A caller on Rush called in about this today. He said the initial application was easy and only two pages. Once he submitted the form to the bank they then wanted over fifteen documents. He said it was nothing but a headache.
If anybody has gone through the process, share you experience.
No you do this online,if approved, they wire it to your account in 3 days.
I believe we are looking at 2 different programs
SBA has always had Disaster Loan Applications, for things like Hurricanes, etc… the rate of the loan is 3.5%. For Covid-19 it seems they added a “Economic Injury Disaster Loan Advance” - which is a disaster loan, for which the first $10K is forgivable. This is the one done on-line, which is very quick.
There is a new loan program under the recently passed CARES Act, called the Payroll Protection Plan. This offers up to $10 million for small business, and is administered through banks who currently are already making SBA Loans. It is very low interest (It started at 0.5%, but I believe banks complained and it is now 1%). This allows much large forgivable amounts, up to 2.5 months of payroll and rent expenses. Can you borrow $10 million, if your company 2.5 month payroll is only $100K? NO - and that’s why SBA is having your local bank get in the middle, to handle approval and administration.
My bank, which is the largest SBA lender in this part of our state, says they are not ready to offer these lines yet - maybe Monday…..
Here is what my banker sent to me as to required documentation:
1. Paycheck Protection Program (“PPP”) – the PPP is a sub-unit to the Small Business Association (“SBA”) 7a Loan Program that is intended to provide short term, forgivable debt to small businesses, nonprofits and veteran organizations for which the lender, as required by the legislation, determines the following qualifications are met:
· whether a business was operational on February 15, 2020;
· whether the business had employees for whom it paid salaries and payroll taxes, or paid independent contractors;
· whether the business has been substantially impacted by COVID-19; and
· whether the organization has under 500 employees.
At this time, the SBA has not issued final guidance on the PPP, therefore ServisFirst cannot accept or process applications. The Bank will provide final instructions once official guidance is available. Businesses will apply for this loan through their bank.
Getting a Head Start
The loan amount your business qualifies for will generally be 2.5x the monthly average of your trailing 12 months of payroll (to include wages of up to $100,000 per employee, group health benefit payments, retirement benefits, paid vacation, and paid medical / sick leave). We recommend you start gathering company
· Payroll reports for 2019 and 2020 year to date showing the following information by employee (your CPA or payroll provider might be able to assist with this):
§ Gross Wages
§ Paid Time Off
§ Paid Vacation
§ Pay for Family Medical Leave
§ State and Local Taxes (Form 940, 941, or 944)
· Completed 2019 business Tax Return or a detailed 2019 Balance Sheet and Income Statement
· Documentation Showing:
§ Payments for Group Health Care Benefits including premiums paid in 2019 through YTD 2020
§ Payment of any company Retirement Benefits paid in 2019 through YTD 2020
§ If applicable, any funds your business received from an Economic Injury loan since 1/30/20.
This is not meant to be a comprehensive list of what will be needed to apply. When final guidance allows, we will have a detailed Application which will specify what additional documentation / information will be required.
Loan Forgiveness
Eligible expenditures for loan forgiveness will be equal to the amount spent by the borrower during an eight-week period after the origination date of the loan on the following items:
· Payroll costs equal to the sum of:
§ Payments of any compensation to employees (salary, wages, commission or similar compensation not to exceed $100,000 on an annualized basis)
§ Payment of cash tips or equivalent
§ Payment for vacation, parental, family, medical or sick leave
§ Allowance for dismissal or separation
§ Payment required for group health benefits (including insurance premiums)
§ Payment of retirement benefit OR Payment of State or Local tax assessed on the compensation of employees
· Interest on any other debt obligation incurred before the covered period, February 15, 2020, and the refinancing of Disaster Relief program loans made between 1/1/20 and the date on which the covered loans are made available to be refinanced.
· Costs related to continuation of group health care benefits during periods of paid sick, medical or family leave, and insurance premiums.
· Employee salaries, commissions or compensations.
· Rent
· Utilities
Collateral – No collateral will be required
Personal Guarantee – No personal guarantee will be required BUT the Government will have recourse to shareholders, members, partners, etc. of a Borrower if loan proceeds are used for an unauthorized purpose.
My wife does them. You need a year of 941’s.
There are no set rules. .. every bank is different.
Seek out local, regional banks. The community banks are far more lenient. They lend heavily to small businesses and have incentive to help them survive.
My son got $9k today... and it’s fully forgivable.