Tips on applying for the Paycheck Protection Program Loan under the Coronavirus Aid, Relief, and Economic Security (CARES) Act

Each bank has a slight twist on the Small Business Administration(SBA) loan application process based on vague guidelines available at this time. Here is a list of a few items we have discovered that might speed up the processing of the application.

Getting the application

Almost all banks are requiring the application process to be completed online and access to the application is available either through your online banking account portal or you may need a special email invitation from your bank in order to create a special PPP Application Portal. Speak to a bank representative to determine how to get the loan application process started.

Information required

Documents required to be included in the application are a bit inconsistent from bank to bank. However, all banks require the following documents:

2019 Payroll Tax Returns Form 941
2019 Payroll Summary
Proof of pension or retirement plan contribution paid during 2019
Proof of health insurance premiums paid during 2019
Schedule K-1 documenting certain Partnership ownership to substantiate guaranteed payments to partners, if applicable
Copy of your 2019 Corporate, Partnership or Schedule C, as appropriate
Social security numbers and addresses for 20% or more shareholders or partners
A list of other companies with common management with all 20% or more shareholders or partners, including a list of owners and the percentage of the other business that they own.
Make sure your Annual Report has been filed and your business is in good legal standing.|
If you operate your business under a fictitious name, make sure the business name is registered and in good standing with your state.

Additionally, some banks require the following additional documentation:

2019 Form 940
2020 Form 941 for the quarter ended 3/31/2020
2020 Payroll Summary through 2/15/2020
2020 Payroll Summary through 3/31/2020
A worksheet of how 2019 payroll costs were calculated, including annual wages paid in excess of $100,000.

Timing for funding

The applications are processed on a first-come first-served basis. The sooner you apply the better your chances for getting funded.

Once the application is approved by the SBA, the funding to your bank account is required to be completed within 10 days.

Coordination with the Economic Injury Disaster Loan(EIDL)

The EIDL contains 2 primary components. The first component is the “Advance” of $1,000 per employee up to $10,000 for 10 employees.This component does not need to be repaid and is more of a grant than a loan. This amount is not included on the PPP application.

The second component of the EIDL is an SBA loan of up to $10 million. Most companies have not received the application for this component of the EIDL. If you did receive the loan component of the EIDL, you must reduce the PPP loan request by the amount of the EIDL loan.

How the Paycheck Protection Program works

  • The Small Business Administration is lending small businesses up to 2.5 times their payroll costs paid during 2019. Additional information can be found at https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp
  • Wages in excess of $100k per year per employee are not included in the loan amount calculation.
  • The loan may be fully forgiven to the extent used for 8 weeks payroll costs, interest on mortgages, rent, and utilities. The 8 week period begins when you receive the loan proceeds.
  • At least 75% of the forgiven amount must have been used for payroll costs. Up to 25% of the payroll costs may be forgiven if used for rent, mortgage interest or utilities during the 8 week period.
  • The number of employees and the compensation level before the loan must be maintained. Compensation levels cannot decline more than 25% of compensation levels before 2/15/2020.
  • Loan payments are deferred for 6 months. Payback period is for 24 months.
  • Interest rate is 1%.
  • Any SBA lender can process the loan. Contact your banker asap since the loan funding will run out

How do I apply for the PPP?

Banks generally require an online application for the Paycheck Protection Program. Call your bank to determine the process for initiating the application. We're here to help! 407-897-7050.