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Payroll Protection Program (PPP)

Zachary_SBMZachary_SBM Director of Digital Engagement and StrategyMember admin

The CARES Act includes $350 billion for federally guaranteed loans for small businesses, sole proprietors, self-employed individuals and independent contractors affected by the COVID-19 crisis. These loans can be forgiven if the proceeds are spent on payroll, benefits, mortgage interest, rent and utilities. According to the latest guidance from the Treasury Department, 75% of the loan proceeds should be spent on payroll costs.

For full details, visit: https://venturize.org/resources/payroll-protection-program

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  • Thank you for the webnar. I was able to apply for the Economic Injury Disaster Loans and Loan Advance on Monday. I called the SBA to confirm that my loan was in their system, and they were able to confirm that with the confirmation number. When I asked about when to expect the advance deposit, they couldn't really say.
    I sure hope that my bank (who is a preferred sba lender) will be taking PPP applications tomorrow.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin
    edited April 2020

    Thanks for attending and the feedback, Hank. Please keep us in the loop as you work through the process, so that we can help inform efforts to speed the recovery.

  • hillsa56hillsa56 CFO Member

    Our business has explosive growth beginning in October 2019 following start-up of two major contracts. Our W2 employee count and payroll grew from 3 to 34 people, and $5,000 to more than $250,000 monthly.

    If we use the twelve-month average, we will not approach the suggested eight weeks target. What is available to a firm in our case where a six-month or four-month average is more representative and gets an award closer to the eight-week target?

    I read a new business uses fewer months to determine their average payroll. In the current proposal; that is a twelve-month average, a firm in business for a long time who experienced very rapid growth and who has employed many people as a result is actually penalized (in a way) for growing fast.

    Steve

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @hillsa56 That is a good question. "Seasonal" employers can take a snapshot of payroll from 2/15/19-6/30/19 in their calculation, but yours is not a seasonal situation. Definitely talk to your banker, but it may just be that you qualify for a smaller loan, but all of it would still be forgiven (though that does not solve the issue of how to pay the remaining payroll obligations). Note that you would take the monthly average, and multiply by 2.5. It's also possible (but verify with your lender) that you could take the monthly avg from 3/1/19-2/29/20.

  • TbellTbell MD Member

    1099s under ppp?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @Tbell Independent contractors can apply for their own PPP. According to the latest ruling issued by SBA, what you pay 1099 employees cannot be factored into the payroll calculation or forgivable amount since they can apply on their own.

  • lldirectorlldirector Executive Director Member

    We tried to apply for PPP and were told that we did not meet the minimum -- that we were TOO small.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @Ildirector Thank you for sharing, and sorry that happened. Would you mind sharing or emailing me what bank told you this: [email protected]

  • koldemeyerkoldemeyer Manager Member

    We are a small seasonal lodge (~14 employees) that only operates in the summer (6/8-9/15) and winter (11/15-4/15). We have some turn over each season so there are new employees planning to work for us starting 6/8/2020. Do we still qualify for PPP forgiveness? Can the 8 weeks of PPP be retroactive and or non-sequential? For example, we would ideally like to apply for PPP and use it for 3/15-4/15 payroll as well as 6/8-7/8 payroll. The complication is that it would pay the same number, but different groups of employees due to it being two different seasons at the lodge.

  • lldirectorlldirector Executive Director Member

    Brian, I have emailed you the specifics of our situation as requested above. Thanks.

  • AngieAngie Administrative Manager Member

    We are having trouble applying for the PPP because banks are saying they are not taking any more applications. What can we do? I contacted the local SBDC for help and he had no suggestions.

  • naanernaaner Director Member

    If i have an employee that was supposed to receive a raise. Can i pay him the increased amount and still have it be forgiven?

  • amyZamyZ president Member

    For the PPP, to compute the average monthly payroll, is it the average for the entire 2019 year or just the period of 2/15/19 - 6/30/19? I hired 2 additional employees during the 3rd/4th quarters, so that shorter time period does not accurately represent the monthly salaries paid.

  • akamom30akamom30 president Member

    What if your 1099 contractor of 2019, switched roles and became an employee in 2020? Will the 1099 amount be considered in the PPP loan amount?

  • roshamboroshambo Owner Member

    We are a small business.. Can we apply for a PPP Loan that will cover Salaries, Health Insurance, Monthly Payroll, Monthly Expenses, etc? How do I find lenders in my area?

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭
    edited April 2020

    Question about forgivable rent expense under the PPP program. We pay $XX dollars each month for rent on our commercial space. And then we also pay one annual invoice to cover what's known as the triple net (essentially extra rent that's equivalent to our business's share of the building's property tax, insurance, and maintenance costs for the prior year). It's a different amount every year, but historically it adds an additional 20% approximately to our yearly rent cost. The triple net must be paid in one lump upon receipt of the invoice (which we coincidentally receive around this time of year). Will this triple net cost be allowed as forgivable, in addition to our monthly rent? If it is forgivable, and if we actually do pay that full amount during the 8 weeks covered by PPP, is the full amount of the triple net forgivable or only a portion pro-rated to the 8 (out of 52) weeks?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    Only 25% of the total PPP loan can go to non-payroll expenses for it to be forgivable. Otherwise, it would convert to a 1% interest, 2 year loan. You would not use your rent costs in calculating the total allowable amount, either.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @roshambo Yes, you are eligible for PPP. I would contact your current bank if you have one. If not, you can use this tool from the SBA to find one: https://www.sba.gov/paycheckprotection/find

    You can also contact your local SBDC to see if they can help. Visit venturize.org, select your state and punch in your zip code to find an SBDC near you.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @akamom30 I do not believe your 1099 costs from 2019 would factor into the allowable loan amount, but the expenses you pay for that employee now would be forgivable.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @amyZ Average for the entire year.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @Angie said:
    We are having trouble applying for the PPP because banks are saying they are not taking any more applications. What can we do? I contacted the local SBDC for help and he had no suggestions.

    Sorry, Angie. Some financial technology companies are awaiting the greenlight from the SBA to help process these loans. We hope that happens soon. We would recommend signing up for Funding Circle at https://www.fundingcircle.com/us/paycheck-app-start/

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    Here's a nagging question I've been thinking about. Using a simple example. I borrow an allowable $100 in PPP funds, then spend $75 on payroll and $15 on non-payroll expenses. I have $10 left unused. I assume that the $10 can be repaid to the government on or before the date that re-payment is set to begin, and I can go through the appropriate channels to pursue forgiveness for the $90. Is that correct? Or is there some penalty for having borrowed more than needed? Even though $100 was an allowable amount?

  • WestHarlemDCWestHarlemDC Communication & Development Manager Member

    Hi all! Thank you for this resource. We are a nonprofit grant-making org in West Harlem, NY. Can we apply for PPP as an umbrella organization to help smaller nonprofits who have trouble securing the loan (i.e. their banks do not participate, told they are "too small")?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @WestHarlemDC I do not believe that would be an eligible use of PPP, unfortunately. Are you familiar with this effort in NYC? I would suggest exploring here: https://nff.org/nyc-covid-19-recovery-fund

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @rosenzweig70 That sounds right, although interest will accrue during the 6-month deferment (rate would be 1%). If you paid it off after a couple months, you'd pay less in deferred interest.

  • carhunters2020carhunters2020 Administrative Assistance Member

    We are trying to apply for PPP assistance to maintain our payroll and employees (we have 5), but Wells Fargo (our main bank) will not accept these applications. I am wondering if this is temporary, or if this is a big banking move:( Any advice on how to move forward? Do we need to open accounts in different banks in order to be considered for this assistance?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @carhunters2020 Sorry you are having trouble accessing PPP. I would recommend contacting an approved SBA lender, searchable here: https://www.sba.gov/paycheckprotection/find

    Also, the law allows for some financial technology companies to start offering these loans once they are cleared by SBA. I would recommend signing up for Funding Circle's waitlist here: https://www.fundingcircle.com/us/paycheck-app-start/

    Be wary of any unsolicited email offering you PPP loan, especially for an upfront fee.

  • rosenzweig70rosenzweig70 Managing Partner Member ✭✭

    On behalf of everyone here -- thank you Brian for fielding all these questions! This forum and your contributions are true blessings.

    A couple of other concerns come to mind ;)

    Unemployment
    Our business is in Los Angeles County and considered non-essential. We were mandated by a city order to shut doors by mid March. Given that essentially all of our employees have filed for unemployment benefits based on this disaster related separation... 1) do I need to fear my UI rate spiking? ...and ... 2) do unemployment benefits received by my employees during the 8 weeks that I hope to pay them with PPP funds need to be taken into account when I pursue PPP loan forgiveness?

    Average Pay
    Assuming that our PPP loan is realized, what's known about determining an employee's average pay? The majority of our employees are largely commission based, so their monthly paycheck can vary perhaps as much as 5% to 10% one month to the next. We also have some unique scenarios... for example a new hourly employee that had only worked 2 weeks before the separation... or another employee that worked for us from 2017 through September 2019... then quit... then was rehired mid-February 2020.

    Any insight to these questions would be well appreciated.

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    Glad I can help.

    1a) One of our policy positions for Phase 4 of federal relief legislation is that there be a prohibition on UI rate increases as a result of this crisis. You can read our policy positions and sign-on to our campaign on the sidebar at the following page: https://smallbusinessmajority.org/policy-agenda/covid-19

    1b) You cannot use PPP proceeds to double-dip: if they are receiving UI but you want to use PPP proceeds to pay additional money on top of that--maybe to make them whole--then you could use the proceeds for your contribution. Be clear with your banker about your situation with your employees, and hopefully they can advise you on how much you should take and what you can use the $ on.

    2) You use an average monthly calculation over a 12 month period to determine eligible amount. That period is either all of 2019, or March 2019-Feb 2020 (I have heard some banks using different calcs, as the regulations are somewhat unclear on that point). So if your payroll costs were $1.2 million in 2019, then your approved amount would be $250,000 ($1.2M divided by 12 multiplied by 2.5).

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin
    edited April 2020

    @carhunters2020

    All- Lendistry, a national CDFI lender, is now accepting PPP applications at mylendistry.com

    Here are details from their announcement:

    Please note, our website is having glitches and we are constantly tweaking our system. If you see any errors, please do your best to bypass them for now and our team will correct them on the back-end.

    Please make sure all of your documents are uploaded or this will cause a delay in processing.

    Items needed are the following:
    Photo ID (we will request later on)

    Proof of payroll for past 12 months including the following (see below)
    Corporate documents
    SBA PPP Application (you can download this on our site)

    Information required with loan application.

    1) Copies of payroll tax reports file with the IRS (including Forms 941, 940, state income and unemployment tax filing reports) for the entire year of 2019 and first quarter of 2020 (if available) should be presented.

    2) Copies of payroll reports for each pay period for the preceding 12 months. Such reports should include gross wages including PTO (which might include vacation, sick, and other PTO). This includes payroll should include reports through the pay period preceding the origination of the SBA loan.

    3) Documentation reflecting the health insurance premiums paid by the company under a group health plan including owners of the company for the immediately preceding 12 months prior to the date of the PPP loan origination. Copies of the monthly invoices should suffice.

    4) Documentation of all retirement plan funding by the employer for the immediately preceding 12 months.
    Copies of work papers, schedules and remittances to the retirement plan administrator should be sufficient.

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