TH3 CPA: COVID-19 Updated April 20th
Updated: Apr 20, 2020
***April 20th Update***
Yesterday there were reports that lawmakers were very close to a deal on additional funding for the PPP Loan Program ($310 billion) as well as the EIDL Program ($60 billion).
For those who have not applied for the EIDL Grant or PPP Loan Program, we filmed a video this morning with our recommendations.
We are recommending that those who have not yet applied for the PPP loans go ahead and get an application in as soon as possible. We are also recommending applying for the EIDL grant if you have not applied for either one.
If you have not yet applied for the PPP Loan :
Step 1- Talk to your lender to see if they are currently taking applications
Step 2- If your lender is not currently accepting PPP Loan applications consider an alternative lender.
As mentioned in the video, If your lender is not currently accepting applications, here are some alternative lenders who are currently accepting PPP Loan applications.
Gusto- if you are using Gusto for payroll, when you login, you’ll see a note on your dashboard that says “ PPP: Connect with a Gusto recommended lender.” You’ll be able to find the information needed to apply via one of their recommended lenders still accepting applications.
PayPal- currently accepting PPP Loan applications
Updated list of lenders currently accepting PPP Loan Applications (from Gusto)
EIDL Grant Application- the SBA is currently not accepting new applications, however, we expect that to change when additional funds are added to the program. You can only apply for the EIDL Grant online at the SBA site (linked above).
***April 16th Update***
As of this morning reports indicate that the Paycheck Protection Program (PPP) has run out of funds (as expected). The SBA is not currently taking new applications or accepting new lenders to the program.
All signs still point to additional funds being added to the PPP Program and SBA disaster loans. Congress resumes on May 3rd which appears to be the earliest date an agreement to add additional funds could be reached.
This indicates the incredible demand. The SBA has stopped accepting Disaster Loan applications as of yesterday. If you have already applied and have not received the funds, there is a large variance in the funds reported as allocated vs. disbursed. Your loan could still be in process.
If your business is suspended in operations this could be good news assuming additional funds are added as it pushes back the timeline for maximum loan forgiveness.
If the PPP Loan program does not become available again (we don’t anticipate this) or you have applied and been turned down, there is an Employee Retention Credit to small businesses who have had operations suspended or business sales severely impacted by COVID-19.
This credit can apply through the end of the year and maxes out at $5,000 per employee (assuming they were paid $10,000 in qualified wages). There are a number of other factors in this in the timing of the credits.
The credit can be applied to wages paid to employees anytime after March 13, 2020 and into the upcoming months.
This credit is not available to businesses that received a PPP Loan.
***April 10th Update***
In the past few days the SBA has provided some additional clarity in regards to The PPP Loan Program
Loan Deferment (reserving funds but delaying the loan origination date)- the SBA has clarified that the maximum deferment is 10 days. Once approved for the loan by the SBA, the lender has 5-10 days to disburse the funds. The 8 week loan forgiveness window begins the date the borrower receives the funds. We were hoping the deferment window would be longer and lenders were initially confident that it would be.
Loan calculation- as we updated a few days ago, there is now clarity in regards to how to calculate the loan amount.
Funding- the additional funding of $250 billion for the PPP loan program stalled in congress yesterday, although all indications are the additional funds are expected to be approved.
PPP Overview- the US Chamber of Commerce has continued to update it’s PPP Loan Overview document which is a helpful resource.
This is a business decision on the timing of applying for the PPP Loans and it’s not an easy answer for those with businesses with operations currently suspended. We do believe from the reporting we’ve been following that there is expected to be more funding available for this program, however, demand is higher than initial estimates.
The team at our favorite accounting podcast, The Cloud Accounting Podcast (subscribe for riveting accounting news), have put together a website to track the publicly available updates to the PPP Loan Funds. According to the most recent update (Thursday evening) about 40% of the $349 billion of the PPP loan funds have already been allocated to businesses (not received) after this first week. This indicates incredibly high demand as some major banks had not started accepting applications until this past Monday.
Finally, if you have not yet watched the most recent episode of Some Good News, we'd highly recommend it.
**April 7th Update- There still remains some confusion on the calculation for the PPP Loan amount (relating to payroll taxes, retirement benefits, and independent contractors).
We are also hearing that some lenders will be allowing applicants to defer the PPP loan origination date (meaning they can reserve the loan for you and the 8 week forgiveable loan period would start on the date the funds are received). This would be ideal for businesses with operations currently suspended as they could maximize the loan forgiveness window for when they would re-open. We have also heard from some lenders that will NOT be allowing loan deferment. Please talk with your lender.**
The CARES act was signed into law on Friday, March 27th. As we are learning more about the bill, we want to start creating a plan of action for your business. Each situation is unique therefore, we wanted to provide some general guidelines and recommendations for your businesses.
There are multiple types of loans/grants to consider and all loans/grants will not fit each situation. We want to help you process these decisions, so please reach out to us to discuss.
***If you will be applying for any of these loans, please set up a separate checking account at your bank to properly track the loan forgiveness (start this process now)***
SBA Disaster Loan
Available to Apply for Now Here Helpful Overview Here
This disaster loan provides funding of up to $2 million dollars per business and has a 3.75% interest rate. The repayment period can be up to 30 years (determined on a case by case basis).
Streamlined Economic Injury Disaster Loan (EIDL) Grant
Available to Apply for Now Here Forgivable Loan Feature
This will be an advance of up to $10,000 while applying for an SBA Disaster Loan. The SBA must distribute these funds within three days of application. Applicants are not required to repay the advance if used for certain expenses and/or denied for the loan, however any EIDL loan forgiveness amount will be deducted from the PPP loan forgiveness amount (no double-dipping).
Paycheck Protection Program (PPP) Loan
Available to Apply for Now - Contact Your Lender Forgivable Loan Feature Contact Your Lender to Apply Helpful Overview Here
This is a loan for 2.5 times your average monthly payroll costs (wages - includes up to $100,000 per employee including owners, group health insurance premiums, retirement benefits for the last 12 months). The funds used for qualified expenses (payroll, interest payments on mortgages, rent, utilities and other loan interest related to your business) in the first 8 weeks after the loan origination date are forgivable up to the loan amount.
We are in contact (socially distant) with bankers as the details on applying for the Paycheck Protection Program Loan. Contact your business banker to let them know you are planning to apply.
General Guidelines and Recommendations
If you have less than 90 days cash including your Line of Credit...
Consider applying for the SBA Disaster Loan as you may have a longer term need for cash as you build back your business. If you are going to need to borrow more than you can qualify for under the PPP loan, this may be a good option and you will get access to the EIDL Grant while waiting for the SBA loan approval.
Call us to discuss your situation. We are here to help you!
If you have 90 days of cash including your Line of Credit...
Since you do not have an urgent cash need and we believe you have enough resources to outlast the current disruptions to your business, there does not appear to be a need to obtain the SBA Disaster Loan or EIDL grant at this time. The loan forgiveness feature can most likely be maximized with the PPP loan (the EIDL grant forgiveness reduces the PPP loan forgiveness dollar for dollar, so there is not an additional loan forgiveness benefit for the EIDL grant).
Collect the necessary documents to be ready to apply for the PPP Loan as soon as it becomes available. The documents needed to apply for the loan are listed below.
Call us to discuss your situation. We are here to help you!
Paycheck Protection Program (PPP) Loan List of Documents:
Payroll Report for 2019. Payroll Journal Detail/ Quarter 1-4 Form 941's, 2019 Form 940)
1099s for 2019 issued to non-employees who you paid for work performed in your business (not a service performed for your business).
Total of all health insurance premiums your business paid for you and your staff under a group health insurance plan.
Total of all employer paid retirement plan contributions for the last 12 months. Get a detail breakdown from your retirement plan administrator.
Compile Business Information
Here is some information lenders recommend compiling in a spreadsheet or document to be able to provide the bank (download the Excel or PDF template)
· Entity Address
· Entity Phone Number
· Entity EIN
Date of Birth
Cell phone Number
Email (electronic signature)
Social Security number