On June 19, the SBA announced “enhanced transparency” measures for the PPP program. In its statement issued on the sba.gov website, the agency said that they “will disclose the business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, jobs supported, and loan amount ranges” for all businesses who received PPP loans of over $150,000. For those businesses whose PPP loans were less than $150,000, the SBA has released aggregate data, which can be viewed here. Banks and credit unions that processed the SBA loans do not release such information. The full download of company data for those who have received PPP funding is here. The file is approximately 130MB.
Why Release Business Data?The announcement by the SBA comes on the heels of some controversy involving businesses that the average person might not consider to be a small business, despite the fact that those businesses fit the categorization criteria of the SBA. Even more controversial were businesses with big bank accounts or backers who applied for and received the PPP funds, despite relatively clear knowledge that the business had no need for the funds — or at least much less need than smaller, harder hit businesses — when many smaller businesses applied funds but did not receive any. Finally, some businesses that received PPP funds have fairly close ties to certain politicians, giving at least the appearance of favoritism. Thus, the SBA and bipartisan members of Congress agreed that the names and other data about the businesses that received larger loans would be released.
What Data is Being Released?For loans of $150,000 or more, the SBA released the following data:
- Business names
- NAICS codes
- ZIP codes
- Business type
- Demographic data
- Non-profit information
- Number of jobs supported
- Lender name
- $350,000-$1 million
- $1 million-$2 million
- $2 million-$5 million
- $5 million-$10 million
What Do You Need to Do?Ben Brazell, Chief Administrative Officer at First Reliance Bank in Florence, SC, commented about how First Reliance is handling the release of their customers’ information: “We view this release by the government agencies as our opportunity to be an advisor to our business customers. They need to know — and most of them do not know — that the government is publicizing their business information under the specific context of having applied for and received a PPP loan. We’re taking the proactive approach of helping businesses get in front of any public relations issues that may arise because of their participation in the PPP.” Brazell added, “We’re an intermediary in this transaction between the SBA and the business, and the government has made the decision to make PPP borrowers known.” At this point, there is very little any business can do, if they’ve received a PPP loan for more than $150,000. The government has released that information. Business owners, more than anything, simply need to be aware of that release, and that it is the government who is releasing the information, not the lenders. FINSYNC is the only all-in-one cash flow platform that helps businesses get all their finances in sync, centralize control of cash flow, and get in sync with the right financial professional at the right time.
FINSYNC has created a simple way for banks and credit unions to enable their business customers to apply for loans completely online. In our latest video, Eddie Davis provides a thorough walkthrough of FINSYNC’s Plug and Play electronic loan application solution for banks and credit unions. COVID-19 and the PPP loan process caused the lending market to shift almost completely online. By necessity, borrowers had to apply for PPP loans electronically, and lenders had to serve that need electronically. In many cases, behind the scenes was an extremely manual process. People were up late at night using all kinds of methodology for workflow management, collecting documents, and all of the processes were created and developed on the fly. Borrowers came to realize that it is possible and desirable to complete application workflows with their bank electronically. This video is about how Banks can deliver on that value proposition outside of PPP loans and PPP forgiveness, and make the transition to a completely digital traditional electronic business loan application process. [embed]https://www.youtube.com/watch?v=71aAS7D4kYw[/embed]
The Borrowers ExperienceWhen a financial institution implements FINSYNC’s tools we provision the borrower intake forms. The intake form has your logo featured prominently. We also support traditional types of loans on our loan application. Our lender’s portal is a co-branded experience and we provision a unique URL for you. So where you see “modern lender” in the URL in the video, that's where your financial institution’s name would be. That makes it easy for you to direct people from your business facing portions of your website, your emails, and other marketing campaigns to be sure that your customers can easily get to your lender’s portal page. In the traditional financing section are the types of loans that you can create. These are the “purposes,” and within the portal, you can create as many loan products as you wish. The borrower works through the various tabs to collect their information and set up their account. Then, they are given access to the portal. Once the borrower has access to the portal, they can then submit documentation to your team if required as part of the process for that particular loan product.
The Lender’s ExperienceYour team of business Bankers will login to their portal and they will process loan applications through your internal vetting process all the way through to funded and then pay back. You set up the portal by creating the various loan products that you offer. You'll go through an intake form to set up each new product. Then set the pre-qualification guidelines that the application will then display. When you receive a loan application, you will receive a notification. The application will then either be rejected out of hand if you feel that it's fraudulent or if it's not relevant to your institution. Otherwise, the loan application will get worked through the various stages of vetting. The lender’s portal is a multi-user environment. Each user may have different portions of an application workflow that they handle. Users can assign themselves or unassigned themselves. Or, a specific user can assign certain tasks to certain people on the team.
SummaryThe FINSYNC Lender’s Portal is a full solution for loan application intake and processing. Any lender can now offer electronic loan applications to their customers. Zero core integration required for one low monthly subscription.
Most large corporations have some debt as a standard financing practice. Depending on the economic situation, debt financing can be far cheaper than investor financing. But for many small businesses, having to service debt each month can mean the difference between taking home a paycheck or not, hiring one more employee or working extra hours, or paying your bills on time. Cash is oxygen to small businesses, so you can, and should, pay down your debt. Here are several ways in addition to sacrificing income, new hires, and personal time.
The US Small Business Administration (SBA) Debt ReliefFrom the SBA website: “The SBA will pay 6 months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020.” If you have one of these loans, you do not need to apply for this assistance. According to the SBA, assistance will be automatically provided as follows:
- Loans not on deferment, SBA will begin making payments with the next payment due on the loan and will make six monthly payments.
- For loans currently on deferment, SBA will begin making payments with the next payment due after the deferment period has ended, and will make six monthly payments.
- For loans made after March 27, 2020, and fully disbursed prior to September 27, 2020, SBA will begin making payments with the first payment due on the loan and will make six monthly payments.
SBA Economic Injury Disaster Loans (EIDL)On June 15, the SBA announced that the EIDL program is open again. Small business owners in the US, including Washington D.C. and territories, can apply for an Economic Injury Disaster Loan advance of up to $10,000. This loan advance will not have to be repaid. Recipients do not have to be approved for a loan in order to receive the advance. The amount of the loan advance deducts from the total SBA loan eligibility.
Corporate AssistanceThat’s right: corporate America is helping out America’s small businesses. Here are just a few examples of US enterprises lending a helping hand to small businesses. While such help is generous, keep in mind that it is in these corporations’ best interests to help out the small businesses that put money in their bank accounts. For example, Morgan Stanley's Brian Nowak estimates small businesses comprise 30% to 40% of Facebook's overall advertising base.
- Facebook is offering U.S. small businesses $40 million in grants to help them navigate the coronavirus crisis. Go to facebook.com/grantsforbusiness to determine if your business is eligible. They also rolled out additional features to help small business owners. Facebook now lets business owners to start a Facebook personal fundraiser for their own business. So they can ask their most loyal customers for help with operating costs during the crisis. In addition, they made it easier for businesses to communicate temporary service changes — like changes in open days and hours — to their customers.
- Lowe’s has put up more than $50 million in various types of relief funds for small businesses since the COVID19 pandemic hit the US. In this latest round of funding, the company will “offer small business grants through some of the company's key partners. Including its supplier diversity network. The funds will also expand support to small business home improvement professionals.”
- Vistaprint, Facebook, Verizon, and others offer grants that can help keep your small business afloat during the coronavirus crisis. Companies can qualify for these grants if they have 3 - 20 employees. Located in an economically vulnerable community, and have been impacted by the COVID-19 crisis.
- Finally, here’s a guide of all the companies (as of this writing) offering small business assistance in many different ways to help America’s small businesses weather this storm.
June 24th: Could This Be The Final PPP Forgiveness Update?As its new normal, the SBA released last Friday afternoon (June 19th) what could possibly be the final updated guidance to the Paycheck Protection Program (PPP) loan forgiveness process. Could this be the FINAL PPP loan forgiveness update? Perhaps, but that’s up to Congress and the SBA. We shall simply interpret the language as best we can and make sure anyone with a PPP loan understands how best to get the maximum amount forgiven. To that end, we have updated both our PPP Loan Forgiveness Calculator and our PPP Loan Forgiveness Guide. Both are free, and you can download them by clicking the button below.
What’s New in PPP?The biggest change is that there are now TWO PPP Loan Forgiveness Applications. The standard application, SBA Form 3508, and the new short form SBA Form 3508EZ. It is appropriate that the SBA has named the new short form “EZ”, since we and others have compared the standard form 3508 to a business tax return for its complexity. Only certain PPP borrowers are eligible to use Form 3508EZ. Those borrowers need to meet ONE of these criteria, from yesterday’s SBA press release:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
Other Changes to PPP ForgivenessThe Paycheck Protection Flexibility Act of 2020 (PPFA) was signed in early June, and allows for the following changes to PPP forgiveness.
- The term of PPP loans made after June 5th, 2020 was extended to five years.
- The ratio of payroll to non-payroll costs eligible for forgiveness changed from 75%/25% to 60%/40%.
- The forgiveness period changed from 8 weeks to 24 weeks with an option to continue using an eight-week period.
- The new application instructions added new limits on compensation and other eligible payroll costs for owners.
- The SBA also issued a new interim final rule this week with guidance on calculating loan forgiveness related to employee and owner compensation during the new 24-week covered period described in the PPFA.
What’s Next for Small Businesses and PPP?Believe it or not, there is still PPP loan money available. Small businesses impacted by COVID-19 can still apply for and get a PPP loan. While this latest change could be the final change to PPP forgiveness, we expect the SBA to continue updating its guidance for PPP loan forgiveness as more and more businesses begin the forgiveness application process and more questions arise. If your business received a PPP loan, you should download the SBA forgiveness application or Form 3508EZ, whichever is appropriate, and begin to prepare for your actual forgiveness application. If you are like most people, you will need help from your accountant. We encourage you to invite your accountant to join our network and help you complete and submit your PPP forgiveness application through your bank via our portal. Invite your accountant here or find a virtual accountant here.
Learn how FINSYNC’s easy-to-use tools are making it easier to apply for PPP loan forgiveness. By FINSYNC The Department of the Treasury and The SBA released the official Paycheck Protection Program (PPP) forgiveness application form just under two weeks ago. While many small businesses hoped this would clear up the questions around the programs, ambiguity remains. In fact, some have compared the forgiveness application form to a tax return in its complexity. At FINSYNC, we have been working to help small businesses with their PPP loan application since the first round. Now we are taking the same approach to the PPP forgiveness program.
Portal for PPP Loan ApplicationsFINSYNC is no stranger to handling loan applications. We have been a provider of electronic business loan applications that support multiple types of loans since long before COVID-19. A big part of the process of handling loan applications is the multi-user portal to which loan applications are submitted. This portal helps small businesses and lenders communicate, review, and process various types of loans. When the PPP rolled out, we saw an opportunity to help small businesses with the application process. We followed SBA guidance and quickly adapted our tools for PPP intake and underwriting, and later added PPP forgiveness intake and processing in the same tool.
Problematic PPP Loan Forgiveness ProcessNow that the PPP loan forgiveness application process is open, several problems have arisen. We continue to hear from small businesses that the forgiveness application is as complicated as a tax return. Many struggle to gather the right documentation or decipher the latest guidance from the SBA. When it comes to lenders, they are poorly prepared as well. The simple fact is that lenders are not set up to forgive loans, much less a huge volume of forgiveness applications in a short time frame. That high volume and short time frame, paired together with the changing SBA guidelines, have made it difficult to properly review and process forgiveness applications. Recently, FINSYNC's Eddie Davis explained how banks can make PPP forgiveness manageable to the Independent Community Banker’s Association. It’s clear that businesses need assistance to complete this complicated process. But how can lenders help when the guidelines are continuously updated and banks don’t have the accounting expertise businesses need?
Focus on Educating CustomersIn addition to focusing on developing a robust application tool, FINSYNC is working to educate small businesses that need guidance. Our goal is to deliver the most current information via resources like the PPP forgiveness guide, which contains what you need to know, have, and do to maximize how much of your PPP loan will be forgiven. We’re also offering small businesses a PPP forgiveness calculator that allows those who received a PPP loan to track their expenditures, and ensure maximum forgiveness. The calculator is an easy, fill-in-the-blanks tool that also includes examples you can use for guidance. We’ve broken it down to five steps that should leave you with a complete PPP loan forgiveness calculation. Both tools are updated as the SBA provides new information, and we email our clients as soon as we are up-to-date on the newest changes. Another part of customer education is professional help. FINSYNC’s network of vetted small business accountants is available for those that may need additional guidance.
Easy, Step-by-Step Application ProcessThese educational resources can set you up for success once you’re ready to fill out your PPP loan forgiveness application. FINSYNC’s application process is completely electronic, including application documents, signatures, and, of course, the e-submission to the SBA. For banks and credit unions, the FINSYNC solution does not require any core or IT integration. You can start your PPP loan forgiveness application by going through a simple intake form that mirrors the SBA form. After filling out the form, you are taken to the main portal where your PPP loan forgiveness will be processed. You will create a secure username and password to protect your account and then submit the required supporting documentation Banks typically have multiple team members review an application before it ultimately is approved. FINSYNC makes it easy for bankers to complete their individual tasks, and then hand it over to the next user. This way it becomes a team effort, where each member gets notified about all important changes. After the application is fully reviewed, it is ready for submission to the SBA electronically or manually (when available). The bottom line is the PPP forgiveness process is complicated and there are some details that still need to be worked out. However, we’re gaining more clarity every week. To make this process easier for your small business, take advantage of educational materials and request your bank use our review tools to make this process easier for everyone.
Get ahead on your 2020 taxes and make the best decisions for your business today by taking advantage of tax relief programs and deferrals. By FINSYNC A number of tax changes were introduced to help small businesses get through the economic downturn caused by the COVID-19 pandemic. Many covered the 2019 tax year, but several are applicable for next year’s tax season as well. In some cases, the decisions you make now will affect the tax benefits you can claim for 2020. Some of these programs are mutually exclusive, so it’s wise to consider which ones will be more beneficial for your business next year. Here are the most important small business tax credits, deferrals and changes. Prepare now so you can maximize your small business tax benefits.
Credit for COVID-related Paid Leave ExpensesEmployees of small businesses can receive up to 80 hours of paid sick leave when they are unable to work due to the coronavirus. As an employer, you can get a 100% credit for such expenses, including health insurance costs. Here is some key information you need to know about the credit:
- The eligible expenses must be paid between April 1, 2020, and December 31, 2020.
- If one of your employees is recovering from the coronavirus, seeking diagnosis, or self-quarantining, you can claim credits of $551 per day up to $5,551.
- For employees who are caring for family members or children due to the coronavirus, the claim amount is $200 per day, up to a maximum of $2,000 total.
Employee Retention Tax CreditThe employee retention tax credit is another credit available thanks to 2020 tax changes. As a small business, you can claim 50% of qualified wages paid after March 12th, 2020. For each employee, you can get up to $5,000 in credit. To qualify for this credit, your gross receipts must have declined by at least 50% in the first quarter of 2020 compared to the same period last year, or you must have fully or partially closed down your business due to the coronavirus. Typically, these kinds of things can be documented with invoices and receipts from your accounting software. You can claim this credit in two ways:
- Report the qualified wages each calendar quarter on your Form 941 and deduct that credit from federal employment taxes before paying them.
- Or, you can get a reimbursement for the credit by submitting Form 7200.
Net Operating LossesThe changes that the CARES act made to the amount and time frame for carry back of net operating losses will remain relevant for the 2020 tax year. However, not all businesses are eligible, so read the fine print carefully. The 2020 tax year is the last year you can carry back net operating losses from 2018, 2019, and 2020. This is a great opportunity to get a bigger refund this year, given that you can carry back net operating losses for years that had a 35% tax rate, versus the current 21% rate. To carry back a net operating loss, you must document it well, which means you need proof that the loss occurred. This proof can include bank statements, receipts, and invoices.
Employee Tax DeferralThe CARES act also enables small businesses to defer payment of employer Social Security taxes. This deferral applies to taxes paid between March 27, 2020, and December 31, 2020. Social Security taxes have been deferred by quite a bit, which may affect your taxes in years to come. The new payment schedule is as follows:
- December 31, 2021: 50% of the deferred amount is due
- December 31, 2022: the remaining amount is due
Start Planning for 2020 Taxes NowTaking advantage of these credits and deductions requires you to have a clear sense of your financials. An all-in-one accounting solution such as FINSYNC can help you keep all of your payroll, accounts receivable, and cash flow projections in one place for easy reporting and analysis by you and your tax professionals. While it may feel far in the future, planning for your 2020 taxes now will help you make the best choices for your business, and ensure that you don’t leave any potential savings on the table. With all of the coronavirus-related changes, next year will be a complicated tax year. Preparing now will put your business in the best possible position. Need help preparing your 2019 tax return before the July deadline? Get insight on the small business tax changes you need to know about, and consider getting help from a tax professional.
On June 3, the US Senate unanimously passed the House Bill H.R. 7010 without changes, and on June 5, President Trump signed the bill into law. The bill retroactively makes changes to the Paycheck Protection Program. Accordingly, we will be updating our free PPP Loan Forgiveness Application Guide and Calculator once the SBA provides revised interpretation on Form 3508 (the “PPP Loan Forgiveness Application”). In our ongoing effort to help SBA PPP lenders and their customers get as much of their PPP loans forgiven as possible, FINSYNC is announcing several new partnerships and transparent pricing for lenders to process forgiveness applications directly with the SBA. NOTE: The funding for the second round of PPP loans has not yet run out, surprisingly. The SBA has announced that they will continue to offer PPP loans until December 31, 2020, or the funds run out, whichever comes first. As of this writing, approximately $100 billion in PPP funds were still available for loan applications.
H.R. 7010, Paycheck Protection Program Flexibility Act of 2020The Paycheck Protection Program Flexibility Act which makes some significant changes to the PPP program. These changes are retroactive to the original date of the law. Below are the key changes and how each will affect your outlook on forgiveness and repayment of your PPP loan.
- The business now has 24 weeks to spend the PPP money instead of 8 weeks; however, that does not mean you must take 24 weeks. You can spend your loan proceeds in 8 weeks, and then apply for forgiveness after that period.
- Only 60% of the funds now have to be spent on payroll instead of 75%. The remaining part of the loan can still only be spent on rent, mortgage interest, utilities, and other qualifying expenses. Although the new law technically indicates that a minimum of 60% of the loan must be spent on payroll to qualify for any forgiveness, the SBA and Treasury have publicly stated this minimum cliff will be revised in further guidance to still allow for partial forgiveness instead of no forgiveness if less than 60% is spent on payroll.
- Businesses now have 10 months after the 24-week period to apply for forgiveness. If you don’t apply for forgiveness, then you must begin making payments after that 10 month period has passed.
- The SBA has created what it’s calling the “FTE Safe Harbor." This FTE safe harbor allows for circumstances in which a business is unable to rehire employees that were laid off or furloughed, or hire a replacement, or cannot to return to the same level of business at which they were operating before the pandemic because of COVID-19-related circumstances. If the business can document such circumstances, then the business can qualify for the FTE “safe harbor.”
- The lender has 60 days to review a forgiveness application before submitting it to the SBA.
- The SBA has 90 days to review and consider all applications for forgiveness before approving, approving partial or denying forgiveness.
- All new PPP loans made after this latest “Flexibility” legislation will have a five-year maturity. Lenders are able to extend maturity for loans prior to the latest ‘Flexibility’ legislation at their discretion, but are not required to do so. The interest rate on the loan remains at 1%.
- Borrowers now can defer the 6.2% OASDI (employer payroll) taxes even if the business receives PPP loan forgiveness. The 6.2% OASDI taxes can be deferred for some time even after a loan has been forgiven. That exact time frame is not yet clear.
- Payments of principal and interest can be delayed until either the lender receives payment of the forgiveness amount from the SBA or 10 months after the end of the 24-week period, whichever is earlier.
Transparent Pricing for PPP Forgiveness Application ProcessingMost lenders have been waiting to make a final decision on adopting a PPP Forgiveness solution. FINSYNC has created a turnkey solution, including fully electronic application submission by the business into a digital portal for processing by the lender. Lenders can then submit forgiveness applications electronically to the SBA (when available). We’re so confident in our solution that we’re one of, if not the only solution provider to offer completely transparent pricing.
- $350 per lender user per month
- No implementation fee
- No long-term contract
- No core integration required
Qualified Help for the PPP Forgiveness ApplicationThe SBA PPP Loan Forgiveness Application will be updated once again after this latest legislation is signed into law. The application is already as complex as a business tax return. Unfortunately, these (we hope final) changes will not decrease that complexity. With that in mind, FINSYNC has partnered with several regional accounting firms across the country to put highly qualified accounting resources at the fingertips of businesses who need PPP forgiveness help. Through the FINSYNC Services Portal, any business can get matched with a highly qualified and vetted accountant who knows their industry. Find an accountant for your business today.
A Plug-and-Play PPP Loan Forgiveness ExperienceWe’re committed to providing the most clear, up to date PPP forgiveness guide and calculator to help you prepare to apply for forgiveness. When the time comes for your business to complete the forgiveness application and provide the required documentation, we’ve partnered with the best accountants in the country to walk you through the process. And, for the banks and credit unions who have to process thousands upon thousands of loan forgiveness applications, our solution and pricing are straightforward and completely transparent.
The PPP Forgiveness ProblemBanks and Credit Unions were not set up to forgive loans, much less forgive loans in the volume that PPP has created. Add to that challenge the fact that in-person meetings are not possible, the PPP Forgiveness Application is as complicated as a business tax return, and constantly updated “guidance” from the SBA. Finally, banks and credit unions are not accounting advisors to their small business customers, nor should they be. But these PPP lenders still have to figure out how to process all these PPP Forgiveness applications, and the window for doing so gets smaller every day.
The PPP Forgiveness SolutionWe’ve created a solution for all PPP lenders that requires zero core integration. Our plug-and-play PPP forgiveness solution is divided into three phases:
PPP Forgiveness: So Complex It’s Like a Tax ReturnThe PPP Forgiveness Application is much more complex than anyone expected it to be, especially compared to the “good faith” application that was required to get a PPP loan. We continue to hear that the Forgiveness application is at least as complicated as a business tax return. We shouldn’t be surprised by this complexity, given that PPP loans were created to be free money to the businesses who needed it the most. The difficulty comes in substantiating that “need” with documentation. Most small businesses do not do their own tax returns. There’s a reason for that, and the same reason may apply to completing the PPP Forgiveness Application. To solve that issue, we offer our network of virtual accountants for those businesses that need assistance. Or, perhaps the business’ existing accountants don’t provide this type of guidance. Either way, we can match any small business with a virtual accountant to help them through the PPP forgiveness application process.
How the FINSYNC PPP Forgiveness Solution WorksFirst, the education phase offers free materials including a simplified PDF guide on exactly how to prepare for and complete the PPP Forgiveness Application and a calculator (Excel and Google Sheets) for small businesses to utilize in calculating how much of their loan can be forgiven. Then, as guidance arrives from the SBA, we update these materials and make sure our users get the right updates. We also inform each user that accountant assistance is available through our network of vetted professionals. Next, after the eight week PPP use window has passed, the user will complete the intake form, which is a bank-branded workflow that directly follows the SBA PPP Forgiveness application. Once the user gets through the form section, we create an account and password for their portal. Once they're in the portal, they complete the application including submitting their supporting documents and the lender’s team gets notified that there is a new application pending. Finally, once the forgiveness application is submitted in the lender’s portal, that’s when the lender’s users can access the application, and start processing it to it’s next point, and then passing it on to the next phase for the next user to access it. Ultimately, the lender’s users carry those through to the point at which the application is ready for SBA submission. At that point, the lender either electronically or manually submits the PPP Forgiveness Application to the SBA.
Very Affordable PricingOnce your lender’s portal is deployed, you get visibility into the business and their PPP Forgiveness Application status throughout the process. The cost is $350 per lender user per month, with no long-term contract. You tell us how many users you want and that's what we bill you. You can cancel anytime you need to. We then charge just $25 per successful SBA e-submission. There is no implementation fee.
Schedule A DemoSchedule a personalized demo here. We will be happy to answer specific questions and walk you through the various tools.
Last Friday, May 15, the SBA issued new guidance for PPP loan forgiveness, and also published the official SBA PPP Loan Forgiveness Application (SBA Form 3508). We immediately went to work updating our free guide and calculator. Today, we’re releasing our new guide and an updated version of our free calculator. These tools will be helpful as you prepare to submit your PPP Loan Forgiveness application to the SBA through your lender.
Updated Guide and CalculatorOur SBA PPP Loan Forgiveness guide and calculator are absolutely free, and you can download them by going to this page. We’ve created a Microsoft Excel version and a Google Sheets version of the calculator. The guide is a 4-page PDF. Get them both here.
What Changed?The Community Bankers Association of Georgia has a good update here. To sum up the major changes, other than the issuance of the actual application, here are the pertinent bullet points from that CBA of GA article.
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles, as opposed to exactly 8 weeks from the day you received funding.
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after borrowers received their PPP loan.
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
- Statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
- The new exemption for borrowers whose good-faith, written offers to rehire workers were declined.
What’s the PPP Loan Forgiveness Application Look Like?You can download that document (PDF) here. To sum it up, it looks a lot like a 1040 tax return. That’s good news for our accountants, whose job it is to help us work through forms like this one, but it’s bad news for anyone who thought they could do it themselves. The application is complex, which is why we’ve done the following:
- Created a guide, much clearer than the official SBA instructions. You can see those for yourself here.
- Created a calculator that will help you prepare to complete your official application.
- Vetted thousands of accountants, and set up a simple matching process for any small business to find the right accountant in a few steps.
What Happens Next?We expect the SBA to continue updating its guidance for PPP loan forgiveness as more and more businesses get funding and then begin the forgiveness application process. We encourage everyone who received a PPP loan to go ahead and download the SBA forgiveness application, so you can begin to prepare (or find an accountant for help). Eight weeks after you received your PPP loan, you will have most of the data that you’ll need to complete your forgiveness application. However, we also encourage everyone who received a PPP loan not to wait, but rather to keep accurate and up to date information on your payroll costs and other necessary payments that fall under the acceptable forgiveness uses for your PPP loan. If you are like most people, you will need help from your accountant. We encourage you to invite your accountant to join our network and help you complete and submit your PPP forgiveness application through your bank via our portal. Invite your accountant here or find a virtual accountant here.
From the Employee Retention Tax Credit to the SBA’s Express Small Business Loans, small businesses have options beyond PPP for coronavirus relief. By FINSYNC Many struggling small businesses pinned their hopes on the Paycheck Protection Program (PPP), which essentially offers free money to qualified small businesses who use it correctly to cover payroll. As good as it sounds, not all small businesses were able to capitalize on this popular program. Whether you don’t qualify, your application didn’t get processed before the money ran out, or you need aid outside of payroll relief, there are several programs beyond PPP that offer relief for SMBs that have been affected by coronavirus.
Employee Retention Tax CreditIntroduced in the CARES Act, the Employee Retention Tax Credit (ERC) is similar to PPP in that it’s designed to encourage businesses to keep employees on the payroll. However, unlike PPP the Employee Retention Credit is a refundable payroll tax credit for qualified wages. Businesses that receive a PPP loan are not eligible for the Employee Retention Credit. You don’t have to wait until you file your quarterly taxes to receive the credit. Eligible employers can receive the benefit now by reducing your employment tax deposits or by filing a claim for an “advance refund” of your credit for the quarter.
Amount of the CreditThe amount of the credit is equal to 50% of qualified wages that you pay your employees in the quarter — after March 13, 2020, and before January 1, 2021. Eligible wages are capped at $10,000 per employee, which means the maximum credit for each employee is $5,000.
EligibilityTo be eligible, your business operations must have been suspended partially or fully due to a government shut-down order caused by COVID-19. Your business is also eligible if your gross receipts have declined more than 50% for a quarter in 2020 (compared to the same quarter the prior year).
How to Receive the CreditTo receive eligible tax credits, businesses can claim credits on quarterly employment tax returns (IRS Form 941) starting with the second quarter of 2020. Alternatively, you can reduce the amount of employment taxes you pay without penalty. You can also submit Form 7200 to receive an advance refund.
SBA Express Bridge LoansWhile it’s not new, the Small Business Administration’s Express Bridge Loan Program was expanded in March so that small businesses affected by COVID-19 are eligible. Designed to provide working capital to help businesses survive the economic downturn caused by coronavirus, the 7(a) loan program offers expedited SBA loans up to $25,000. You can apply through any qualified SBA Express lender, though you must have an existing relationship with the lender. Funds for the SBA Express Bridge Loan Pilot Program will be received within 45 days of application approval.
SBA Debt ReliefIf you have an existing SBA loan, chances are you’re already getting help paying it off through the SBA Debt Relief Program. The SBA will automatically pay the principal, interest and fees of current, eligible 7(a), 504 and microloans for a period of 6 months. The same applies for new 7(a), 504, and microloans disbursed prior to September 27, 2020. For loans that are currently on deferment, SBA will start making payments on the next payment due after the deferment period is over.
Discontinued or Limited Coronavirus Relief ProgramsUnfortunately, the Economic Injury Disaster Loan and Advance (EIDL) has tightened eligibility requirements and new applications are only being considered for agricultural businesses. In addition, the $5,000 Save Small Business grants have also hit capacity. Not to worry, in addition to the programs above, online lenders are another option for small businesses that need to access cash fast.
Alternative LendersOnline lenders can provide a lifeline for small businesses who need funding to get through this downturn. Even before the coronavirus crisis, small businesses have been turning to alternative lenders in increasing numbers. According to the Federal Reserve’s 2019 Small Business Credit Survey, 33% of small businesses applied for a loan from an online lender in 2018, up from 19% in 2016 and 25% in 2017. Why? Less stringent application requirements, a streamlined application process — and perhaps most importantly, a higher approval rate. According to the Fed, online lenders approved funding for 76% of small businesses categorized as a medium or high credit risk in 2018. Contrast that with an approval rate of only 34% from large banks and 47% from small banks. More Help on the Horizon: Main Street Lending Program While there’s currently some debate over whether or not there will be a round 3 of PPP funding, additional relief programs have been announced and will be coming soon. One such program is the Main Street Lending Program, which is designed to help small and medium-sized businesses affected by COVID-19. To be eligible for the Main Street Lending Program, businesses must have 15,000 employees or less, and 2019 revenues below $5 billion. The minimum loan starts at $500,000 and the term is four years. Eligible banks can extend new loans or increase existing ones, and interest and principal payment will be deferred for one year. The start date of the program has not been announced yet. Additional programs and opportunities for small business coronavirus relief will also likely be introduced in the coming weeks and months. Take stock of your current options, and take advantage of the programs that can help your business weather this economic downturn.
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