Virginia National Bankshares : PPP Round 3 Information

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January 12, 2021

PPP Round 3 Information

Updated January 12th, 2021

Virginia National Bank will be accepting applications for the new round of PPP funding (referred to as 'Round 3').

The online portal will be open on our site beginning at 1pm on Wednesday, January 13th.

PLEASE NOTE THAT THE SBA IS NOT ACCEPTING SUBMISSIONS FROM MOST LENDERS UNTIL NEXT WEEK AT THE EARLIEST. VNB will submit any applications received as soon as we are permitted to do so.

*Please note: VNB will be processing PPP Round 3 applications onlyfor current customers, as defined by those who:

• Have an active deposit account as of 12/31/2020, and/or

• Have an active non-PPP-related loan with VNB.

We will update this site with the link to the online application portal along with instructions for our customers once the portal is open. PLEASE DO NOT SEND PAPER APPLICATIONS.

***If you are a VNB customer (as defined above) and did not apply for a PPP loan in the first two rounds, but would like to apply for Round 3, please contact us as soon as possible at the following email address: [e-mail]

In the interim, we have provided some general information about the program so that our customers may be better prepared prior to applying:

*All of the following information is based on the best available data at the time of publishing. All information included herein is subject to further SBA guidelines, clarification, and related changes. We recommend reviewing the Interim Final Rules (IFRs) recently published by the US Department of the Treasury (links provided below for your convenience):

IFR 1 - Amendments to the PPP program
IFR 2 - Second Draw Loans

Summary of what we know so far:

First and Second Draw PPP Loans

• If you have not previously taken a PPP loan:
  You will be able to apply for a PPP loan using PPP loan criteria and terms from previous funding rounds (e.g. up to 500 employees, loans amounts up to $10 million).
  
• If you have received a PPP loan in Round 1 or Round 2 and are applying for a second PPP loan:
  'Second draw' PPP loans, as they are known, have new eligibility requirements intended to assist smaller businesses that were hard hit by COVID restrictions. Generally, the requirements are as follows:
  • Business has 300 employees or fewer
  • Business experienced at least a 25% reduction in gross revenue in any quarter in 2020 compared to that same quarter in 2019, or at least a 25% reduction in annual gross revenue in 2020 compared to annual revenue in 2019.
  • Loan amounts are equal to 2.5 times monthly payroll up to $2 million. Certain industries, such as hotels and restaurants (or all NAICS codes starting with 72), can request loan amounts equal to 3.5 times monthly payroll up to $2 million.

Documents and materials needed to apply:

• Application for loans less than or equal to $150,000:
  • No documentation is required at the time of application, but the borrower must make attestations relating to the requested amount and the revenue reduction
  • The borrower will be required to provide payroll documentation (similar to rounds 1 and 2 of PPP) at or before the time of forgiveness, as well as
    • Documents substantiating a reduction in gross revenues of greater than 25% in either:
      • Any quarter of 2020 relative to that same quarter in 2019
      • Total 2020 revenue relative to 2019 revenue
    • The document must be a statement of revenue and expenses that the borrower uses to keep a record of such data. The following would be acceptable:
      • Tax documents (filed or to-be-filed)
      • Statement generated from accounting software such as QuickBooks
      • Other internally-prepared document generated in MS Excel or other spreadsheet software
        
• Application for loans greater than $150,000:
  • Payroll documentation and proof of taxes paid (or filed)
    • Quarterly 941 forms are best
    • Borrower may opt to use 2019 data or 2020 data
  • Documents substantiating a reduction in gross revenues of greater than 25% (see details above for applications less than $150,000, as this requirement is the same)

*IMPORTANT NOTE: If you applied for PPP loan in 2020 with VNB, and we already have these documents (i.e., if you wish to use 2019 data and have already provided those documents to VNB for Round 1 or 2 of PPP), you do not need to re-submit these documents. However, all borrowers will be required to submit evidence of the revenue reduction as noted above.

Although borrowers may not yet submit an application, we recommend collecting your documentation ahead of time in order to expedite the process.

Eligible expenditures of PPP loan funds

Eligible expenses continue to be 60% payroll costs and 40% non-payroll costs. However, eligible non-payroll expenses have been expanded to now include certain business software or cloud computing services, certain uninsured property damage costs from public disturbances during 2020, certain supplier costs, and certain worker protection expenditures (please see page 49 of IFR 1 linked above).

Clarification of PPP tax treatment

The law includes clarification regarding taxes and eligible expenses and forgiveness. We recommend that you contact your tax adviser or accountant for more details.

Update to Economic Injury Disaster Loan (EIDL) Advance Reduction

According to prior legislation, the forgiveness amount of a PPP loan was required to be reduced by the amount of any EIDL advance received (for those borrowers that received funding from both sources). The current legislation signed on December 27th has repealed this reduction.

If you have already completed forgiveness of your PPP loan, the law states you must be retroactively made whole. If you are a Virginia National Bank PPP customer in this situation, we will be in contact with you once we know more.

Updates to Forgiveness of Existing PPP Loans:

• PPP loan amounts of $150,000 or less:
  The new law calls for a streamlined loan forgiveness application that is limited to a one-page certification form that does not require documentation be submitted with your application. We will notify customers once this form is available.
• PPP loan amounts of more than $150,000:
  There are no significant forgiveness changes included in the new law, except for the inclusion of additional non-payroll costs for which PPP funds may be used.

What we expect to know soon:

How long will the funds last?

We are unable to predict how quickly the funds may be exhausted. However, we do expect demand to be high. We know that, per the law, the PPP program will end on March 31st, 2021 and all loan applications must be approved by the SBA on this date, if funds remain.

How quickly will my loan be funded after I apply?

We expect the SBA to include loan approval and loan funding timing and guidelines in the coming days. We have been led to believe that the applications will be approved in 1-3 days (if eligible), and funding should occur a few days later, but at this point the exact timeline remains to be seen.

We understand that PPP loans are a vital lifeline to businesses during the pandemic. We are committed to keeping you informed, and we will update this page regularly.