{"id":127,"date":"2020-05-12T17:05:28","date_gmt":"2020-05-12T17:05:28","guid":{"rendered":"http:\/\/pjsservicesgroup.com\/blog\/?p=127"},"modified":"2020-05-12T17:05:29","modified_gmt":"2020-05-12T17:05:29","slug":"how-to-obtain-ppp-loan","status":"publish","type":"post","link":"http:\/\/pjsservicesgroup.com\/blog\/how-to-obtain-ppp-loan\/","title":{"rendered":"How to Obtain PPP Loan"},"content":{"rendered":"\n

The number-one pressure on small-business\nowners right now is payroll. Whether you\u2019re a sole proprietor one-person-show\nor a company with 500 employees, you\u2019ve certainly felt the pressure. Maybe\nyou\u2019ve already stopped paying yourself, have laid off workers or cut hours.\nWell, you can thank your federal government for the best aid program\nrecently offered for small business, the Paycheck Protection Program loan (aka Coronavirus Stimulus Loan,\nor PPP Loan)<\/a>.<\/p>\n\n\n\n

The PPP Loan was signed into law on\nMarch 27, 2020. On March 31, the SBA issued its guidance<\/a> and sample application\nfor the loan to be used by banks. Here\u2019s a summary of the details you need to\nknow.<\/p>\n\n\n\n

Who Qualifies? <\/strong><\/p>\n\n\n\n

A small business with fewer than 500\nemployees that was in business on or before February 15, 2020. This can be an S\nCorp, C corp, LLC, sole proprietorship or independent contractor. It also\nincludes certain nonprofits, tribal groups and veteran groups. When\nobtaining the PPP loan, you need to certify that your business has been economically\naffected or that economic uncertainty make the loan necessary.<\/p>\n\n\n\n

How Much Can I Get? <\/strong><\/p>\n\n\n\n

Up to $10 million dollars. But the amount\neach business gets is based on its payroll costs. The amount you qualify for is\nbased on 2.5 times your average monthly payroll costs. Your monthly average\npayroll is calculated based on your prior 12 months of payroll costs. You take\nthat average monthly payroll number and multiply it by 2.5. For example, if\nyour monthly average payroll was $20,000, then you would qualify for a $50,000\nPPP Loan.<\/p>\n\n\n\n

What’s Included in Monthly Payroll Costs? <\/strong><\/p>\n\n\n\n

It includes salary, wages, commissions,\npayment of vacation, sick, parental\/family\/medical leave, payment of retirement\ncontributions, group health coverage premiums and state and local taxes\nassessed on payroll. It doesn\u2019t include federal payroll taxes though. It also\ndoesn\u2019t include payroll costs for those making more than $100,000. Their\nfirst $100,000 is considered, but anything in excess is not considered for\ndetermining average monthly payroll costs.  <\/p>\n\n\n\n

What Can I Use This Money For? <\/strong><\/p>\n\n\n\n

First and foremost, payroll for you and your\nemployees, but you can also use the money for rent, mortgage obligations,\nutilities and other debt obligations you may have.<\/p>\n\n\n\n

What Is the Interest Rate? <\/strong><\/p>\n\n\n\n

Half a percent. that\u2019s right. It\u2019s nearly an\ninterest-free loan. The bill allowed for a maximum rate of 4 percent, but\nthe guidance issued by the U.S. Treasury is stating that the maximum rate would\nbe 0.5 percent. Your government is stepping up as they\u2019re backstopping these\nloans for the banks. Now, this rate could certainly change, but under\nthe law it cannot exceed 4 percent. <\/p>\n\n\n\n

When Do I Have to Pay It Back? <\/strong><\/p>\n\n\n\n

The loan term specified by the treasury\nguidance is two years. Loan payments are deferred for the first six months.\nThere is no pre-payment penalty though, so you can repay or have the loan\nforgiven earlier.<\/p>\n\n\n\n

Do I Have to Put Up Collateral or Sign a Personal\nGuarantee? <\/strong><\/p>\n\n\n\n

Nope. I told you this was a good deal, right?<\/p>\n\n\n\n

How Do I Get This Loan Forgiven? <\/strong><\/p>\n\n\n\n

This is the critical question. The loan\nforgiveness provision is the best part. You are eligible for loan forgiveness\nfor the amounts you spend over the next eight weeks after receiving the\nloan on certain qualifying expenses. The qualifying expenses of the business\nover the eight-week period includes payroll costs, rent, interest on mortgage\ndebt and utilities.<\/p>\n\n\n\n

If the number of full-time employees is\nreduced over this time period or if your payroll costs are reduced 25\npercernt or more, then the amount of the loan eligible for forgiveness\nwill be reduced.<\/p>\n\n\n\n

The bank who granted the loan is who will\ndetermine the loan forgiveness amount based on the criteria above. The business\nwill request forgiveness of the loan with evidence to the bank, and the bank\nwill have 60 days to approve or deny the forgiveness.<\/p>\n\n\n\n

Will the Business Get Forgiveness of Debt Income Via a 1099-C? <\/strong><\/p>\n\n\n\n

Now, this is a question only your tax lawyer\nor account would ask. In other words, will I have to pay taxes on the amount of\ndebt forgiven on the loan? Nope. The new law specifically stated that forgiven\nPPP Loans will not be considered forgiveness of debt income.<\/p>\n\n\n\n

Do I Still Qualify If I Already Have an SBA Loan?<\/strong><\/p>\n\n\n\n

You can have more than one SBA loan. You just\ncan\u2019t exceed the total SBA loan maximums when all loans are combined.<\/p>\n\n\n\n

What About the SBA Economic Injury Disaster Loans\n(EIDL)?  <\/strong><\/p>\n\n\n\n

This is another good loan option. It is up to\ntwo million dollars and is the loan typically used for natural disasters that\nhas been approved for businesses effected by the coronavirus pandemic. If you\nhave a low payroll or need funds in excess of the amounts you qualify\nfor under PPP, consider the EIDL loans, as they have low rates, longer\nrepayment terms and can be used for more purposes than the PPP loans.\nHowever, they do not offer any form of loan forgiveness. But they do include a\nquick $10,000 grant to effected businesses that does no need to be\nrepaid. <\/p>\n\n\n\n

So, let\u2019s run a quick scenario on the facts\nabove for a PPP Loan. Let\u2019s say your total \u201cpayroll costs\u201d over the prior\n12-month period is $240,000. As a result, your monthly average payroll is\n$20,000. We then multiply $20,000 by 2.5 and get the maximum loan amount of\n$50,000.<\/p>\n\n\n\n

Let\u2019s further assume that over the eight-week\nperiod after you receive the loan that you use $40,000 for payroll costs,\n$9,000 for rent and $4,000 on utilities. You would then have totally\nqualifying expenses for forgiveness of $53,000. Since you have qualifying\nexpenses in excess of the loan amount, you would be eligible for forgiveness of\nthe entire loan. Not bad, huh? Not bad at all. Finally, we have a stimulus bill\nthat small businesses can be excited about.<\/p>\n\n\n\n

So, What Should You Do Now? <\/strong><\/p>\n\n\n\n

Jonathan Morris, President and CEO of Titan\nBank, an SBA Preferred Lending Partner based in Texas recommends that, \u201cIt is\nimportant that you apply early on. There are 30 million small businesses in the\nU.S. and $350 billion allocated to the program. We expect funds may run out\nbefore everyone can receive a loan.. I\u2019d suggest only applying to FDIC-insured\nbank for PPP loans. Many non-banks are taking applications, but in almost\nall cases they are simply trying to broker this information to banks in return\nfor a fee.\u201d <\/p>\n\n\n\n

What I\u2019d suggest is that you gather\nyour payroll records for the prior 12 months, check the sample loan app\nlinked above and be ready to be amongst the first in line to get a PPP Loan.\nAnd by getting in line, we presume this will be with an application completed\nonline, as most banks have limited in-branch capability right now. I\u2019d\nrecommend working with your current business bankers, if you have one, as they\nwill have your business bank accounts and an established relationship. I have\nalready seen notices from banks with increased questions and demand on these\nloans saying they are only working with existing customers first. If you don\u2019t\nhave a good business-banking relationship, consider small community banks who\ntend to specialize in SBA loans and are more eager to get local businesses as\ncustomers. Open a business checking and savings account there to show them you\nwant to be a customer for the long haul. And finally, consider banks who are\nSBA Preferred Lending Partners, as they\u2019ll be familiar with navigating the new\nSBA rules. Not all banks provide or have SBA loan expertise and the ones who do\ncan usually move faster.  <\/p>\n\n\n\n

Many business owners have learned the hard\nlessons of carrying too much debt. However, this isn\u2019t just any debt. This is\ndebt eligible for forgiveness by the government. It\u2019s debt that will keep your\nemployees on payroll, and it\u2019s an effort by our federal government to ensure\nthat small businesses and their employees can survive the coronavirus\nfinancially. So, step up and take advantage of this program while it\u2019s there.\nWe don\u2019t know how long the coronavirus will impact our economy, small business\nand entrepreneurship, but what we can do is work hard, work smart and take\nadvantage of programs like this that can give us all a better chance at\nbouncing back and staying open for business.<\/p>\n","protected":false},"excerpt":{"rendered":"

The number-one pressure on small-business owners right now is payroll. Whether you\u2019re a sole proprietor one-person-show or a company with 500 employees, you\u2019ve certainly felt the pressure. Maybe you\u2019ve already stopped paying yourself, have laid off workers or cut hours. Well, you can thank your federal government for the best aid program recently offered for small business, [&hellip<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-127","post","type-post","status-publish","format-standard","hentry","category-general"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/posts\/127","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/comments?post=127"}],"version-history":[{"count":1,"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/posts\/127\/revisions"}],"predecessor-version":[{"id":128,"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/posts\/127\/revisions\/128"}],"wp:attachment":[{"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/media?parent=127"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/categories?post=127"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/pjsservicesgroup.com\/blog\/wp-json\/wp\/v2\/tags?post=127"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}