The communication below was sent to North State Bank PPP loan customers on Friday, January 15, to the email address associated with your PPP loan application.
North State Bank will begin accepting applications for Phase Two Payroll Protection Program (PPP) loans on Tuesday, January 19. Applications will be accepted through our online portal. We will accept applications for both First Draw and Second Draw loans, as defined by the SBA.
If you have questions about a PPP loan, email us at:
January 12, 2021 Update
An overview of this information and a link to this page was sent to North State Bank PPP loan customers on Tuesday, January 12, to the email address associated with their PPP loan applications.
The Payment Protection Program (PPP) is re-opening this week for both new (First Draw PPP Loans) and certain existing borrowers (Second Draw PPP Loans). The reopening is referred to as Phase Two.
Initially, in an effort to assure underserved and disadvantaged communities are assisted during this process, financial institutions designated as Community Development Financial Institutions and Minority Depository Institutions are the only ones able to process applications. It is anticipated that all other banks, including North State Bank, will be authorized in the near future. When North State Bank is authorized to submit applications, we will post the information to our website and send an email to all current PPP customers.
How the PPP programs will be structured going forward:
- Customers who did not receive a loan under the original (Phase One) PPP are eligible to apply as First Draw PPP Loan borrowers in Phase Two. The rules are similar to Phase One, with the addition of 501(c)6 borrowers and the added deductibility of costs related to worker protection costs, uninsured property damage, looting or vandalism, as well as certain supplier costs.
- Customers who did not receive the full amount of the eligibility of their Phase One PPP Loan may be able to obtain additional funds up to the original eligibility. This is meant primarily for those who did not get full eligibility due to changes in the calculations as the program changed.
- PPP borrowers who received an EIDL Advance will no longer be required to deduct this Advance from PPP Forgiveness. These borrowers will receive the full amount of forgiveness they have been approved for in their application. Those who had the EIDL Advance deducted from their Forgiveness will receive a reconcilement payment from North State Bank once it is released by the SBA.
- The limit on the Simplified Forgiveness Application increased from $50,000 to $150,000. If you already have completed and submitted the Forgiveness Application for a loan amount greater than $50,000 but less than $150,000, it will fall under the previous rules for verification and documentation requirements. We cannot withdraw and resubmit under the new limit.
Second Draw PPP Loans
- To be eligible as a Second Draw PPP Loan borrower, you will have received a Phase One PPP Loan and:
- Have or will use the full amount only for authorized uses.
- Have started the Forgiveness process.
- Have no more than 300 employees.
- Can prove at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020, or for the calendar year. This is a new eligibility requirement, but the loan amount will be based on 2.5 times monthly payroll costs, similar to Phase One PPP.
- Borrowers who apply for a Second Draw loan and fall into the NAICS code starting with 72 (Hospitality and Food Service), may now be eligible for up to 3.5 times of monthly payroll.
- Since the calculation of payroll costs is the same as in Phase One, the loan amount should be the same and we may not need to gather as much information.
- The maximum loan amount for Second Draw Loans is $2,000,000 per borrower with a combined limit of $10,000,000 for First and Second Draw Loans.
- The Forgiveness period will cover up to 24 weeks of eligible costs, i.e., Payroll (including health insurance, retirement, etc.), Interest on Real Estate, Mortgage or Rent, and Utilities. Also included are costs related to worker protection costs, uninsured property damage, looting or vandalism, and certain supplier costs.
- PPP Loan Amounts will not be taxed as income and, for tax purposes, borrowers can deduct the associated, reimbursed expenses forgiven.
- Both PPP Programs (First Draw and Second Draw) are set to expire on March 31, 2021.
The new PPP applications and summary instructions are provided below:
December 23, 2020 Update
The communication below was sent to North State Bank PPP loan customers on Wednesday, December 23, to the email address associated with your PPP loan application.
A new Payment Protection Program (PPP) and stimulus package received Congressional Approval on Monday, December 21. Currently, President Trump is scheduled to sign the bill on Monday, December 28. As of this writing, it is unclear whether or not he will sign it and, if so, when, and whether or not there will be any changes to the PPP portion of the bill. As was true with the last stimulus release, we anticipate changes now or in the days ahead. There were more than 50 changes between the initial bill and the first 30 days of the initial PPP.
What follows is a summary of what we understand so far on the new PPP. The bill also covers information related to individual stimulus checks, Section 1112 Deferrals on SBA loans, as well as other items that are outside of this summary.
Changes to 1st Phase of PPP Loans and Forgiveness
- PPP borrowers who received an EIDL Advance will no longer be required to deduct this Advance from PPP Forgiveness. These borrowers will receive the full amount of forgiveness they have been approved for in their application.
- There is still no clarity on how funds will be refunded to those who already had the EIDL Advance deducted from their Forgiveness proceeds. We will update this information as it is received from the U.S. Small Business Administration (SBA) and the U.S. Treasury.
- Borrowers who already agreed to repay the remaining PPP amount resulting from the EIDL Advance will be contacted when a resolution is completed.
- The limit on the Simplified Forgiveness Application will increase from $50,000 to $150,000. If you already have completed and submitted the Forgiveness Application for a loan amount greater than $50,000 but less than $150,000, these will fall under the previous rules for verification and documentation requirements. We cannot withdraw and resubmit under the new limit.
Phase 2 of the PPP Loans
- To be eligible under Phase 2, borrowers must prove a 25% reduction in Gross Receipts in 2020 compared to the same period in 2019. This is a new eligibility requirement, but the loan amount will be based on 2.5 Months Payroll Costs, similar to Phase 1.
- Since this is the same as in Phase 1, the loan amount should be the same and we will not need to gather additional information. We have not seen the application for this yet, but it should be fairly similar to the previous application with the addition of the 25% reduction validation or verification and supporting consents.
- The maximum loan amount in Phase 2 is $2,000,000 per borrower with a combined limit of $10,000,000 for Phase 1 and Phase 2.
- The Application for new PPP Loans in Phase 2 will be simplified for all loans under $150,000.
- The Forgiveness period will cover up to 12 weeks of eligible costs, i.e., Payroll (including health insurance, retirement, etc.), Interest on Real Estate, Mortgage or Rent, and Utilities.
- Certain expenses related to damage resulting from political unrest in 2020 may be deductible as part of a Phase 2 PPP Loan Application. If someone already filed for Forgiveness under Phase 1 PPP, they will not be able to use this deduction as part of Phase 2. Details are still vague around this and we will release more information as it becomes available.
- The PPP Loan Amount will not be taxed as income and, for tax purposes, borrowers can deduct the associated, reimbursed expenses forgiven.
All of these items are subject to change as the SBA and U.S. Treasury shore up the rules and requirements. Be cautious in obtaining guidance from others during this process. Fraud has been a significant issue and some fraudsters are using this program to obtain your information or to get you to click on malicious links. We will be diligent in knowing enough about the information before we share it to minimize confusion.
If you have any questions about taxes or accounting, please reach out to your accounting or tax professional.
Caution Regarding Unsolicited Communication on Your PPP Loan
On December 1, 2020, the U.S. Small Business Administration (SBA) was required, by court order, to publicly release information concerning Payroll Protection Program (PPP) and COVID-19-related Economic Injury Disaster Loan (EIDL) borrowers. This information includes, but is not limited to: business names, addresses, and types; loan amounts; and the lender name associated with the loan. Following release of the information, the American Bankers Association (ABA) was made aware that third parties are using the information to contact borrowers. Unfortunately, they are not identifying themselves as third parties and may be attempting to falsely associate themselves with the lending institutions from which the borrowers obtained their loans. This means a third party could contact you and identify themselves, in some way, as being affiliated with North State Bank.
With that in mind:
- First, and perhaps most importantly, rest assured that North State Bank did not release any information about you or your PPP loan, or about any of our customers.
- If you receive unsolicited communication about your PPP loan—a call or other contact from someone you do not know—do not share information with them about your PPP loan or about your business.
- Feel free to contact your banker at North State Bank at any time concerning your PPP loan or to let us know about any unsolicited communication you receive, if you have concerns.
- Alternately, you can consult with your financial adviser, attorney, or accountant about your PPP loan and/or the forgiveness process.
- If there are others at your company who need to be aware of the potential for unsolicited communication, please share this information with them.
PPP Loan Forgiveness
The SBA’s PPP Loan Forgiveness application for North State Bank customers is available via our PPP online portal. Bankers are contacting customers individually to provide access to the application. Once access is enabled for your loan, you will receive an email with complete details to the address provided during the application process. If you have questions or if you are ready to apply before being contacted by your banker, email Cares@NorthStateBank.com.
As has been true regarding CARES ACT PPP loan origination, we anticipate changes and updates from the SBA that may impact your application. We encourage you to review the U.S. Treasury website for supporting documentation and to view the forgiveness application.
We will submit your completed applications as quickly and efficiently as possible.
Paycheck Protection Program
North State Bank is accepting and processing applications for the SBA’s Paycheck Protection Program (PPP) which is part of the 2020 CARES Act. The PPP is a federal loan program aimed at helping small businesses that have been severely impacted by COVID-19, with the primary purpose of helping companies retain their workforce and assist with other operational expenses.
Complete details about the PPP are available on the SBA’s website at this link.
To apply through North State Bank, applicants must be either:
- A business banking customer with an active North State Bank relationship.
- A business located in a community we serve that is interested in becoming a relationship banking customer.
Supporting Documentation for the Paycheck Protection Program
Once a North State Bank SBA Lender contacts you after the initial review of your application, the following documents are needed to further advance your submission.
2019 Quarterly 940, 941 or 944 Payroll Tax Reports
Payroll reports for a twelve-month period (corresponding to 941 reporting period), detailing the following information:
- Gross wages for each employee, including officer(s) if paid W-2 wages.
- Paid time off for each employee.
- Vacation pay for each employee.
- Family medical leave pay for each employee.
- State and local taxes assessed for each employee’s compensation.
Documentation showing the total amount paid by the company for health insurance premiums, including:
- Owner(s) under a group health plan.
- All employees and company owners.
Documentation showing the sum of all retirement plan funding that was paid by company owner(s), including:
- All employees and the company owners.
- 401K plans, Simple IRA, SEP IRA’s.
Employee retirement plan funding should not be included.