Paycheck Protection Program

Bank of Jackson Hole is no longer accepting applications for the Paycheck Protection Program.

Please reach out to sbappp@bojh.com with any questions. 

 

Second Draw Loan Eligibility

In order to qualify for a second draw loan, PPP recipients must meet the following criteria:

  • Have 300 or fewer employees;
  • Experienced a revenue reduction of 25% or greater in 2020 relative to 2019; and,
  • Have used or will use the full amount of their first PPP loan on eligible expenses.
Revenue Reduction Requirement

In order to meet the revenue reduction requirement, the borrower must compare the quarterly gross receipts for one quarter in 2020 with the gross receipts for the corresponding quarter in 2019. Alternately, a borrower who has experienced a revenue reduction of 25% or greater in 2020 compared to 2019 may compare annual gross receipts to substantiate its revenue reduction.

The SBA defines gross receipts as, “revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances.  Generally, receipts are considered “total income” (or in the case of a sole proprietorship, independent contractor, or self-employed individual “gross income”) plus “cost of goods sold,” and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms.  Gross receipts do not include the following: taxes collected for and remitted to a taxing authority if included in gross or total income (such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees); proceeds from transactions between a concern and its domestic or foreign affiliates; and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker.”

Borrowers should ensure forgiveness amounts received from the First Draw PPP is excluded from gross receipts.

Payroll Cost Calculation

The Second Draw Loan amount equals the lesser of 2.5 months of average monthly payroll or $2 million. Average monthly payroll can be calculated using the following timeframes:

  • 2019 calendar year;
  • 2020 calendar year; or
  • 1 year period before the date on which the loan is made (borrowers who are self-employed including sole proprietors and independent contractors are excluded from this option).

Borrowers assigned a NAICS code beginning with 72 may calculate the maximum loan amount using 3.5 months of average monthly payroll. The maximum loan amount is $2 million.

Documentation Requirements

For Payroll:
  • No additional payroll documentation is required If the 2019 calendar year figures were used for the First Draw Loan and the Second Draw Loan, and both loans are originated by the same lender. Upon review, the bank may request additional documentation.
  • If using any other payroll timeframe, the following documentation is requested, as applicable:
    • Form 941s and state quarterly wage unemployment insurance tax reporting forms for each quarter in payroll calculation timeframe; or,
    • Equivalent payroll processor records; and
    • Evidence of any retirement and health insurance contributions.
    • A payroll statement or similar documentation from the pay period that covered February 15, 2020 to show you were in operation on February 15, 2020.
  • The following business types should submit the following:
    • Self-employed, sole-proprietors and independent contractors – 2019 or 2020 IRS Form 1040 Schedule C
    • Partnerships – 2019 or 2020 IRS Form 1065 (including K-1s)
    • Farmers and Ranchers – 2019 or 2020 IRS Form 1040 Schedule F
For Revenue Reduction:
  • For loans with a principal amount greater than $150,000, documentation to substantiate the revenue reduction may include:
    • Relevant tax forms, including annual tax forms; or
    • Quarterly financial statements; or
    • Bank statements
  • For loans with a principal amount less than $150,000, the documentation list above may be submitted at the time of application or when the borrower applies for loan forgiveness.

 

Maximum Payroll Calculation by Business Type

* Maximum loan amount is the lesser of the payroll calculation described below or $2 million.

*Accommodation and food services operations (those with NAICS codes starting with 72) can use 3.5 as the multiplier.

*When calculating payroll use the same tax year for all items.

Step 1: Find your 2019/2020 IRS Form 1040 Schedule C line 7 gross profit amount (if you have not yet filed a 2019/2020 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less, you are not eligible for a PPP loan.
Step 2: Calculate the average monthly net profit amount (divide the amount from
Step 1 by 12).
Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5.

Your 2019 or 2020 IRS Form 1040 Schedule C must be provided to substantiate the applied-for PPP loan amount. You must also provide a 2019 IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record establishing you were self-employed in 2019 and a 2020 invoice, bank statement, or book of record establishing you were in operation on February 15, 2020.

Step 1: Compute your 2019/2020 payroll costs by adding the following:

  • 2019/2020 IRS Form 1040 Schedule C line 7 gross profit amount (if you have not yet filed a 2019/2020 return, fill it out and compute the value); if this amount is over $100,000, reduce it to $100,000; and if this amount is less than zero, set this amount at zero;
  • 2019/2020 gross wages and tips paid to your employees whose principal place of residence is in the United States, which can be computed using 2019/2020 IRS Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each
    quarter plus any pre-tax employee contributions for health insurance or other
    fringe benefits excluded from Taxable Medicare wages & tips, subtracting any
    amount paid to any individual employee in excess of $100,000 and any
    amounts paid to any employee whose principal place of residence is outside
    the U.S;
  • 2019/2020 employer contributions for employee health insurance (portion of IRS Form 1040 Schedule C line 14 attributable to health insurance);
  • 2019/2020 employer contributions to employee retirement plans (IRS Form 1040 Schedule C line 19); and
  • 2019/2020 employer state and local taxes assessed on employee compensation,
    primarily state unemployment insurance tax (from state quarterly wage
    reporting forms).

Step 2: Calculate the average monthly payroll costs amount (divide the amount from
Step 1 by 12).
Step 3: Multiply the average monthly payroll costs amount from Step 2 by 2.5.

Your 2019 or 2020 IRS Form 1040 Schedule C, IRS Form 941 and state quarterly wage unemployment insurance tax reporting form from each quarter (or equivalent payroll processor records or IRS Wage and Tax Statements), along with documentation of any retirement or health insurance contributions, must be provided to substantiate the applied for PPP loan amount. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation and had employees on that date.

Step 1: Compute 2019/2020 payroll (using the same year for all items) by adding:

  • Net earnings from self-employment of individual general partners in 2019 or 2020, as reported on IRS Form 1065 K-1, reduced by section 179 expense deduction claimed, unreimbursed partnership expenses claimed, and depletion claimed on oil and gas properties, multiplied by 0.9235,57 that is not more than $100,000 per partner;
  • 2019 or 2020 gross wages and tips paid to your employees whose principal place of residence is in the United States, if any, which can be computed using 2019 or 2020 IRS Form 941 Taxable Medicare wages and tips (line 5c-column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages and tips, subtracting any amounts paid to any individual employee in excess of $100,000 and any amounts paid to any employee whose principal place of residence is outside the U.S;
  • 2019 or 2020 employer contributions for employee group health, life, disability, vision and dental insurance, if any (portion of IRS Form 1065 line 19 attributable to those contributions);
  • 2019 or 2020 employer contributions to employee retirement plans, if any (IRS Form 1065 line 18); and
  • 2019 or 2020 employer state and local taxes assessed on employee compensation, primarily state unemployment insurance tax (from state quarterly wage reporting forms), if any.

Step 2: Calculate the average monthly payroll costs (divide the amount from Step 1 by 12).
Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.

You must supply 2019 or 2020 IRS Form 1065 (including K-1s) and other relevant supporting documentation if the partnership has employees, including the 2019 or 2020 IRS Form 941 and state quarterly wage unemployment insurance tax reporting form from each quarter (or equivalent payroll processor records or IRS Wage and Tax Statements) along with records of any retirement or health insurance contributions. If the partnership has employees, a payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish the partnership was in operation and had employees on that date. If the partnership has no employees, an invoice, bank statement, or book of record establishing the partnership was in operation on February 15, 2020 must instead be provided

Step 1: Compute 2019 payroll costs by adding the following:

  • 2019/2020 gross wages and tips paid to your employees whose principal place of residence is in the United States, which can be computed using 2019 IRS
    Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each
    quarter plus any pre-tax employee contributions for health insurance or other
    fringe benefits excluded from Taxable Medicare wages & tips, subtracting any
    amounts paid to any individual employee in excess of $100,000 and any
    amounts paid to any employee whose principal place of residence is outside
    the U.S;
  • 2019/2020 employer health insurance contributions (portion of IRS Form 1120 line 24 or IRS Form 1120-S line 18 attributable to health insurance);
  • 2019/2020 employer retirement contributions (IRS Form 1120 line 23 or IRS Form 1120-S line 17); and
  • 2019 employer state and local taxes assessed on employee compensation,
    primarily state unemployment insurance tax (from state quarterly wage
    reporting forms).

Step 2: Calculate the average monthly payroll costs (divide the amount from Step 1
by 12).
Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.

The corporation’s 2019/2020 IRS Form 941 and state quarterly wage unemployment insurance tax reporting form from each quarter (or equivalent payroll processor records or IRS Wage and Tax Statements), along with the filed business tax return (IRS Form 1120 or IRS 1120-S) or other documentation of any retirement and health insurance contributions, must be provided to substantiate the applied-for PPP loan amount. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation and had employees on that date.

Step 1: Compute 2019/2020 payroll costs by adding the following:

  • 2019/2020 gross wages and tips paid to your employees whose principal place of residence is in the United States, which can be computed using 2019/2020 IRS Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each
    quarter plus any pre-tax employee contributions for health insurance or other
    fringe benefits excluded from Taxable Medicare wages & tips, subtracting any
    amounts paid to any individual employee in excess of $100,000 and any
    amounts paid to any employee whose principal place of residence is outside
    the U.S;
  • 2019/2020 employer health insurance contributions;
  • 2019/2020 employer retirement contributions and
  • 2019/2020 employer state and local taxes assessed on employee compensation,
    primarily state unemployment insurance tax (from state quarterly wage
    reporting forms).

Step 2: Calculate the average monthly payroll costs (divide the amount from Step 1
by 12).
Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.

The entity’s 2019/2020 IRS Form 941 and state quarterly wage unemployment insurance tax reporting form from each quarter (or equivalent payroll processor records or IRS Wage and Tax Statements), along with documentation of any retirement and health insurance contributions, must be provided to substantiate the applied-for PPP loan amount. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation and had employees on that date.

LLCs should follow the instructions that apply to their tax filing situation, for
example, whether they file as a sole proprietor, a partnership, or a corporation.

Step 1: Find your 2019/2020 IRS Form 1040 Schedule F line 9 gross income (if you are using 2020 and you have not yet filed a 2020 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less, you are not eligible for a PPP loan.
Step 2: Divide the amount from Step 1 by 12.
Step 3: Multiply the average monthly gross income amount from Step 2 by 2.5.

You must provide the 2019/2020 Form 1040 Schedule F with your PPP loan application to substantiate the applied-for PPP loan amount and a 2019/2020 IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record that establishes you are self-employed. You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020.

Step 1: Compute 2019/2020 payroll by adding the following:

  • The difference between your 2019 or 2020 Form 1040 Schedule F line 9 gross income amount (if you are using 2020 and you have not yet filed a 2020 return, fill it out and compute the value), and the sum of Schedule F lines 15, 22, 23, and 37, up to $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred, if this amount is over $100,000, reduce it to $100,000, if this amount is less than zero, set this amount at zero.
  • 2019/2020 gross wages and tips paid to your employees whose principal place of residence is in the United States computed using 2019/2020 IRS Form 941 Taxable Medicare wages & tips (line 5c- column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips; subtract any amounts paid to any individual employee in excess of $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred and any amounts paid to any employee whose principal place of residence is outside the United States; and
  • 2019/2020 employer contributions for employee group health, life, disability, vision and dental insurance (portion of IRS Form 1040 Schedule F line 15 attributable to those contributions), employer contributions for employee retirement contributions (Form 1040 Schedule F line 15), and state and local taxes assessed on employers for employee compensation (primarily under state laws commonly referred to as the State Unemployment Tax Act or SUTA from state quarterly wage reporting forms).

Step 2: Calculate the average monthly amount (divide the amount from Step 1 by 12).
Step 3: Multiply the average monthly amount from Step 2 by 2.5.

You must supply your 2019/ 2020 Form 1040 Schedule F, Form 941 (or other tax forms or equivalent payroll processor records containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019/2020  or equivalent payroll processor records, along with evidence of any retirement and health insurance contributions, if applicable. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation on February 15, 2020.

A borrower is a seasonal employer if it does not operate for more than 7 months in any calendar year or, during the preceding calendar year, it had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts for the other 6 months of that year.

A seasonal employer must determine its maximum loan amount for purposes of the PPP by using the employer’s average total monthly payments for payroll for any 12-week period selected by the seasonal employer beginning February 15, 2019, and ending February 15, 2020.

Eligible Expenses

For initial and second draw PPP loans, the costs eligible for loan forgiveness include payroll, rent, mortgage interest, utilities as well as the following non-payroll expenses:

  • Covered operations expenditures, including payment for any software, cloud computing, and other human resources and accounting needs
  • Covered supplier costs related to contracts, purchase orders or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made
  • Covered worker protection costs such as personal protective equipment and adaptive investments that help businesses comply with federal and local health and safety guidelines
  • Covered property damage costs, related to public disturbances that occurred during 2020 that are not covered by insurance

The requirement to spend at least 60% of PPP loan proceeds on payroll expenses remains in place.

The information herein is for informational purposes only and is subject to change as further SBA guidance is released. Borrowers should contact their tax or legal advisors with specific questions about their eligibility for PPP.

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