Urgent Update on the Payroll Protection Plan Money

by | Apr 24, 2020 | Uncategorized

As the new tranche of money has been approved by the Senate and the House and awaits the President’s signature, there are some urgent issues you need to be aware of regarding the Payroll Protection Plan money.

If you applied initially and did NOT get funded:

  1. Thousands of loans were approved by the banks participating in the SBA PPP program, but could not be approved by the SBA before they ran out of money. In other words, your application may be sitting in a queue. Your banker should be able to tell you where you are in the process. If you are very far back in that queue, then you may need to look at other options if you have relationships with multiple banks, Paypal, or Quickbooks. You certainly can put in multiple applications and then pull the application if you can get it approved quicker through another lender.
  2. There is a difference between an SBA-preferred lender and an SBA-approved lender.  Processing applications through an SBA-preferred lender may be a significant advantage and may accelerate approval.  Here is a list of the 100 most active SBA 7(a) lenders through 2019.  https://www.sba.gov/article/2020/mar/02/100-most-active-sba-7a-lenders.
  3. Here is a list of banks that Yahoo Finance displayed, and it shows what the banks are requiring. Not all banks required an existing relationship.  See https://finance.yahoo.com/news/ppp-loans-lender-list-requirements-173706601.html
  4. Please know that time is short. You are racing against many other businesses to get this money. Get your 2019 payroll summaries, 2019 941 payroll tax filings, 2019 940 payroll tax filing, and a payroll run for February 2020 which shows how many employees you have.  If you need to request it from your payroll processor, do so immediately.  As soon as the President signs this bill, contact your banker and submit your application.

If you applied initially and were lucky enough to get funded – pay attention to a couple of issues:

  1. Please note that your 8 week period starts on the effective date of your loan. For instance, I have a client that received the funding on April 22, 2020, however, their loan document is dated April 21, 2020. The eight week period starts on the date of your loan document. Therefore, you have 8 weeks from the date of your loan document to spend this money.
  2. Remember: 75% needs to be spent on payroll (exclude any amount of any person who makes over $100,000. For instance, if you have an employee that makes $120,000 per year or $5,000 on a semi-monthly basis, you must exclude anything over $4,167 per pay period), state unemployment insurance, state disability, company-paid medical, dental and retirement.
  3. You can then spend the other 25% on rent and internet services for your business. Make sure you document each and every cost with the amount that you are paying. For instance, you should be able to support payroll with the related payroll report for that period. I recommend opening and depositing the money in a separate account to wall it off from the business. You need to keep this as a loan on your books until you apply for and receive forgiveness.

As always, if you need help navigating these waters, we’re here to help! Call us at (925) 256-6321 or email me jrunalp@unalpcpa.com.