Paycheck Protection Program Updates

  

The Small Business Administration (SBA) has announced that the Paycheck Protection Program (PPP) will open to all lenders, including Cape Cod 5, for application processing on Tuesday, January 19.

On Tuesday, January 19, Cape Cod 5 will begin accepting Paycheck Protection Program (PPP) First and Second Draw loan applications through our Loan Portal.

The PPP is a federal relief program created to assist small and medium-sized businesses affected by the Covid-19 pandemic, and all participating lenders, including Cape Cod 5, must follow program regulations as set by the SBA and U.S. Treasury.

Preparing to Apply

To prepare to digitally submit your application, please review the appropriate application. When the Cape Cod 5 Loan Portal opens, you will need to enter the information found on the application form in the Cape Cod 5 loan portal:

PPP Second Draw Borrower Application Form (SBA Form 2483-SD)
PPP First Draw Borrower Application Form (SBA Form 2483)
On Tuesday, January 19, information on logging into the portal and the link to the log-in page will be added to this page. 
Required Documentation
  • Identification information for authorized signers and, for business entities, proof from the Secretary of State’s website that your business is in good standing
  • 2020 and 2019 payroll tax reports (Forms 941 and 940)
  • Payroll reports and other documentation of health insurance and retirement plan costs paid by the business
  • For sole-proprietors, 2019 or 2020 Form 1040 Schedule C
  • For Second Draw Loans only: Back-up documentation to show at least a 25% reduction in gross receipts between comparable quarters (loans under $150,000 can submit a certification and provide documentation at time of forgiveness)
Second Draw PPP Loan Eligibility Requirements & Information
Eligibility: A borrower is generally eligible for a Second Draw PPP Loan if the borrower: 
  • Previously received a First Draw PPP Loan and has used the full amount only for authorized use
  • Certifies that the current economic uncertainty makes the loan request necessary to support ongoing operations and that the First Draw PPP Loan was used only for eligible expenses – please note you do not have to apply for First Draw Loan forgiveness to make this certification
  • Has no more than 300 employees – please note that number of employees is lower than that for First Draw and,
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020
Loan Amount and Terms: Borrowers are generally eligible to request a loan amount of 2.5x average monthly 2019 or 2020 payroll costs. Borrowers in the accommodation and food service section (NAICS codes beginning with 72), are eligible for 3.5 times average monthly 2019 or 2020 payroll costs. The maximum amount for Second Draw PPP loans is $2 million. PPP loans have an interest rate of 1% and a maturity of 5 years. Loan payments are deferred for 10 months after the end of the borrower’s covered 24 week period.
Forgiveness: PPP Second Draw loans are eligible for forgiveness, from the SBA, under the terms and conditions as First Draw PPP Loans. Authorized uses of loan proceeds during the covered period (which can be up to 24 weeks) include payroll costs (at least 60% of the loan amount), and certain other expenses (up to 40% of the loan amount).
First Draw PPP Loan Eligibility Requirements & Information
Eligibility: A borrower is generally eligible for a First Draw PPP Loan if the borrower:
  • Is an eligible borrower type which includes: business entities, sole proprietors, independent contractors, and self-employed individuals, 501(c)3s, 501(c)9s, tribal business, 501(c)6s, housing cooperatives, destination marketing organization, and news organizations – please note expanded eligible organization types
  • Has no more than 500 employees or meets SBA’s alternative size standard; and,
  • Certifies that the current economic uncertainty makes the loan request necessary to support ongoing operations
Loan Amount and Terms: Borrowers are generally eligible to request a loan amount of 2.5x average monthly 2019 or 2020 payroll costs. The maximum amount for First Draw PPP loans is $10 million. PPP loans have an interest rate of 1% and a maturity of 5 years. Loan payments are deferred for 10 months after the end of the borrower’s covered 24 week period.
Forgiveness: PPP First Draw loans are eligible for forgiveness from the SBA, providing the loan funds are used for authorized uses and employee and compensation levels are maintained within program rules. Authorized uses of loan proceeds during the covered period (which can be up to 24 weeks) include payroll costs (at least 60% of the loan amount), and certain other expenses (up to 40% of the loan amount).

Additional Details

Here are answers to some frequently asked questions about the Paycheck Protection Program:

If I didn’t receive a PPP loan in 2020, can I still apply?
Yes, you may apply for a PPP First Draw Loan under the Covid-19 Relief Act. In general, to be eligible for a First Draw PPP Loan you must be a qualified business or non-profit type in operation on February 15, 2020. Seasonal businesses will be considered if the business was in operation for any 12-week period between February 15, 2019 and February 15, 2020. First Draw SBA loans do not have the revenue reduction requirement.   
Additional business types now permitted to apply for PPP loans including non-profit and tax-exempt news organizations, housing cooperatives, destination marketing organizations and certain 501(c)(6) organizations. Additionally, borrowers who applied in 2020 and returned funds, may reapply to the program.
Source: SBA Interim Final Rule: Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act, January 6, 2021. 
For more information and updates, visit SBA.gov/PPP or Treasury.gov/CARES   
What loan amount am I eligible for?
In general, borrowers will be able to borrow up to 2.5 times their average monthly payroll costs.
Businesses in the accommodations and food service sector (NAICS costs beginning with 72) are eligible to borrow up to 3.5 times their average monthly payroll costs. Eligible employee compensation may not exceed an annual annualized salary of $100,000.   
The maximum loan amount for a First Draw PPP Loan is $10 million. The maximum loan amount for a Second Draw PPP Loan is $2 million.   
Source: SBA Interim Final Rule: Business Loan Program Temporary Changes; Paycheck Protection Second Draw Loans and Paycheck Protection program as Amended by Economic Aid Act, January 6, 2021. 
Will Second Draw PPP Loans be eligible for Forgiveness?
Second Draw PPP Loans are eligible for loan forgiveness under the same terms and conditions as First Draw PPP Loans (borrowers of loans of $150,000 or less are required to provide documentation of revenue reduction if such documentation was not provided at the time of loan application)   
Source: SBA Interim Final Rule: Business Loan Program Temporary Changes; Paycheck Protection Second Draw Loans and Paycheck Protection program as Amended by Economic Aid Act, January 6, 2021. 
When can I apply for a First or Second Draw PPP Loan?
Cape Cod 5 (and other PPP lenders) are awaiting final guidance from the SBA. Once this information is available, we will provide an update on when the SBA will open their loan portal and Cape Cod 5 will begin accepting applications from Cape Cod 5 customers. The SBA has stated that March 31, 2021 will be the last day to apply for and receive a PPP loan.
If you are a Cape Cod 5 customer and would like to receive updates on the PPP program please complete the form above to be added to our email list.
What expenses can a PPP loan be used for
Eligible expenses include:  
Payroll costs: Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wages, commissions, income, or net earnings from self-employment, or similar compensation. Include only payroll costs for employees whose principal place of residence is in the United States and for each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000. 
Non-payroll costs (may total up to 40% of the loan amount): These include (a) covered mortgage obligations: payments of mortgage interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020; (b) covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 and (c) covered utility payments: business payments for a service for the distribution of electricity, gas, water, telephone, transportation, or internet access for which service began before February 15, 2020. Recent changes to the PPP program include expenses related to software to support operations and personal protective equipment for employees.   
I have already received a PPP loan from Cape Cod 5. How do I apply for forgiveness?
Please visit www.capecodfive.com/ppp-forgiveness for additional information and to log into the Forgiveness portal. For borrowers with loans under $150,000, the Covid-19 Relief Act includes provisions to simplify the forgiveness process, and you may wish to hold off on applying until these changes are implemented.
Are Economic Injury Disaster Loan (EIDL) advances/grants still being deducted from forgiveness amounts?
Economic Injury Disaster Loan (EIDL) advances/grants no longer deducted from forgiveness amount. If you have previously applied for forgiveness and had the amount of your EIDL advance deducted from the SBA’s payment, the new legislation allows you to qualify for the full amount of forgiveness. For those who have already applied for and received forgiveness, if you had the amount of the EIDL advance held back and paid off the remaining balance or intended to make payments, the SBA will be making you whole. We will provide more information when the SBA makes it available.
Where can I find additional information?
Please visit sba.gov and treasury.gov for more information on the program.  
At this time, our Banking Centers and Customer Service Center will have no additional information on the new PPP legislation as we wait for guidance from the SBA.  
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Protect your business

Please be aware that fraudsters have been targeting businesses, claiming to be offering SBA and PPP grants and loans. Requirements of payments upfront for assistance in applying or getting approval for a PPP loan should be considered fraudulent. Cape Cod 5 does not charge the borrower a fee for applying for a PPP loan or applying for forgiveness. We encourage you to use extreme caution when sharing information and clicking on links or attachments in emails – especially if you do not recognize the sender. Please visit the Cape Cod 5 Security Center for additional tools and tips to protect yourself and your business.

Cape Cod 5 Security Center

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As a reminder, the Paycheck Protection Program (PPP) is a federal relief program administered by the U.S. Treasury and SBA. Please note that future information released by these agencies must be followed by all participating Banks, including Cape Cod 5, and may impact the guidelines and eligibility for the program. Please visit sba.gov and treasury.gov for more information. Current PPP borrowers should consult with their tax advisor for any tax implications of these new rules. 

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