More Requirements for Businesses Applying for Paycheck Protection Program Loans
We have heard from several bankers that the SBA released additional directives to lenders participating in the Paycheck Protection Program (PPP). The SBA also updated the FAQs. Applicants are now asked to provide lending institutions a certified document listing how they will use the monies from the PPP, prior to loan approval.
The main purpose of the loan is to help keep the maximum possible number of employees on board, which is why the payroll amount must be >75% of the total loan amount requested. Keep in mind, payroll does not include 1099s. The balance of the loan amount may be used for rent, utilities, mortgage interest, and interest on debt pre-February 15, 2020.
Forgiveness Calculation Sheet
Many banks have provided a separate loan forgiveness calculation sheet for their borrowers to use. Some forms are less complicated to complete than others. This estimated forgiveness worksheet, and its supporting documentation, will enable lenders to provide the SBA with a good faith estimate before the SBA releases funds to the bank.
In addition to the Forgiveness Calculation sheets, some lenders are asking for entity creation documents and entity operating documents. Many businesses do not have access to the original documents. If you do not have copies, we recommend that you contact your attorney.
In addition to signatures of authorized owners, applicants are also being asked to provide EIN/SSN and a Driver’s License number.
What We Recommend
Apply for the Paycheck Protection Program Loan. If you are approved, before you accept the loan, determine if the loan is a better option compared to the Employee Retention Credit. Do your due diligence. Compare the two forms of financial relief. You are only permitted one loan and not able to use it in conjunction with the Employee Retention Credit.
No one knows how long our nation and businesses will be affected by the COVID-19 emergency. Make certain you choose wisely.
DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.
