If you missed out on a PPP loan before funds ran out, here’s what you need to do now
In March, Congress passed the CARES Act, which provided $350 billion for small business Payroll Protection Program Loans. It took just two weeks for that money to be exhausted, and while over 1.6 million small businesses did receive funding, many business owners were caught up in the confusion that ensued. Some banks were refusing applications from some customers, others were overwhelmed and not prepared for the amount of applications they received, and worst of all, contractor and sole proprietor applications were not being accepted until just a few days before funding was exhausted.
The package that the President is expected to sign today includes an additional $310 Billion of funding for PPP loans. However, the second round of funding could go faster than the first, due to the existing backlog of applications being processed, and the overall popularity of the program.
If you missed out on funding in the first round, here’s what you can do now to best ensure you can participate in this program.
Apply now if you have not already applied to the PPP
Banks have been processing applications in the order they receive them, so you should apply as soon as possible. However, many won’t re-open submissions until next week due to the existing backlog. While most banks are taking online submissions only, you can obtain the SBA’s standardized loan form so you’ll be ready with the information you’ll need.
If your bank has stopped accepting applications or hasn’t yet prepared their program, there are a variety of online alternatives who have stepped up to offer loan processing services. If your bank has been unresponsive, this is likely because they’ve overwhelmed with requests. Don’t be afraid to seek out other banks or non-conventional lenders.
Do not apply for the PPP more than once
If your application has been accepted and you’ve received confirmation from your lender, sit tight. Applying through multiple lenders, or even sending multiple applications to your bank can push your application to the back of the pile as they try to sort out duplicate submissions. Lenders have been assuring their customers that they will maintain their place in line for those who have already submitted applications.
Get your documentation in order
If you have submitted an application with your bank, but it was put on hold due to the first round of funding running out, get your documentation ready for your banker. To prevent delays in processing you should be ready to submit the required information and calculations for your loan as soon as your bank requests it.
Have a plan for spending the PPP money that maximizes forgiveness
Many business owners have come to us, asking “I got my PPP money, now what?” The rules around forgiveness are still changing and can be complex. Make sure you have a plan for spending the funds, as the clock starts ticking the day you receive the loan. You have 8 weeks to spend the money in order to qualify for loan forgiveness, and the expenses must qualify under the rules of the CARES Act.
If you already received PPP funding in the first round, there is nothing more for you in the new bill.
Just be grateful for what you got, most small businesses were not so fortunate.
There have been lots of questions and uncertainty around payroll calculations, and how debt forgiveness will be processed. Guidance from the SBA has been in flux and even sometimes contradictory. At CFOShare, we have been closely monitoring that guidance, and can provide help with loan documentation and the evolving guidance from banks and the SBA. Please contact us if we can be of assistance.
