Small Business Owner’s Guide for Relief Loans – Tips from WizeHire
This page provides regularly updated information on the Paycheck Protection Program (PPP) and is based on emails originally shared with WizeHire customers.
June 3, 2020:
The Payment Protection Program Flexibility Act just passed in the Senate and is now on its way to the President’s desk.
May 29, 2020:
As May wraps up, demand for PPP loans has slowed and roughly $140 billion in funding remains from the 2nd round. According to the Census Bureau, 75% of businesses have requested PPP loans and 70% have received funding.
Now, the focus has shifted to how more small businesses can take advantage of the program. The House recently passed the Payment Protection Program Flexibility Act, which would ease restrictions and forgiveness rules and allow businesses more time to use the loan and spend more of the proceeds on operations. The bill now moves to the Senate where we hope it will pass next week.
Here’s a breakdown of the planned changes:
- Reduce the minimum amount that must be spent on payroll from 75% to 60%. This would allow up to 40% to be spent on rent, utilities, and other operating expenses.
- Increase the timeline to spend PPP loan funding from 8 weeks to 24 weeks, giving more businesses time to return to work and rehire.
- In the event funds are not forgiven, increase the repayment timeline from two years to five years.
While we’re waiting, next week many businesses will enter the eighth week since receiving approval for their PPP loans, and face deadlines for the current forgiveness rules.
For all businesses that have received funding, our friends at Gusto have put together a great guide to help plan for full PPP loan forgiveness. https://gusto.com/blog/business-finance/ppp-loan-forgiveness-spending-guide
May 4, 2020:
The SBA resumed accepting applications for PPP Loans last Monday, April 27. In the first week of this 2nd round, 2.2 million loans were processed, providing small businesses with $175 billion in funding.
With more than half of the second round dollars already allocated, funding is likely to run out this week.
If you’ve been unable to apply for a PPP loan through a national bank, I continue to recommend your local lenders as the best choice. Forbes has also put together a list of non-bank and alternative lenders worth considering.
April 24th, 2020:
Earlier today, an expansion to the PPP was signed into law, replenishing the program with $310 billion. The law also brings an additional $60 billion for the Economic Injury Disaster Loan program. With this added funding, the SBA will be able to continue processing PPP loan applications on a first-come, first-served basis. If you haven’t submitted an application yet, Gusto has put together an updated list of lenders currently accepting applications.
April 16th, 2020:
PPP loan funding ran out this morning and Congress continues to negotiate an additional $250B in funding. If you did not hear back on your loan, we recommend reaching out to your legislators to share your story by either calling (202) 224-3121 or using the Find Your Representative website: https://www.house.gov/representatives/find-your-representative
April 10th, 2020:
I’ve been talking to a lot of business owners about their PPP experiences and I’m hearing the same things: a small percentage are getting funding so far (typically from smaller, local banks), while many are stuck waiting, and for a few, big banks are turning customers away.
If your current bank will not accept your application, I want to share two lenders that we’ve confirmed are accepting and processing loans from non-customers:
Additionally, here’s a list of some smaller banks are worth exploring: https://smartasset.com/insights/ppp-loan-lenders (The ones noted with ** are already taking applications from non-customers).
Important: If you’ve already applied for a loan but haven’t been approved yet, don’t apply again. The SBA outlines this and other questions in a new FAQ. Only apply again if your current lender has pushed you to do so.
April 2nd, 2020:
From one business owner to another, I wanted to make sure you’re prepared so you can benefit from the small business relief programs available starting April 3rd, through the recently passed CARES Act.
In my opinion, the most critical element of this law for small businesses is the $349 billion set aside for the Paycheck Protection Program (PPP). This program is separate from the disaster loan program I mentioned two weeks back.
The PPP works through the Small Business Administration in partnership with local banks to ensure companies like yours have the necessary capital to maintain operations and retain your people—through emergency loans that are ultimately forgiven.
This program is being launched at a rapid pace. Someone at your bank is likely working tonight to ensure things go smoothly.
I highly encourage you to evaluate this program for your business and contact your bank. The SBA is anticipating running out of funds within two weeks of the application opening. Time is of the essence.
If you haven’t researched the program yet, I wanted to share the latest resources with you:
- The US Chamber of Commerce put together a great guide on the program outlining how to qualify, what lenders will require, how much you may borrow, and what is forgiven.
- The PPP will work through existing bank programs, however not every bank will accept applications on April 3rd. The SBA provides a lender matching tool to help businesses find lenders. If you do not already have a banker with an existing SBA program in mind, use this list to find options.
- Yesterday, the Treasury provided a sample application form. It may change by tomorrow, but one thing is clear: it is about as simple as government forms can be. Your lender of choice will likely use a very similar application form.
If you choose to apply, you’ll need the following payroll documents:
- Every employee’s W-2 for 2019 and when applicable, Form W-2 C
- All 4 quarterly-filed Form 941 due to IRS within 30 days following quarter-end
- Annual IRS Form 940 due to IRS by January 31
- Each independent contractor’s 1099
- All 4 quarterly-filed Form 1040-ES for self-employed individuals
- The 2019 YTD detail of payroll paid (if you use a third-party tax service)