Where do I apply for the Paycheck Protection Program (PPP)?
Business owners are being instructed to go to their primary banking partner (with whom they have an existing relationship) to apply for the PPP loan. There are situations where their banking partner isn't offering the PPP loan or have reached their maximum limit. In these cases, business owners are instructed to go to the SBA website.Click here for a list of SBA Lenders.
Tips to remember:
Yes! There are two different loan applications and processes, but if you need more working capital than the PPP loan or EIDL alone you can apply for both. Just remember you have to track how you spend the money, and you can't claim to use loan funds from both loans for the same exact purpose (Example: for the same exact payroll period/same employees). SBA would consider that "double dipping" and potential fraudulent activity. You need to keep track of used funds matching total borrowed government funds to best document and protect yourself.
Do I have to apply for EIDL loan in order to apply for the grant?
Yes. The application for the EIDL Grant (also known as Advance) is the same as the EIDL loan. You would check a box at the end of the SBA EIDL loan Application requesting to be considered for the EIDL Grant.
Will I receive both the grant and PPP loan?
You can apply for the EIDL grant, the EIDL loan (remember the application for the grant is within the EIDL loan application - you would by default be applying for both), and the PPP loan (different application for the PPP loan - you would go to your primary bank relationship to apply for the PPP loan).
Approval for these loans will need to be determined. It takes roughly six weeks to know if you get approved for the EIDL loan (two weeks roughly to find about qualifications for the EIDL grant). The PPP lender will be able to tell you within two weeks if you qualify for the PPP loan (maybe sooner -it's up to the lender).
If I own two companies, can I apply under each company?
You can definitely apply for loans under each company (different Business Legal Names, different EIN or Tax Identification Numbers).
How do I justify a given loan amount, if I am a new business and haven’t realized any profits?
Under the EIDL loan process, you would complete SBA Form 1368 page 2 financial forecast.
You will provide SBA with anticipated loss when historical financial information is unavailable to understand you are a young or growing business. You can reach out to your SBDC advisor to answer questions regarding the projections, but note SBA wants the borrower to complete the form and the forecast. The SBDC advisors cannot do this work for you.
Does the PPP loan cover part-time employees?
You can include total payroll costs (full-time and part-time wage earners) into the average monthly payroll cost. The PPP loan can cover part-time employees.
Note: Interim ruling for this loan dated April 3rd page 18 section iv states full-time employee head count is considered for the forgiveness of the loan. I recommend reading the ruling for yourself. Just remember that 75% of borrowed funds need to be paid in payroll, with a similar average monthly payroll dollar amount to each employee. This has to be done by June 30, 2020. If you use the part-time employee payroll cost to qualify for the loan, and don't bring those people back you run the risk of not meeting the forgiveness goals. Make sure to forecast your cash flow so you don't borrow too much money.
Does the PPP loan cover contractors?
Independent contractors have the ability to apply for the PPP on their own. (April 3rd Interim Ruling page 6 ii); therefore, they should not be used to calculate the PPP payroll costs. Independent contractors are also not counted in the employee count required for loan forgiveness (Page 15 p April 3 Interim Ruling).
If I am the owner and take a paycheck, does PPP cover my pay?
Yes. There is no exclusion in the April 3 Interim Ruling for owner’s income. It does state that employees earning more than $100,000 annually is capped at $100,000 annually.
What if I am offered both the loan and the grant? Can I decline the loan and just take the grant?
Yes! You are not obligated to take out the EIDL loan should it be offered.
How do I calculate average payroll If my employees are commission based?
Simple! You would look at their commission-based income from the 12 months in 2019. You can use historical commission and tips to come up with an average total payroll cost for the PPP formula.
How can I check the process of my application?
To check on the status of your SBA EIDL loan application, email firstname.lastname@example.org or call (800) 659-2955. You will need to reference the EIDL loan application number given once you completed the online SBA application. The PPP application status would be delivered through your PPP lender (an approved SBA lender taking the loan application).
If my company is a 503c, can I still apply?
Yes. April 4th SBA made an announcement that they expanded aid to small 503c's. You can read more about those updates on the SBA website. If you are still unsure, you can use the SBA size standards to search your eligibility or visit the Facts and Question aid provided by SBA.
What type of businesses are not eligible for the EIDL and PPP loans?