PPP APPLICATIONS OPENED TODAY.
Have you contacted your bank yet? I certainly hope so.
Some banks might be ready to start accepting applications and some should be ready soon. You need to contact them asap and request additional information.
It is known that banks are going to work first with their current clients and their “special clients” and then they will start processing applications from New clients.
Each bank will ask for different documents with their applications but you should be ready with at least these ones:
Payroll Forms (940, 941, W2, W3) for 2019.
Payroll cost details for 2019 and 2020.
2019 Financial Statements
2019 Business Tax Returns
2019 Individual Tax Returns for owners of more than 20%
Date business started
Below you will find answers to the most common questions our clients have asked:
When can I apply for a PPP loan?
Small businesses and sole proprietorships can apply for loans starting on Friday, April 3. Starting April 10, independent contractors and self-employed individuals can apply, according to the Treasury guidelines. Loans will be given on a first-come, first-served basis.
Will they check my credit?
Based on the available guidelines so far, there is currently no prescriptive guidance on credit requirements. However, Logsdon points out that "The [CARES] Act was designed so those types of considerations weren’t going to be necessary."
What documents will I need when applying for a PPP loan?
Small businesses will need to provide payroll documentation to calculate the average payroll monthly cost.
After receiving the funds, and for the following 8 weeks, you need to track how the loan was used. If used at least 75% for payroll and the rest for covered mortgage interest payments, covered rent payments, and covered utilities you will be able to request loan forgiveness.
How much can I borrow?
Small businesses can borrow up to 2.5 times their average monthly payroll from the previous year through the Payroll Protection Program, which provides forgivable loans to small businesses intended to help pay their employees during the coronavirus crisis, but payroll is capped at $100,000 per employee, and the loans are capped at $10 million per business.
What can I use a PPP loan for?
Small businesses can use the loan for payroll costs and benefits, including vacation, parental, family, medical and sick leave, health and retirement benefits, and state and local taxes.
The SBA's guidelines state: payroll costs, including benefits; interest on mortgage obligations, incurred before February 15, 2020; rent, under lease agreements in force before February 15, 2020; and utilities, for which service began before February 15, 2020.
How much will I have to pay back?
According to the SBA, the Payroll Protection Program loan will be "fully forgiven" if the money is used as outlined.
For employers who keep or quickly rehire their employees and maintain salary levels, the loan will be forgiven. However, "forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease."
Decisions on the forgiveness of the Paycheck Protection Program loan will be made within 60 days of forgiveness submission.
The SBA notes the loan has a maturity of 2 years and a fixed interest rate of 1% (changed from 0.5% on Thursday). Loan payments will be deferred for six months.
How long will it take to get the money?
Unfortunately, at this point, it's unclear how long it will take for businesses to get the money. Banks and lenders are likely to extend the loan to existing customers first, so it may take even longer for those who are not part of the existing network.
A senior government official said the applications will not require SBA approval, and funds could be made available on the same day you apply. However, because of all the issues with figuring backend repayments and loan forgiveness (and all the due diligence from lenders that may come as part of that process), I would personally be really surprised if money is going to be flowing before the end of May.
What are the fees?
There aren't any fees—the SBA has waived fees for the loan.
What if I've already laid off some of my staff?
In order to get full loan forgiveness, companies need to maintain pre-crisis levels of full time employees. Companies are able to lay off staff while they have the SBA loan, but forgiveness of the loan will be reduced (meaning they'll have to repay a certain amount) in the event they have reduced full-time staff or salaries.
According to the SBA, small businesses have "until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020" for forgiveness of the loan.
We hope you find this information helpful. If you have additional questions or need help please contact us asap by replying to this email or schedule a phone call here.