The Act authorized up to $350 billion in small business loans to be made under the newly created “Paycheck Protection Program” (“PPP”). The program is administered by the U.S. Small Business Administration (“SBA”). Loans made under the PPP are intended to provide small businesses with up to 8 weeks of funds to cover payment of qualified costs including payroll, mortgage, rent, and utility payments. PPP loan proceeds will be forgiven to the extent that the proceeds are used to pay those qualified costs. At least 75% of the forgiven amount must be used for payroll costs.
The first date that PPP loan applications can be submitted is Friday, April 3. Since the funding for PPP loans is limited and offered on a first-come, first-serve basis, it is critical that you take immediate steps to begin the loan application process. These steps include:
- Contact your bank as soon as possible to set an appointment to begin the loan application process. Many banks are giving current customers priority.
- Gather 2019 payroll information including Forms 940, 941, W-2, etc.
- Gather other related information including employee health care, retirement, and other benefit data.
- Complete the PPP loan application. (See the previous link for access to the PPP loan application). Whitley Penn is available to assist you in this process.
In addition to the PPP loan, small businesses may obtain financing under other SBA loan programs. A small business may apply for an “Economic Injury Disaster Loan” (“EIDL”). Applicants under this program can borrow up to $2 million and defer principal and interest payments for up to four years. Note that the forgiveness provisions do not apply to an EIDL. An applicant that applies for an EIDL may request an emergency advance of up to $10,000 that can be disbursed within three days. This amount will be treated as an emergency grant and will not have to be repaid. Click “
” to go to the SBA website where you can apply for an EIDL and emergency grant.
Another option available is a loan under the “Small Business Debt Relief Program” whereby small businesses may request a non-disaster loan. The SBA will pay principal, interest, and fees for a six-month period on loans made under this program. This option provides relief for both current and new borrowers.
Due to the critical timing and analysis required in the loan process, it may be prudent to seek assistance from financial advisors as you undertake this process. Whitley Penn has a task force of professionals available and ready to help you evaluate the various options and choose the financing program that is best for your business. Whitley Penn can assist you in determining the amount of financing for which you qualify and help you to submit the required documents and complete the application process. Please contact us if you have any questions or require additional assistance.