How to Prepare for the Second Wave of PPP Funding

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Spur
Spur
Apr 22, 2020
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COVID-19 has caught governments, businesses, and individuals off guard, and it’s clear that the crisis is far from over. In the US, poor roll-outs of the government’s relief effort have left many businesses and individuals feeling unprepared to cope with the global pandemic. Confusing policy, last-minute updates, and poor guidance make it difficult to keep up; especially for small businesses that lack the resources to specialize in navigating through these issues.

With yesterday’s news of the additional $310 billion allocated to the Paycheck Protection Program (PPP), small businesses that missed the first wave of funding have another chance to access the funds necessary to keep their business afloat. In this post, we’ll increase your likelihood of successfully receiving relief from the Paycheck Protection Program.

What is the Paycheck Protection Program?

The Paycheck Protection Program (PPP) initially authorized up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. Yesterday, an additional $310 billion was allocated to the program by Senate Democrats. The House is expected to vote and approve the bill on Thursday. Learn more about the PPP and the rest of the CARES Act here.

How do I apply?

Eligibility

All businesses — including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors — with 500 or fewer employees can apply. Learn more about eligibility here.

Finding an Approved Lender

PPP loans are being administered by approved SBA lenders, leaning on the existing SBA 7(a) loan program. When funds become available again, you’ll be able to apply for your PPP loan through any lender seen on the Small Business Administration’s Lender Search Tool.

Preparing your Application

As proven by the first wave of funding, it is incredibly important to move quickly with this application. You can find the application here.

You’ll need to provide accompanying documentation to prove your requested amount is accurate by showing the details of your business before the impact of COVID-19 was felt. Despite the guidance by many ill-informed lenders, there are numerous ways to provide these details that comply with the Treasury Department’s guidance. For the 39% of businesses that outsource their payroll, payroll processing records are an acceptable form of proof. You do not need to provide Form 941 to your lender.

Tip:

If your lender insists on reviewing Form 941, be sure to point them to the guidance offered by the Treasury Department:

SBA recognizes that eligible borrowers that use PEOs or similar payroll providers are required under some state registration laws to report wage and other data on the Employer Identification Number (EIN) of the PEO or other payroll provider. In these cases, payroll documentation provided by the payroll provider that indicates the amount of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s employees will be considered acceptable PPP loan payroll documentation. Relevant information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly Federal Tax Return, should be used if it is available; otherwise, the eligible borrower should obtain a statement from the payroll provider documenting the amount of wages and payroll taxes. In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.

Submitting your Application

At the time of writing, you cannot apply for the PPP loan. In the coming days, the program will begin accepting applications and business owners should be prepared.

In the meantime, we recommend gathering all accompanying documentation, meeting with your lender, and completing your application — even if you can’t submit it at the moment, it is worth spending the time ensuring the application will be accepted without issue.

What if I Already Applied?

Work with your lender to decide the best course of action. Some lenders may ask you to apply again, while others will hold on to your past application. If they aren’t confident in your chances, you may choose to search for other lenders that may be better suited to successfully access the funds.

If you do decide to try other lenders, be sure to confirm with each lender that you will receive a notice before your application is submitted. Multiple applications for the same business will likely trigger a fraud alert, causing your application to be delayed.

Closing Recommendation

Work closely with your lender and third-party payroll provider to ensure you can apply as soon as the program re-opens. Strong relationships with your banking partners and third-party payroll vendors will greatly improve your likelihood of receiving the PPP. Payroll providers are working quickly to adapt to shifting regulations; giving them as much time as possible to create the necessary reports will make the application process far less stressful. Letting your chosen lender know to expect your application (and what that application will look like) at a certain time will generally help expedite the process.