Tuesday, October 27th, 2020

How to prepare for a new round of PPP funding

Posted: Friday, April 24, 2020

As an additional $310 billion in Paycheck Protection Program (PPP) funding will be approved by the end of the week, there are certain steps small business owners can take now to improve their chances of securing funding for their businesses.

PPP was established as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act and has been implemented by the Small Business Association (SBA). PPP provides small businesses with funds to pay up to eight weeks of payroll costs, including certain benefits. Funds can also be used to pay interest on mortgages, rent and utilities. If certain conditions are met, the loans may be forgiven (at least 75% of the forgiven amount must have been used for payroll).

Applications for the initial $349 billion in funding began April 3, and unfortunately the money was exhausted in less than two weeks. According to the SBA’s PPP Report through April 16, a total of 1,661,367 loans have been approved, providing over $342 billion dollars in loans; 35,990 loans were approved for Indiana businesses for a total of $7.4 billion.

PPP has not been without controversy, but a substantial amount of funding is working its way through the lending system to help small businesses maintain or rehire employees. Of the $310 billion coming this week, $60 billion is set aside for small, midsize and community lenders. If a small business has not yet had an opportunity to apply for a loan through PPP, it is time to take action to increase the chances for success in the second round of PPP funding.

Establish a lender relationship now. PPP loan applications must be submitted by an SBA lender. If a business does not have an existing relationship with an SBA lender, now is the time to act. The SBA’s site can help you find a lender here: https://www.sba.gov/paycheckprotection/find. Gather data. The loan application is available on the SBA’s website, sba.gov. Small business owners should familiarize themselves now with the required information and be prepared to respond to all questions. If a business has affiliates, it will be necessary to determine whether those relationships will push the business above the 500-employee threshold or the SBA industry size standard for businesses with more than 500 employees.

Add information to the application. While not required on the application itself, include the following information on your application to simplify submission by your lender: (1) date the business entity was created (the date of incorporation for corporations or organization for limited liability companies); (2) the nine (not five) digit zip code for the business entity and each owner identified on the application; and (3) the NAICS code for the business.

Engage your advisors. It will be helpful to work with your payroll processor, accountant and/or legal counsel as you prepare to submit your PPP application. Such professionals are following the developments and will be able to provide valuable guidance. Last round, the SBA issued guidance shortly before business owners could submit applications and it has continued to do so. Therefore, business owners should continue to monitor the SBA’s website for additional information as the second round of funding becomes available.