benefits, including insurance premiums;
payment of any retirement benefit; and,
payment of state or local tax assessed on the compensation of the employee.

If you are a sole proprietor, independent contractors, or self-employed individual, then take the wage, commission, income, net earnings from self-employment, or similar compensation that is not more than $100,000 in one year as pro-rated for your designated covered period.

Please refer to SBA PPP website for more information permitted payroll costs.

Excluded Payroll Costs

Subtracted from the Permitted Payroll Costs are the Excluded Payroll Costs, which are defined as:

Compensation of an individual employee in excess of an annual salary of $100,000, as pro-rated for the period February 15 to June 30, 2020
Payroll taxes, railroad retirement taxes, and income taxes
Any compensation of an employee whose principal place of residence is outside of the United States
Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act

Please refer to SBA PPP website for more information permitted payroll costs.

Funding Availability

Within the appropriated $284 billion, there are certain allocations to help specific businesses. There is a strong demand for PPP loans. Thus, we suggest you promptly apply as there is no assurance that Congress will authorize additional loan funds. $35 billion is targeted at first time PPP loans, with $15 billion of that to businesses with ten or fewer employees or with loans less than $250,000 in low-income areas. In addition, $25 billion of the new PPP funding is set aside for Second Draw Loans to businesses with ten or fewer employees or for loans less than $250,000 in low-income areas.

First Draw Loan Increase

The SBA provided guidance specific to First Draw PPP Loan Increases, in limited circumstances, and will not be accepting these applications until January 25. If you feel you may be eligible, please review the SBA Procedural Notice, which you may access here.

Frequently Asked Questions

Can I apply again if I have already received a PPP loan?
Yes. If you already have a PPP loan, you may still apply for a second PPP loan, also known as a Second Draw loan.

Can I apply again if I have not already received forgiveness on my exisiting PPP loan?
Yes. In fact, due to the limited PPP funds, we recommend not waiting until you receive forgiveness on your first PPP loan.

How long will it take to get the loan proceeds?
Once the SBA and Treasury release the details and guidance, SouthState can approve your loan and disperse funds as fast as possible into your account or send them via electronic (ACH) payment.

How does loan forgiveness work?
Up to 100% of the principal amount of the loan may be forgiven if your business uses the proceeds on qualifying expenses. The forgiveness program is designed to support employment – if your firm does not maintain certain levels of employees or compensation, then part of the loan will not be forgiven. Please see our Forgiveness page for more information.

Can my business also apply for a SBA 7(a) loan for longer-term capital?
Yes. Applying for both PPP and a 7(a) loan is permitted. You can find more information on our SBA 7(a) Program on our SBA page.

If a loan is not forgiven, how much is my monthly payment?
After the deferral period, any balance that is not forgiven (including any accrued interest on the unforgiven portion) will become a term loan. Monthly payments will be due up to the maturity date, which is 5 years from the disbursement date of your loan. Please keep in mind that payments are not due until after the deferment period ends. Interest continues to accure during the deferment period.

I already have a loan with the Bank – can PPP proceeds be used to pay that loan?
Yes. Customers can use PPP proceeds to keep their SouthState interest current. However, keep in mind any amount applied to non-mortgage debt or principal payments will not qualify for PPP loan forgiveness.

How do I calculate my loan amount?
The SBA provides requirements for how to calculate your maximum loan amount for both First Draw Loans and Second Draw Loans. In general,
For First Draw Loans (customers who have not previously received a PPP loan):

Borrowers can request a loan amount of up to 2.5 times their average monthly payroll costs.
Seasonal employers can borrow average monthly payroll costs for a 12-week period between February 15, 2019 and February 15, 2020.
The maximum loan amount is $10 million, or $20 million in the aggregate for a single corporate group (as defined by SBA PPP requirements).

For Second Draw Loans (customers applying for a second PPP loan):

Borrowers can request a loan amount of up to 2.5x their average monthly payroll costs (or 3.5x the monthly payroll costs for borrowers with a NAICS code beginning with 72 (restaurants and accommodations)).
Seasonal employers can borrow average monthly payroll costs for a 12-week period between February 15, 2019 and February 15, 2020.
The maximum loan amount is $2 million, or $4 million in the aggregate for a single corporate group (as defined by SBA PPP requirements).

For more information about how to calculate your maximum loan amount, please view the SBA guidance documents available on the SBA PPP website found here.

Important Legal Disclosures and Information

The information provided does not and is not intended to, constitute legal advice. All information is for informational purposes only, is subject to change, and may not constitute the most up-to-date information. You should contact your legal advisor to obtain advice with respect to any particular legal matter, and you should not act or refrain from acting on the basis of information contained herein without first seeking advice from your attorney. All liability with respect to actions taken or not taken based on the information contained herein is expressly disclaimed.

COVID-19 Updates

Get Ready to Apply for the Next Round of PPP

SBA Paycheck Protection Program Loan Forgiveness Information