Since so many of us are aware of and focused on the SBA Payroll Protection Loan Program, Insider wants to continue to provide updates on what we are reading and hearing.
Lapse in Appropriations – Yesterday came the news that the SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. If you already have an online application in, you may be OK. If not, Congress is working to provide an additional $250 billion into the program, so stand by.
Loans are closing and money is starting to flow – We have heard from several owners this week that they have signed loan documents and received funds.
Local Banks are the real winners – Again, by far the best results have been with local banks. Insider saw the Wells Fargo online application this week and it is fine as long as your equity holders with over 20% ownership are individuals. If the equity is held by another entity, the form becomes problematic and there is no help number or easy contact for questions. The personal touch from a local bank is a huge asset.
Sole Proprietors may see problems – Insider talked to an owner who’s banker declined their application being a sole proprietorship and were not eligible for a PPP loan as they had no W-2 employees. The banker is not correct in this instance, but you have to remember, your bank decides who gets submitted to the SBA for approval. Take the time to read through the Standard Operating Procedures (here is the link) established by the SBA. In this case, Section III, 2, f speaks to what qualifies as payroll costs. It includes this language:
“and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.”
Even though the procedures appear to be clear that income earned by sole proprietors is included, you may need to make your case to your banker. Having read and understanding the Standard Operating Procedures allows you to defend your case.
So what else could we do?
Consider State/Local Assistance
https://www.uschamber.com/co/run/business-financing/state-government-coronavirus-assistance-guide
Consider the Employee Retention Tax Credit
https://www.uschamber.com/report/guide-the-employee-retention-tax-credit
Larger Companies Can Seek “Main Street” Help
https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm
Let us know if you have additional information to share by contacting Insider at johnhweller@comcast.net.
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