PPP Loan Program Update

The roller coaster of events over the past week has left many Atlanta businesses wondering what could happen next. When it was announced on April 15, 2020, the Paycheck Protection Program (PPP) had exhausted its initial funding fear and anxiety mounted. This was unwelcome news for many who had not yet submitted their application or did not receive an acceptance notice from the Small Business Administration (SBA). On April 20^th, the news was filled with the details of the second round of funding. By yesterday, President Trump has signed the relief package which includes an additional $370B to both the PPP and the Economic Injury Disaster Loan (EIDL) program. The new round of funding means that businesses not able to previously receive a loan will now have the opportunity to do. However, the timeframe for application preparation is short as the SBA announced applications will start being accepted on Monday, April 27, 2020, at 10 EST. To help clients, prospects, and others, Wilson Lewis has provided a highlight on the new funding and tips for compiling loan applications below.

New COVID-19 Relief Package  

The Paycheck Protection Program and Health Care Enhancement Act (the Act) not only provided additional funding for healthcare organizations for COVID-19 testing but also re-funded the PPP loan program with an additional $310B with caveats designed to permit rural and minority businesses broader access. For example, the Act sets aside $30B for loans made by banks with total assets between $10B and $50B. Another $30B is set aside for loans made by banks with assets less than $10B. This $60B allocation is designed to help small businesses that may have been unable to previously secure a loan. Finally, there was also an increase in funding for EIDL emergency grants from $10B to $20B.

PPP Loan Application Preparation

Since some lenders may not accept applications for the second round of funding, it is important to contact them to determine their status. If not, find a lender that will be participating and immediately start communicating with them. Concurrently, invest time in compiling the information and documentation needed for the loan application. This will ensure minimal delays in the application process. The list of documentation and information needed to supplement the loan application is listed below.

• Basic Business Information – This should include the Articles of Incorporation and Operating Agreement.
• Documentation on Monthly Payroll Costs – This should include employee salaries, wages, commissions, payments for vacation, medical, sick leave and severance payments. Also include employee healthcare premiums, retirement benefits, and payment of state and local taxes paid on compensation. Spend time “showing your work” as the SBA may want to see how totals were calculated.
• Full-Time Employee Costs – This should include monthly eligible compensation, annual salaries prorated to a monthly basis, and where compensation exceeds $100,000, applicants need to use $100,000 for proration.
• 2019 Tax Forms- Provide copies of relevant 2019 tax filings such as IRS Form 941, Form 944, 1099s, and any relevant records from an outsourced payroll provider.
• Ownership Verification (Over 20% Equity) Documents – This includes copies of their 2019 Schedule K-1 (S-corporations) or 2019 Form 1065 if incorporated as a partnership. Single Member LLCs should submit a copy of the Form 1040 Schedule or bylaws and operating agreements reflect ownership percentages.

Existing Loan Applications

If a business previously applied for a PPP loan but did not receive funding, then contact the lender to determine whether the application will be automatically considered or if a new one needs to be completed. Be sure to ask plenty of questions as one should not assume the bank will be proactive in their communication. The more questions asked the greater the chance issues will be immediately resolved.

Contact Us

Things are moving rapidly with the PPP loan program and it’s important to act quickly to ensure access to the latest round of funds. It is important to reach out to your lender as soon as possible. If you have questions about the information outlined above or need assistance with a COVID-19 tax analysis or another issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.