Wanted to give everyone an update before we enter round #2 of the PPP applications. The House is scheduled to vote later today and assume President Trump will sign this evening. Not sure if the SBA will fund this Friday or wait until Monday.
For those who are in queue or waiting for funding. If you are in queue with one of the big banks, try to keep your spot in line (wherever the heck that may be), attempt to reach out to local banks (reach out to as many as possible) or last resort would be one of the FinTech's that have come on line, I know several were successful with PayPal before the last funding ran out (be aware they are pulling credit). A lot of banks, credit unions, credit card companies (AMEX), payroll companies and FinTech's have opened to these loans. I will say local banks are your best bet, but I know that is not possible in all instances, however many local banks have opened funding for the PPP loans to non-customers (they are starting to realize a nice 5% commission on a 100% SBA backed loan is not a bad deal). I do not suggest you pull your application with the big banks if in queue but seek out other possibilities based on the probability the big banks may not get to your application. If you are successful with a local bank or FinTech, contact your original bank and ask them to pull your application. Based on conversations with banks, it does not appear the SBA will allow two applications to be submitted for this program by the same taxpayer. I know this is not ideal, but this is the best advice we can give under the current circumstances. The big banks have millions of applications in queue. Bank of America has $46B of loans in queue, Chase has $26B. Many of you may be in queue, but I think most realize how that worked out in round 1. I would not pull my application; but rather seek out other alternatives. I hope the banks get through all loans in queue, but we cannot guarantee anything with the banks. This has made the process very difficult, as we cannot control what the banks are doing. You should have all information from our office to submit, but please contact whoever assisted with your application should you need the information again. We cannot fill out the applications with the FinTech's as the information they ask for requires knowledge we do not have (think about filling out an application for credit and the verification behind it). The payroll and backup information we have provided will be the information you will need to upload for proof of payroll. We will continue to assist in any way possible, but after doing a couple of FinTech applications they are asking questions to pull credit we do not have answers to. If this is the route you choose to go, the applications are not difficult and the calculations you need are on the documents we provided along with the backup payroll documents and application you will need to upload.
For those who have funding and are looking for answers on the forgiveness, we suggest patience as the SBA has not issued final guidance on the forgiveness part. I am currently on a webinar for SBA lenders and I will quote, "a forgiveness formula is currently being developed by the SBA and will likely be available in
near future. It is NOT going to be an all or nothing if you fail to meet the full 75%. Should you not, there will be a reduction in the amount of forgiveness, but the formula is in process". Have to be honest the SBA leadership on the call seemed to be confused on what is eligible for forgiveness or exactly how it will be determined so I guess I don't feel so bad that I don't have answers,
. Based on what I just heard, if you don't get all the way to the 75% there will still be partial forgiveness, so the necessity of hitting the 75% is not an all or nothing. I will point to the application which states 75% of the loan amount must be used on "payroll costs" (defined as gross payroll, health insurance and retirement) in order to obtain full forgiveness. Until final guidance is issued, I must encourage clients to spend this on the purpose of the program which is payroll. The other 25% can be used on rent/mortgage interest, utilities, and interest on loans. If employees are not coming back on payroll, I recommend you only use the loan proceeds for the covered costs listed and nothing else. There are head counts, reduction in pay and other requirements that I don't see as feasible (hence they are working on a "formula"), but until the SBA tells us exactly what to do, I have to issue advice based on my interpretation of the guidelines which is attempt to bring employees back on payroll in order to obtain full forgiveness. If you end up with partial forgiveness you should still have the money and a 1% loan, still not a bad deal.
We are at a crossroads in several industries with employees refusing to come back on payroll because their unemployment benefits are higher. Our suggestion is to document in writing with employees that their jobs were offered back as of date XXX and have them respond in writing they are not coming back. As business owners we are being put in a tough position. In many cases we are being asked to act as the "middle-man" in administering unemployment via the PPP program but are now battling the fact that unemployment benefits, in many cases, are much higher than what business owners are paying. I have heard in the last 24 hours multiple instances of employees refusing to return to payroll. This is a tough position to be in, which is why I fully expect some guidance coming because it seems impossible to figure out what to do under the current conditions. Offer back, document those who refuse and continue down the path we have been going. I know this is a lot of uncertainty, but that is the world we all live in during this 2020 Covid-19 pandemic.
Not that this gives everyone the warm and fuzzy feeling we all would like to have; this is the best information we have on 4/23/2020 as we enter round 2 of the PPP funding.
As we learn more about forgiveness, we will keep everyone updated. I am not the person who likes to say I don't know, but in the current climate with all the uncertainty it is all I have and for that I apologize. This is not easy for any of us, however trying to keep everyone informed and as up to date as possible.