The Payroll Protection Program is now scheduled to be available to small businesses starting April 3rd. Below the current details about the program (as far as we have them).
Payroll Protection Program
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. You should consult with your local bank or lender as to whether it is participating in the program. All should work with their current banking institution and ask them for assistance where needed. Lenders may begin processing loan applications as soon as April 3, 2020. If you would like to view a sample application so you are aware of what information will be requested, please click here.
One of the most common questions received is, “What can I do now to get ready to submit an application?”
- Please gather 3 years of personal and business tax returns. If you have already completed your 2019 tax returns, include those, if not include those from 2018, 2017, and 2016.
- If you don’t have 2019 tax returns for your business, please prepare your 2019 year-end profit & loss and balance sheet.
- Please prepare your 2020 YTD Profit & Loss, Balance Sheet, and an AR aging summary (if applicable) as of March 1.
- Please prepare a Personal Financial Statement – any owner 20% or over should complete one.
- The two forms attached here are part of every SBA loan application:
- SBA 1919 Form – this is the SBA’s application. There is a business section (pages 2 and 3) and a personal section (pages 4 and 5). I need one business section per business and one personal section per owner 20% or greater. On this form, please be sure that questions 12-16 are answered in the affirmative (true) and questions 17-19 & 22 are initialed.
- IRS 4506T Form – this is the form that allows the bank, and the SBA, to confirm your tax returns. Simply sign the bottom and our SBA officer will complete the rest.
This is all standard documentation for an SBA loan. While all of this may not be required in the final application for this program, it will definitely not hurt to have it all prepared and ready to go if it is needed.
Another common question is, "How much can I receive through the PPP loan?"
Depending on your business’s situation, the loan size will be calculated in different ways (see below). The maximum loan size is always $10 million:
- If you were in business February 15, 2019 – June 30, 2019 : Your max loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date.
- If you were not in business between February 15, 2019 – June 30, 2019 : Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
- If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum.