First Draw Paycheck Protection Program Loan Increases and Reapplications : CLA (ClfitonLarsonAllen)

Key insights

This notice applies to:

Partnerships that improperly excluded partner compensation from loan application,
Seasonal employers that have new guidance on average monthly payroll calculation,
Farmers and ranchers that wish to utilize the new methodology on maximum loan amounts,
Borrowers that returned all funds,
Borrowers that returned a portion of funds, or
Borrowers that accepted less than the amount they were approved for.

Do you qualify to increase your PPP loan size?

The SBA procedural notice effective January 13, 2021 provides guidance and procedures for reapplications or requests for increases for first draw Paycheck Protection Program (PPP) loans approved on or before August 8, 2020.

Key considerations

First draw PPP loans previously could not be increased unless the loan was made to a partnership or seasonal employer and approved by the lender before including the loan in required reporting to the SBA. These requirements are no longer in play.
Reapplications and requests for increases must be made to the lender of record, defined as the current owner of the first draw PPP loan.
First draw PPP loans that the SBA has partially or fully forgiven are not eligible. However, if this is your situation, you may be eligible for a second draw PPP loan.

First draw PPP loans: can you reapply or request an increase?

The requirements below highlight the circumstances that could allow certain classes of eligible borrowers to reapply or request an increase to a first draw PPP loan.

Partnerships

The first draw PPP loan did not include any amount for partner compensation

Seasonal employers

The application of the new methodology to select any 12 week period between February 15, 2019 and February 15, 2020 for determining the maximum loan amount is higher than the original methodology

Farmers and ranchers

The application of the revised formula for the maximum loan amount is higher than the original methodology

For all requests made by the eligible borrowers listed above:

The amount of the increase may not exceed the maximum loan amount the borrower is entitled to under PPP rules and the overall maximum of $10 million for an individual borrower or $20 million for a corporate group.
The borrower must provide required documentation to support the calculated increase to the lender of record on or before March 31, 2021.
All requests are subject to the availability of funds.

Other eligible PPP borrowers

If you are an eligible borrower that falls into one of the categories below, you may be able to reapply or request an increase to a first draw PPP loan.

Eligible borrowers that fully repaid a first draw PPP loan prior to December 27, 2020

Consult with your lender to verify eligibility to reapply for a new first draw PPP loan.

Reapplications are subject to availability of funds.
This is only applicable for first draw loans that were cancelled or paid in full.

Eligible borrowers that returned part of a first draw PPP loan prior to December 27, 2020

Consult with your lender to verify eligibility to request an increase.

Funds disbursed will equal the difference between the amount retained by the borrower and the amount previously approved.
Re-disbursements are subject to availability of funds.

Eligible borrowers that did not accept the full amount of an approved first draw PPP loan prior to December 27, 2020