the banks are responsible for "underwriting" the PPP Loan (I use "underwriting" loosely, because they are ....I would think that they would be able to verify the existence of the business prior to the date requirement.

This is unchartered waters for me, and probably one of those details that nobody really thought about in the heat of the moment.

I would hope common sense and logic would dictate that those people were employed before, and you're trying to keep them employed during and afterwards....

If I can find an answer for you, I'll post....

Thanks man I appreciate it

Morning!

Good article from Inc:

https://www.inc.com/kevin-j-ryan/sma...incthismorning

I keep going through the bill over and over, looking for something that either helps or hurts your cause. I certainly didn't see anything that hurts your cause, but the help side isn't really definitive.

So, I'm going to speculate a little bit here:
in the "definitions" section of the PPP, it states "the term ‘eligible recipient’ means an individual or entity that is eligible to receive a covered loan"....I would think that the business entity itself meets this requirement, as you are filing on behalf of the business....

Later on (after reading through much legal mumbo jumbo), there is a "Considerations" section that states
"In evaluating the eligibility of a borrower for a covered loan with the terms described in this paragraph, a lender shall consider whether the borrower—(aa) was in operation on February 15, 2020; and (bb)(AA) had employees for whom the borrower paid salaries and payroll taxes; or (BB) paid independent contractors, as reported on a Form 1099–MISC.

Again, if I'm evaluating looking at it as an eligilble business entity as the borrower, and that entity was in existence before Feb 15th, and had employees who were paid salaries and payroll, then it'd fit.

Nothing I'm saying above is definitive, but again, my gut is that you'll be able to include that location in with your loan app....talk with your banker for sure, because, again, it wouldn't make sense to not fund that portion, which means (likely) people are out of work)...

I believe the answer to this is that you cannot include 1099s in your calculation of average payrolls to determine the amount you can borrow for PPP....

The reasoning is that independent contractors and sole proprietors can apply for their own PPP, so in a way, that would be "double dipping" if the business also included those payments....

Good synopsis....links to other related articles are good as well....

That’s how I understand it. We incorporated the business after we purchased but it’s still the same entity it was before

Great article. I was wondering what to do about the professionals on our staff that made more than $100k and I think the article cleared it up. My banker doesn't really know anything that granular. (shocking!)

I was alarmed at the statement in the article about these not being funded for 3-4 weeks. That's really no different than a regular SBA loan, the only difference being is the shorter application and less vetting. That will be too little too late for a lot of businesses. We may be OK, but I know others that won't. Sucks.

I'm pretty certain you can include sub contractors pay for calculating the loan amount. That was a specific question we had to our SBA packager who we've worked with for several years. He said according to the National Association of Government Guaranteed Lenders, that in deed subs can be included as "payroll".

Good read, thanks.

So tomorrow I douche my banker with loan applications huh? :D

Nah, once you create a corporation it is legally separate from management and shareholders, which is the point.

But you might be able to convince somebody to use the historical information because you didn't change procedures or personnel. Definitely try it. Hopefully they'll apply some common sense here, but it looks like there are ways to bone you on account of shitty timing. Hopefully they work with some common sense.

Whatever happens with the payroll, you should (according to my very limited understanding) be eligible for overhead relief.

Yeah, the timing thing could be problematic. Hopefully at least some of the bankers and credit holders will exercise some flexibility. But there are a lot of businesses that have been down for a long time. Hopefully they can open back up soon.

If I were president, I'd tag the IRS and have them issue refunds on 8.3% (1/12) of non-depreciation expenses on C, F, E, 4835, 1120, 1120S, 1065 and 1041 on either the 19 (if available) or 18 return. Then during the summer sometime apply for forgiveness. If not they have to carry forward the liability on their next tax return.

Yeah, apparently there are some extenuation circumstance stuff in there. So here's to hope.

Letter from President of Bank:



Dear Valued Customer,



You have most likely been inundated with information regarding the Paycheck Protection Program under the CARES Act as well as information on the Families First Coronavirus Response Act (FFCRA). We would like to touch base with you on these programs and provide information on how we can help.



CARES Act and the Paycheck Protection Program

On March 27, 2020, Congress passed and the president signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides economic support intended to be quickly available to workers and businesses. The Paycheck Protection Program is one of the largest sections of the Act and offers an estimated $349 billion in government-guaranteed loans to small businesses and non-profit organizations. While the program details are still being finalized, here is what we know so far.



Under the Paycheck Protection Program:

· You may be eligible if you are a small business with fewer than 500 employees, are a select type of business with fewer than 1,500 employees, are a 501(c)(3) non-profit with fewer than 500 workers, or are a 501(c)(19) veteran organization. Businesses must have been in operation on February 15, 2020 and had employees for whom it paid salaries and payroll taxes.

· Eligible recipients may qualify for a loan up to $10 million determined by 8 weeks of prior average payroll, plus an additional 25% of that amount.

· Loan payments under the program will be deferred for six months.

· If you maintain your workforce, SBA will forgive the portion of the loan proceeds that are used to cover the first 8 weeks of payroll and certain other expenses following loan origination.

· Loans will be guaranteed 100% by the U.S. Government

· No annual fee; no guarantee fee; no collateral requirement; no personal guarantee

· Maximum interest rate of 0.50%; maximum term and amortization of up to 2 years



Applying for the Paycheck Protection Program (PPP):

The Paycheck Protection Program is being implemented by the SBA with support from the Department of the Treasury. The SBA is working on finalizing the development of the program, and while all the details have not yet been communicated to financial institutions, we wanted to share with you important information on how you can start preparing your application for submission.



Preparing your application now will help ensure it is processed as efficiently as possible. Please know our dedicated team of bankers is ready to assist once we have all the details from the SBA and the program is officially put into place. We are a certified and Preferred SBA Lender. As such, we will be able to submit applications to the SBA the moment the program is implemented, which is expected to be Friday, April 3.



Step 1:

Read through and garner an understanding of the sample application. The SBA published a sample application form on March 31. Note, this is still a “sample”; however, it can assist you in preparing your application ahead of time. We expect a final version of the application will be published by the SBA on Friday, April 3.



Step 2:

Start compiling all necessary paperwork. Please note: we have not received final guidance on what documentation will be required along with your application; however, we anticipate it will include the following:

· 2019 year-end financial statements and most recent interim financial statements

· Number of employees on your payroll for the last 12 months as well as pay rates

· IRS payroll tax filings and state income taxes

· Payroll and unemployment insurance filings

· Employer paid health insurance premiums and employer retirement contributions for the last 12 months

· Payments on covered mortgage obligations, lease obligations, and utilities



Step 3:

Complete the sample PPP calculator we created for you (four separate tabs). You may use this sample calculator to determine the amount of your loan request as well as the anticipated forgivable portion of your loan. Again, this is a sample that we believe will be close to what the final calculator will look like from the SBA. This sample will provide an indication of your final loan amount. We ask that you fill in the forgivable amount in the calculator as you may not be able to get your entire loan amount forgiven. In the event this occurs, the remaining amount not eligible to be forgiven will be at an interest rate of 0.50% over 2 years.



Step 4:

Submit these preliminary items to your relationship manager. Once we receive the information, your relationship manager will review and will reach out if we have any questions. Please note: we may reach out for additional items once we get final details on the program from the SBA.



The Families First Coronavirus Response Act (FFCRA)

The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The Department of Labor’s Wage and Hour Division administers and enforces the new law’s paid leave requirements. For more information regarding the FFCRA and its requirements, click here.



Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage. For more information, please see the Department of the Treasury’s website.



Where to Seek Assistance

We ask that you please check with your accountant or tax advisor as seeking the tax credit approach may be more beneficial as opposed to one of the loan programs. As we understand, you cannot take both tax credits and loan forgiveness. Also, once you choose a program, certain circumstances may prohibit you from applying for another loan program.



We understand you may have questions as you navigate through the details of these programs. Please know our team is working diligently around the clock to serve our customers and are here to help. Please contact your local office or relationship manager, and they will assist with any questions or concerns you may have.




Additional Resources:

· U.S. Chamber of Commerce Resources for Business

· Small Business Administration (SBA) Small Business Guidance & Loan Resources

· Small Business Administration (SBA) Disaster Assistance

· Sign up to receive SBA Updates

· Sample Payroll Protection Program (PPP) application

· Sample Payroll Protection Program (PPP) calculator

· IRS FAQs on Employee Retention Credit

PPP Calculator

For those above $100K: in the formula, you add in all the payroll, but then back out the amounts over $100K....For instance (an overly simplistic example), let's say you have 1 employee who made $110K. You would count the $110K as your payroll, but then back out $10K to get it down to the $100K limit.

As far as usage goes....theres a number of scenarios, but you'll want to make sure you get total loan forgiveness on the PPP and even on the EIDL portion that you roll into it....that's for another post

Awesome!

Still confused on the rent/lease/interest debt portion. Where do we input that into the loan calculation?

Those do not get put into the loan calculation amount. However, those are valid uses of the PPP funds, and will be used to help calculate the loan forgiveness....

Thanks. I was afraid that was the case. Doesn't make a whole lot of sense. Asking for a loan based solely on payroll expenses. But it can be used and forgiven for things like rent. But we aren't supposed to lay off employees that the loan was based on keeping. So how does it cover something like rent if it is to be used for payroll? 'Merica

That's why they are letting you ask for 2 1/2 times your monthly payroll. The 2 is for your payroll, the 1/2 is for your utilities/rent/etc.

FWIW I got my banker up pretty hard since I can apply tomorrow.

I asked him if I apply for the PPP through him if it kicks me out of an EIDL loan. My business a couple months payroll is pretty immaterial in terms of expenses. And depending on how this shakes out payroll might be the easiest check for me to cut. What he told me is you can still apply for the EIDL you just can’t use those expenses.

He also said their guidance is that they don’t need any “packagers” whatever that means and you should apply through the website.

Take that for what it’s worth. There is nothing saying my banker is any sort of right here but that’s what he told me.

I’ll probably take a look at the EIDL application first. If it looks more promising I may forego the PPP loan.

This....keep in mind you're only covering 8 weeks of payroll, but funding 2.5 months of average payroll.

First and foremost: APPLY FOR ALL OF IT!

Second: As I understand it, as long as you don't use PPP and EIDL for same purpose, you still may qualify for both. for instance, if you use PPP for payrolls (as intended), you may be able to EIDL for other expenses. The banks I'm talking to are very vague on this, so don't take this verbatim

Third: You can roll EIDL into your PPP amount. So that alone doesn't eliminate you from PPP if you receive EIDL funds

Fourth: EIDL you apply directly through the SBA. There are diligence requirements, but not during the initial application. PPP, you apply through a participating bank, and the loan is backed by the SBA. The bank is responsible for the "underwriting", but basically other than validating payroll amounts and that the business was in existence, there really isn't any underwriting requirements.

Fifth: Even the banks don't have good answers on specific details. for instance: the SBA is backing the loan for one year, but terms are two years. So, banks are concerned that they are taking on risk without the benefit of underwriting....and they have no idea how to mitigate at this point. Of course, they are paid a processing fee from the SBA, so my best guess is the money they receive for processing is meant to mitigate any risk. I anticipate 75 - 80% of the loan value to be forgiven, which means there could be upwards of $70M in risk taken on!

So, don't forego the PPP, because you can re-fi the EIDL into it. But more to your point, you may get more benefit out of the EIDL than the PPP, although you won't get the loan forgiveness

I could be totally off but I think that 10k of an eidl loan will be forgiven also.

That could be more than the ppp for some

This is correct...the initial "Bridge" $10K....

Also, if you you convert the EIDL to PPP, and assuming you use the PPP as intended (for payroll), you also get loan forgiveness (up to additional 25%) for mortgage interest, utilities, and rent....I believe that would eat into the EIDL portion of the loan....

Sounds like there will be more SBA money available so I wouldn't sweat it running out.

Listening to Mununchin

Totally agreed....I look at it like this: There are 30 Million small businesses in the US. With $349B in funding, and assuming a loan of $350K per loan, that's 1 million loans that could be made.

I'm going to bet that the average loan will be more like $1M, so that's 349K loans that could be made....out of potential 30 million small businesses. Yeah, this is the start, not the finish....

So, just to vent a little bit. I mentioned before that my company set up a free hotline for CoronaVirus / COVID help. In reality, its me and my boss fielding all the calls all day long and into the evening. It's been call after call of people who have no clue as to what is happening or remedies available.

I appreciate all of you, because you seem like you are on top of things, even if you don't necessarily have or know all the answers. It's amazing how many people that are out there that don't even concern themselves with the basics....

Definitely is in my case. My whole payroll is less than corn herbicide by itself.

Landlords...what are you telling your tenants?

Some I pay the utilities, others I do not. Nonetheless, one of my tenants is insinuating that he should not have to pay his rent. If he doesn't pay his rent, I still have to pay the house payment, the utilities, the cable, the heat, the taxes, insurance etc. Why would I continue to pay utilities if you don't even pay me rent?

He is also indicating some apartment complex waived their rent for 4-months. How would they even survive? I'm not some big conglomerate corporation.

Also, when is this Govt payment going to be direct deposited? Do we have a firm date?

But you still get loan forgiveness via the PPP, plus rent, utilities, and mortgage interest and can still roll the EIDL in.

So, hypothetically, if you cover payroll with your PPP, and still get the $10K forgiveness on the EIDL bridge, why wouldn't you do that?

I’m going to apply for both for sure. But I learned long ago with government promises I won’t count it until the check clears.

no argument from me....but I actually expect there to be more forgiveness than anticipated. So if you can get funded, then do it. My reasoning is a little long-winded, and just my opinion, but get the cash in hand now if you can

This is why I'm glad I'm not a landlord right now. You're in a lose/lose situation if it's someone that lost their job.

Have them pay rent as normal? They may not have enough money to keep living, but you can pay your normal bills.

Give them the month off? They have enough money to survive, but you may not be able to pay your normal bills.

Chase is telling us they wont have anything for us tomorrow...

"Financial institutions like ours are still awaiting guidance from the SBA and the U.S. Treasury. As a result, Chase will most likely not be able to start accepting applications on Friday, April 3rd, as we had hoped."

https://recovery.chase.com/contingency-plan

My local bank will start submitting applications tomorrow. However, they haven't heard back from the SBA on their request for additional user licenses. So they can only have one employee submitting apps at a time. Many of the other area banks aren't doing the PPP or don't really have their ducks in a row yet. My bank has been sending me updates multiple times per day as this evolves. I've sent all of my info and completed app to the bank in advance. Thank you very much for being a voice of reason when I was sleep deprived and stressed, mililo4cpa. If everything works out with the PPP, and it should, then my business will most certainly be just fine even if shit got real, real bad for six months.

one of my consultants confirmed the same (working with a client this morning to get their app in through Chase).

So far, only bank I've heard so far....will report if others are out there

I haven't gotten the dreaded calls yet but I know they are coming. I plan to empathize with them. I will ask them how much they can pay now and the rest will be deferred until July to pay out over 6 months. Also I want some kind of documentation they are not working.

your'e good man Hog.

Please realize they dread making that call, too.

Apparently, Bank of America's portal is up?

I just had one of my consultants, who is helping a client put in their application to BoA tell me that BoA is telling our client that unless they already have an existing credit relationship (i.e. line of credit or other borrowings), that the SBA is not allowing them to accept PPP loan requests. NOTE: This client has all of their existing checking and savings accounts with BoA

This is not a requirement for PPP eligibility, so I think BoA is giving them a load of shit. I told my consultant to, with our clients, call their relationship manager and physically tell them where in the CARES act or SBA 7(a) does that state it is a requirement.

It's bullshit because there are millions of small businesses that deal with non-SBA lenders, who will need to go to SBA lenders to get the PPP. I understand that there will need to be accounts established, and some credit underwriting performed for new customers, but that shouldn't proclude anyone from getting access to the funds.

P.S. I believe they made the application in person, not portal....not 100% sure on this

Also, SBA raised the fixed rate from .05% to 1%, but also stream-lined the application process....

https://bankingjournal.aba.com/2020/...program-loans/

I'm told that there's another new app. https://home.treasury.gov/system/fil...30-2020-v3.pdf

This is the email information I just received from BOA. I have two business checking accounts with them but no lending as I've never needed a loan from them and their credit card rewards suck, so I use Chase Ink for business. Reading this makes it sound as though I'll be pretty low priority for them to process my application.

It's quite possible, as the treasury made last minute changes last night to stream-line the process....so this app may reflect that

I call bullshit on this....call your BoA rep and ask them where in the CARES act, SBA Section 7(a), or specific treasury guidance does it state that you need an existing credit relationship....

and them tell them this is directly from the treasury.gov site:

https://home.treasury.gov/system/fil...Fact-Sheet.pdf

"Where can I apply? You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders."

P.S. I take this as BoA leaving small businesses out to dry....

my bank is saying they have to confirm the borrower hasnt gotten and wont get any other sba loan to give these out.

I was told a similar thing I think

This is the form I filled out.

My bank said that this loan has nothing to do with EIDL.

But make goddamned the **** sure that's right. I'm thinking, at least philosophically the EIDL should be higher than 2.5X monthly payroll.

FWIW Ag is not eligible for EIDL. I read something that they put more funding into CCC program, so they're thinking they'll do something like MFP, but they're saying it won't be like MFP so I don't know why anyone is saying that. Whatever, don't bother applying for EIDL.

New form my banker sent me to fill out. Basically the same as the one I posted before with minor changes.

Margaritas at noon. That's what I'm doing.

yeah mine is saying if i am applying for the eidl then i cant apply for the ppp.


i think ill call somewhere else and ask

On the final application published by the Treasury, these are a specific qualifying questions answered by the borrower as part of the application

https://home.treasury.gov/system/fil...30-2020-v3.pdf

I think banks are real nervous due to high level of uncertainty. My original prognosis is that it will take 2 months to fund due to this uncertainty, and while I certainly could be wrong on this, as of today the banks are saying things that are (to me) obvious delay tactics....

Again, not true....you can roll an EIDL into the PPP, so fundamentally this is not true....

Again, this is a question asked on the application: https://home.treasury.gov/system/fil...30-2020-v3.pdf

I have to record a podcast at 12:30, but I won't be far behind you!

Even if you can get the mortgage deferred, they are still going to charge you all of the interest. Your taxes and insurance still gotta be paid.

Goddamn sure get it 100% right before you submit the app. I know nothing but if I were running the program a disaster payment better be more than 2.5x monthly payroll.

I’m guessing my banker is right because he told me to **** off with this EIDL shit do that online. I’m guessing it is any pre-existing SBA loan. But again make goddamn sure.

My banker told me they get 5% as a fee. If it takes 2 months to get the money that’s a hell of a return.

The other thing is he hasn’t been approved as a provider or whatever yet. I’m guesssing the logjam stretches things out more than they are projecting.

BOA is 100% only allowing people to apply through them that meet both requirements.

1) business checking/savings account AND
2) previous lending account (loan, BOA credit card, etc)

I'm still waiting for Wells Fargo to start accepting apps. Can you apply at more than one bank?

Can anyone clarify in more detail which payroll taxes are to be omitted from the request?
Ive heard only Federal taxes, but Ive also heard only the employer portion is excluded.
Any help would be great.

you only include taxes that are the responsibility of the company, not those withheld from the employees

You cannot apply more than once.

From my consultants in the field: None of the big banks are going through right now, but smaller banks are starting to process.

In a call earlier with PNC, we believe that until the big banks have clarity on the level of risk they are taking, they are going to either not accept applications or hold the ones they do get. PNC is expecting upwards of $10B in these loans, which means BoA, Chase, JPMorgan, Wells, and any other sizable bank is going to sit tight in short term. The smaller banks that have little exposure are processing....

I haven’t heard of any banks that won’t put you behind existing customers.

That's not the issue. The issue is they are telling folks, including customers that do not have lending accounts, that the two items you listed are a requirement set by the SBA and they (BoA) are honoring the intention of the Treasury Department. This is blatantly false, and in my opinion, a huge disservice to both small businesses and their employees. The Treasury and SBA are both clear that all eligible applicants need to do is apply with an SBA lending partner.

If BoA wants to come out and say, we're only taking applications because we made a business decision to do so, then do that, but don't lie to people.

Great.
Thanks Mililo!!
I'm new to the board and everyone has been great.
Look forward to talking with everyone

Welcome aboard! If you learn to not take things to seriously in most of the threads, it's a really enjoyable place. I've been a long time lurker until about 6 - 8 months ago....fun group to say the least, but you have to have thick skin!

Anyone heard anything back yet? I sent all my stuff in yesterday and they said they’re sending it all to SBA today

Assuming you mean PPP application:
Had many of my clients that went through smaller banks acknowledge the application is in....none of the big banks came through today...

From here, I suspect at least two weeks to fund, but that's speculative. And no prognosis at this point as to when the big banks will come through.

I forgot to add employer portion of FICA as well....

Found this out on the SBA site today....it is their "interim final rule".

Lots of good information here, but what stood out to me was on page 13....the PPP is "First Come, First Served" Apparently BoA didn't get the memo on this....

https://www.sba.gov/sites/default/fi...%20FINAL_0.pdf

They have said first come first served all along

Somebody should tell Bank of America that....

Great Thanks!

Got everything done

Can’t get this on my new office because of the timing. Sucks

But the girls all figured out apparently they can make more being furloughed and on unemployment

that does suck....but you seemed to be very realistic about that possibility, so there is that....

And yeah, I'm actually against the UI amounts right now....what's going to happen when businesses start getting PPP, but the employees don't want to come back!

That sucks ass man. And frankly the dudes that stepped out and did something are the guys that need it.

But I figured that’s what it would be.

Yeah, it sucks. But it is waht it is. I'm actually gonna check with my associate that i bought it from and see if he would be willing to apply for it and i'll take all the risk. Basically i just want to be able to take care of the girls and such.

But in the end, I'll be fine. Just keep moving forward.

I think I'm gonna actually let them get unemployment for a month or so. We can determine when to use the PPP funds and it looks like we may not be back doing dentistry until June. So i may end up paying them May and June with the PPP funds so i don't have to waste my built up capitol.

Still wonder if EIDL is an option for your payroll with the new business....so many unanswered questions, and even the banks and SBA reps can't give me a straight answer.

I'll keep digging to see if there is a way to work around that, but fundamentally, it doesn't make sense....

the thought in the back of my mind is if the prior owner needs to apply, and you need some legal means to ensure that the funds go to your employees?