February 28, 2024

PPP – Paycheck Protection Program

What is the Paycheck Protection Program?

The SBA Paycheck Protection Program is the official name of the $367 billion in funds allocated by congress and administered by the Small Business Administration (SBA). It’s part of the 7(a) loan program with the goal of providing low-interest loans with favorable terms to small businesses impacted by the current economic crisis caused by COVID-19.

How Do I Apply for the Paycheck Protection Program?

Before you apply, you’ll need to make sure you have answers/documentation for some important information the lender will need to evaluate your SBA loan application. You will need to know much money do you need to borrow to meet your needs, including:

Your payroll costs, including employee salary, wages and commissions, payment of tips, payments for vacation, parental, family, and sick leave, etc. These costs may also include the costs of group health benefits (including insurance premiums), payment of retirement benefits, payment of state and local tax assessment on employee compensation, an income for a sole proprietor or independent contractor not in excess of $100,000.
Your utility expenses, defined as electricity, gas, water, transportation, and telephone or internet access for service that began before February 15, 2020.

Will My Business Qualify for the Paycheck Protection Program?

To qualify for the Paycheck Protection Program, you must be a small business as defined by the SBA. This includes:

Small businesses or non-profit 501(c)(3) organizations with 500 or fewer employees
Small businesses, 501(c)(3) veteran’s organizations or tribal concerns that meet the SBA size standards
Sole proprietors or independent contractors

You must have been in operation on February 14, 2020, and had employees for whom the borrower paid salaries and payroll taxes, or paid independent contractors (as reported on Form1099-MISC). An ‘employee’ includes individuals employed on a full-time, part-time, or other basis.

Additionally, “…individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible,” according to the legislation. If your business falls into this category, you will need to provide documentation such as “payroll tax filings reported to the Internal Revenue Service, Forms 1099-MSC, and income and expenses from the sole proprietorship, as determined by the (SBA) Administrator and the (Treasury) Secretary.”

What Are the Loan Terms Offered Through the Program?

The maximum loan amount is the lesser of $10 million and 2.5 times the average monthly payroll costs (this is why the payroll calculation is so important) for the one year period before the loan was made, with consideration for any seasonality-based adjustments or a shorter period for businesses less than a year old. In other words, if you have been in business for less than a year or are a seasonal business, the nuance of your business will be taken into consideration.

The maximum loan term is 10 years, but shorter terms will also be available. The Secretary of the Treasury, in consultation with the SBA, will set guidance on interest rates and other terms and conditions of the program. Currently interest rates are negotiated between the SBA lender and the borrower, based upon the Prime Rate or the SBA Peg Rate, with a cap.

Interest rates will be deferred for one year.

Can Loans Through the Paycheck Protection Plan Be Forgiven?

These loans are available for forgiveness, but there are some conditions for which some loan forgiveness is available, but don’t assume forgiveness is automatic and any forgiveness (if available in your circumstance) will be based upon factors like your payroll costs, rent, utilities, and interest payments on debts you had previous to receiving the aid—and will go through a review with the lender.

What Should I Be Doing to Prepare my Application?

You will have to provide your 941 (payroll forms for 2019) and if you are a sole prop or do not have employees we will need a copy of your 2019 filed tax returns.

Frequently Asked Questions

What types of businesses and entities are eligible for a PPP loan?

• Businesses and entities must have been in operation on February 15, 2020.

• Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 31(b)(2)(C) that has fewer than 500 employees or fewer employees than established by the relevant industry code.

• Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals.

• Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a North American Industry Classification System code beginning with 72, for which the affiliation rules are waived.

• Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company.

How is the loan size determined? Depending on your business’s situation, the loan size will be calculated in different ways (see below). The maximum loan size is always $10 million.

If you were in business February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date.
If you were not in business between February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum. What costs are eligible for payroll? • Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent) • Payment for vacation, parental, family, medical, or sick leave • Allowance for dismissal or separation • Payment required for the provisions of group health care benefits, including insurance premiums • Payment of any retirement benefit • Payment of State or local tax assessed on the compensation of employees What costs are not eligible for payroll? • Employee/owner compensation over $100,000 • Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code • Compensation of employees whose principal place of residence is outside of the U.S • Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act

What are allowable uses of loan proceeds? • Payroll costs (as noted above) • Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums • Employee salaries, commissions, or similar compensations (see exclusions above) • Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation) • Rent (including rent under a lease agreement) • Utilities • Interest on any other debt obligations that were incurred before the covered period

What are the loan term, interest rate, and fees? The maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge).

How is the forgiveness amount calculated? Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000): • Payroll costs plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation plus and any covered utility payment.

How do I get forgiveness on my PPP loan? You must apply through your lender for forgiveness on your loan. In this application, you must include:

Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings
Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

What happens after the forgiveness period? Any loan amounts not forgiven at the end of one year is carried forward as an ongoing loan with max terms of 10 years, at 4% max interest. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again.

Can I get more than one PPP loan? No, an entity is limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity.

What kind of lender can I get a PPP loan from? All current SBA 7(a) lenders (see more about 7(a) here) are eligible lenders for PPP. The Department of Treasury will also be in charge of authorizing new lenders, including non- bank lenders, to help meet the needs of small business owners.

How does the PPP loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program? Emergency Economic Injury Grant recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan.

Recent Blog Posts

February 28, 2024

SBA Assist Was A Program During Covid

The SBA Assist program was created for companies frustrated with the SBA.

Companies applied for The SBA disaster relief loans, such as PPP or EIDL but had been declined.

Some companies waited weeks and months without a response.

YMV's SBA Assist Team helped companies through this process!

We helped hundreds of clients during covid relief times.

THE EMPLOYEE RETENTION CREDIT (ERC) - Discontinued

The ERC program has ended and is no longer offered, below you can find historical information on the program and how it helped companies during Covid.

The ERC is a refund for wages paid to W2 Employees during eligible time periods. This refund comes in the form of a check mailed directly to your company.

2020

Companies can claim up to $5,000 per W2 employee

2021

Companies can claim up to $21,000 per W2 Employee

Recovery Startup Business

Companies opened after 2/11/20 can claim up to $100,000 in credit

ELIGIBILITY FOR ERC

Reduction in Revenue

2020

May qualify for any quarter in 2020, if gross receipts were less than 50% of gross receipts for the same quarter in 2019

2021

May qualify for any quarter in 2021, if gross receipts were less than 20% of gross receipts for the same quarter in 2019

Government Mandated Closure 2020 - 2021

May qualify for any time period where a business or their suppliers was subject to a government mandated closure that affected their business

Examples

Restaurant – Indoor Dining was limited to 50% Occupancy

Construction Company – Non essential projects were not permitted

Medical Practices – Mandated timed cleaning of offices in between patients or postponement of elective surgeries.

COMMON FAQ

I received a PPP loan, EIDL, or money from the Restaurant Revitalization Fund, do I still qualify?

Yes! A business can receive these funds and still file for ERC. Only the wages used for PPP loan forgiveness may not be used to claim for ERC.

Do my PPP loans and EIDL Loans count towards my gross receipts?

These loans are not counted when reviewing gross receipts tocalculate a reduction in revenue.

My businesses did not have a significant decrease in revenue butI had government mandates that affected a nominal portion ofmy normal business operations, can I still qualify?

Yes! A business can still qualify based on a closure mandate evenwithout qualifying for a reduction in revenue.

Why haven’t my payroll companies or accountants reachedout to help me obtain such significant funds until now?

The ERC is a complicated credit that involves work beyond thescope of just an accountant's or payroll company's software. Eligibilityfor ERC often requires intensive legal analysis. Thus, accountantsneed to work in tandem with lawyers to ensure a proper case study isdeveloped. In addition, the constantly evolving guidance andlandscape of ERC requires that lawyers and accountants stay up todate on all guidance and changes in order to maximize ERC for eachclient. Thus, a firm with accountants and lawyers who are specialist inERC, is best suited to maximize the credit for each company.

EIDL Loans

SBA Economic Injury Disaster Loan (EIDL)

Loan Overview:

The 7(b) loans provide up to $500,000 per entity in assistance with an interest rate of 3.75% for-profit companies and an interest rate of 2.75% for non-profits. The loan terms range up to 30 years, and there are no early payment penalties.

Loan information:

Payments start 12 -18 months after the date of the contract
Funds can be used to business expenses such as pay sick leave for employees who are unable to work due to a direct effect of COVID-19, payroll, materials, rent or mortgage payments, repaying outstanding obligations

Eligibility requirements:

Loans for any business that is affected by COVID-19, has less than 500 employees and was in operation before February 1, 2020, is eligible to apply.

Those interested in applying, must apply before December 31, 2021

Emergency Targeted Advance up to $10,000

There is no requirement to repay the advance even if your business is denied the 7(b) loan
Businesses can get up to $10,000.
Funds can be used to pay business expenses such as pay sick leave for employees who are unable to work due to a direct effect of COVID-19, payroll, materials, rent or mortgage payments, repaying outstanding obligations

FREQUENTLY ASKED QUESTIONS

Economic Injury Disaster Loan Program (EIDL)

1. How do I contact someone to go over an issue I am having with EIDL?

YM Ventures specializes in assisting clients with SBA Loans and the EIDL program. You can call us to discuss the issue you are having and a loan specialist will advise on the proper steps to get your loan approved in the most efficient manner possible. We have hundreds of satisfied clients and we are confident we can help YOU!

2 . How do I get a status update on my EIDL loan / Advance if I applied early and did everything right and still have not heard back?

If you are looking for information on the status of an EIDL loan or advance, please ask one of our Loan advisors to assist you with getting in touch with the SBA to confirm your loan application status.

3. We are a small family owned hotel and applied for EIDL in hopes to receive the maximum of $2M; Is that still possible?

SBA had to make a difficult decision to limit loan amounts to ensure the program reaches as many small businesses as possible. Historically, the maximum amount of EIDL assistance is 2 million dollars. During these unprecedented times and given our current funding levels we do not expect a loan amount to reach $2 million. The current limit is $500,000 up from the original cap of $150,000. However legislation is being worked on to increase this limit back to 2 million .

4. Are there as strict parameters with the EIDL as there are with PPP? For example, can I use the EIDL to pay my business credit card balance?

The Economic Injury Disaster Loan (EIDLs) funds are for working capital to pay the ordinary and necessary debts and obligations as if the business were not impacted by the disaster. Funds cannot be used to refinance existing debt. However if credit cards were used for working capital needs on an emergency basis (similar to obtaining an emergency or bridge loan), they can use the EIDL proceeds to pay the portion of the credit card that was used for emergency purposes as a result of the disaster.

5. Are there certain things that should be paid with the economic injury loan?

EIDL program loan proceeds may be used as working capital to pay for expenses, such as payroll, accounts payable, rent, mortgage, vehicle leases, and other bills that would have been able to be paid if not for the COVID-19 disaster.

6. We have received acknowledgement but no indication as to whether, when or how much funding we may receive. How does this process work?

While your loan is in the processing queue you will receive an invitation to go into the portal. You will see a loan proposal amount. This is for you to indicate whether you accept this amount, want less or decline the loan amount. The proposal is not an approval. The loan is not approved until the loan officer processes the application and requests that you come to the portal to sign loan closing documents.

7. Is collateral taken for EIDL/Advance? Collateral is only taken for loans in excess of $25,000. There is not real estate collateral required. A blanket UCC-1 will be filed against non-real estate business assets. For loans over $200,000 a personal guarantee may be required.

8.If e received a denial for EIDL how can I dispute the denial?

To request reconsideration ask one of our loan specialists about the EIDL Reconsideration Program. Some documents you may need to provide include a copy of your 2019 Business Tax return, a Valid form of government Identification and a business Voided Check and a 4506T which authorizes the SBA to confirm with the IRS that your taxes have been filed.

9. Can the EIDL money be put into an interest-bearing account?

The Treasury can deposit the disbursements to business checking or savings accounts.

10. Does EIDL interest start accruing immediately or is that delayed for the year as well?

EIDL interest accrues when the funds are disbursed to the borrower. The accrued interest will be added on to the remaining term of payments after the deferral period.