Answers to your most pressing questions about PPP lending and lending related to the coronavirus


The Paycheck Protection Program has been successfully extending potentially forgivable loans to millions of small businesses (with fewer than 500 employees) over the past few weeks to help them meet their payroll and other fixed expenses during these challenging times. But unfortunately the program created more questions than answers for many.

In its rush to publicize the legislation, Congress left some details open, leaving many details to the Small Business Administration, the federal agency responsible for managing the program, and the Treasury Department. Here are some of the most frequently asked questions I’ve received over the past week and my guide.

The PPP’s Forgivable Loan Program is designed to help employers keep their employees on their payroll (rather than unemployment) and to add some extra funding to some fixed costs such as rent and utilities. It is not intended to replace lost income.

According to the SBA last Friday the $ 310 billion Congress approved in its second round of funding resulted in $ 187 billion in loans approved by more than 5,400 lenders with an average loan size of approximately $ 73,000. That means there is still $ 123 billion to be allocated. But the money goes fast. So if you are still interested in participating, you should act soon.

The process is taking longer than expected due to the enormous number of applications. The SBA tries to balance the flow between large and small lenders to ensure that funding is distributed fairly. You should expect a waiting time of one to three weeks.

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Yes, but you can only get a loan that is matched against your company’s tax number or social security number. However, be aware that some lenders may prohibit you from applying elsewhere.

Yes sir.

The SBA has issued guidelines for its banks, which act as intermediaries. Some lenders ask for more information than others, but be ready to explain that your business is “affected” by COVID-19 (definition is not clear) and provide your articles of association, tax identification number, payroll, tax return, bills and bank statements as well as 1099 dates if you are an independent contractor or sole proprietor.

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It is best to apply as unemployed. States are now required to cover independent contractors. However, be prepared to provide bank statements and tax returns to support your claims for compensation.

I have told my clients who are independent contractors and sole proprietorships to apply for both but be careful not to let the benefits overlap. The PPP is only valid for eight weeks, so theoretically you should be able to apply for and receive unemployment from the state before or after this period. Be prepared to wait for your application to be processed and provide proof of your income like 1099.

There’s no rule against it, but I recommend you set up a separate bank account for your PPP funds and make any withdrawals you want to request waiver from from that account for easy billing and give your audit -Trail more clarity.

Once the funding is in your bank account, the eight week period begins. The lender must distribute the funds within 10 calendar days of the loan being approved by the SBA.

The program does not accept applications after June 30th (unless the congress is extended). However, if the eight-week period is extended beyond this date, the costs incurred during this period can still be waived.

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No. You will not be able to claim the tax credit – which is 50 percent of up to $ 10,000 of each employee’s quarterly wages for COVID-19-affected companies – while you are on the Paycheck Protection Program.

You can ask your lender to hold off the funding for as long as possible (10 calendar days from the date of approval), but that is your only option other than to decline the loans. If you received the loan and you think you don’t want it, you can return the money to your lender by May 14th. Otherwise, you may not get complete forgiveness.

Any amounts that are not waived remain outstanding as loans and are due two years from the date of funding at an interest rate of 1 percent. Your first payment would be due six months from the date of the grant at the earliest.

They will provide very similar documentation that you provided when applying for the loan. Expect to file pay slips and bills that demonstrate all of the payments you’ve made.

The rules aren’t entirely clear, but I advise my clients that in order to receive full forgiveness, you must reinstate any full-time equivalents you employed and used as the “baseline” for your original loan, compensation and staffing that you included in the formula to determine your credit availability when applying.

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You may still receive forgiveness, but it will be less and based on the proportionate number of employees and the compensation you pay at the end of your eight week forgiveness period compared to the baseline you used.

There is nothing in the rules that prohibits you from asking for forgiveness for more than 75 percent of your wage bill. If an employee chooses not to show up for work after receiving the PPP loan, does the company still have an obligation to continue paying that employee?

No. Even if you ask an employee to return to work and the employee refuses, you may still be able to forego the number and compensation requirements for a full apology. I tell my clients to document these efforts.

The rules on this are still in preparation, but if you’ve used your self-employed income from your Appendix C to offset your credit availability, you’ll need to do a similar calculation – and records like bank statements, bills, 1099. present ‘s – in order to be forgiven.


About Alexander Estrada

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