Financial Guidance for Small Businesses
Northwest Federal is here to assist our small business members access federal resources and navigate through your emergency preparedness plans as described in the CDC’s Guidance for Businesses and Employers. Through the Corona Aid, Relief and Economic Security (CARES) Act, the Small Business Administration (SBA) has been providing additional financial assistance for your business.
Paycheck Protection Program (PPP) Second Draw Program
As part of the federal stimulus package approved in December 2020, the Paycheck Protection Program (PPP) has once again been made available. This SBA funded loan is available to both first-time qualified borrowers as well as businesses that previously received a PPP loan.
Small businesses* may apply for a "Second Draw" loan, provided they have 300 or fewer employees and can demonstrate they experienced a 25% decline in gross receipts for any quarter in 2020 as compared to the same quarter in 2019. The maximum loan amount is $2 million; actual loan amounts will be based on applicant's payroll.
The calculation for loan forgiveness under the second draw program is similar to the original PPP:
- Funds can be used for a period of 8 to 24 weeks.
- 60% of funds needs to be used for payroll. The remaining portion can be used for: rent on business building, mortgage interest on business building, business utilities, operation expenditures, supplier costs, unreimbursed property damage costs due to vandalism, and worker protection expenditures such as PPE.
- 1% APR** interest and payment deferral until loan forgiveness is determined.
- Any portions not forgiven will be payable within 24-60 months.
Before beginning the application, please have the following information available:
- SBA loan number, if you received a previous PPP Loan
- PPP loan amount, if you received a previous PPP Loan
- Northwest Federal member account number (provided you are already a member)
- Northwest Federal account number where funds would be deposited
- If you're not currently a Northwest Federal member, funds will be deposited once you become a member. Learn more about establishing a business account with us and open your Northwest Federal business checking account.
- First Draw requests are only for those businesses that did not previously receive a PPP Loan.
- Second Draw requests are for those businesses that previously received a PPP Loan.
Questions may be sent to: CaresActRelief@nwfcu.org.
Important Updates as of March 3, 2021
The SBA determined in a recent update that as long as you, the Borrower, submit the PPP Loan Forgiveness Application within ten (10) months of completion of the Covered Period, the Borrower is not required to make any payments until the forgiveness amount is remitted to Northwest Federal by the SBA.
We at Northwest Federal want to make sure we comply with the SBA and their requirements. We also understand that now, more than ever, sound business decisions are necessary.
Further guidance has also been provided to address the qualifications for loan forgiveness. Please refer to this Paycheck Protection Loan Forgiveness Requirements Guide for detailed information.
Only 60% needs to be used for payroll, down from 75%. The remaining portion still needs to be used for: Rent on Business Building, Mortgage Interest on Business Building and Business Utilities
Any unused portion will be converted to a loan of at least 5 years, extended from 2 years
Due to the high volume of inquiries and SBA guidelines stating financial institutions are not permitted to assist in completing loan forgiveness applications, we ask that you please refer to the complete and detailed instructions that are included with the application.
SBA may provide further guidance, if needed, through SBA notices that will be posted on SBA’s website at www.sba.gov.
Questions on the Paycheck Protection Program may be directed to the Lender Relations Specialist in the local SBA Field Office.
Please send all documentation for forgiveness to CaresActRelief@nwfcu.org.
Main Street Loan Program
Northwest is pleased to announce that we are participating in the Main Street Lending Program. The Federal Reserve established the Main Street Lending Program to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic.
We are here to support Businesses located in Washington, DC Metro area. If you are interested in more information, or would like to apply for funding, please contact us at MainStreet@nwfcu.org or visit the Federal Reserve's Main Street Lending webpage.
*Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards.
**APR = Annual Percentage Rate. Interest will continue to accrue on your existing PPP Loan as it has been since origination.