SBA and PPP Loan Critical Updates

There continue to be changes coming in regarding the loan programs. With so many last minute changes regarding the Paycheck Protection Program Loan program, it appears it will most likely not be ready today as anticipated.  Some banks are taking advanced applications which we hope will speed the process but this varies by bank.  We recommend that our clients have all information prepared for when you are able to submit your loan package. Remember, your loan applications will be submitted to YOUR corporate bank, as they prefer to work with customers with existing banking relationships as part of a “know your customer” guidance. They will most likely have an online application process and require their own application and most likely not use the one provided by the SBA earlier this week. If you need funds sooner, you can apply for the Emergency Injury Disaster Loan and draw the $10,000 grant while you wait for your PPP Loan funding. This grant is provided as an advance on the EIDL loan funding and is forgiven, thus treated as a grant and not loan proceeds. However, if you are applying for the PPP Loan, we do recommend that you refrain from drawing on the EIDL proceeds until there is more definitive guidance available regarding the utilization of both loans.

While we currently believe that both loans can be obtained and utilized so long as loan proceeds are used for different expenses, we recommend waiting on drawing anything other than the first $10,000 in grant funds so that we can be completely sure that this will be permitted and that it will not impact your ability to obtain the PPP loan proceeds. This grant would reduce the overall loan forgiveness under the PPP loan program. The AICPA has provided the loan calculator (link provided below) that is the most current and accurate calculator to date .Some changes noted include the following:

  • Independent contractors are NOT to be included in your payroll calculations and instead, they would apply for their own individual PPP Loan.
  • The employer match for FICA and FUTA are not part of the calculation of payroll costs for purposes of loan eligibility.

AICPA Loan Calculator
https://www.aicpa.org/interestareas/privatecompaniespracticesection/qualityservicesdelivery/sba-paycheck-protection-program-resources-for-cpas.html

As always, please let us know if you have any further questions regarding this critical update to the loan program.