Author: SouthStar Bank

What is the Paycheck Protection Program (PPP)? NOTICES: The deadline to apply for the Paycheck Protection Program (PPP) Round 1 was August 8, 2020. Click here for more information on PPP Round 2, available through March 31, 2021. The Paycheck Protection Program (PPP) authorizes up to $349 billion in forgivable loans to small businesses who maintain payroll during the COVID-19 crisis. Funds may be used for employee payroll (including paid sick or medical leave), employee salaries, mortgage interest payments, rent and utilities. Provides small businesses the opportunity to maintain workforce by providing funds for payroll, mortgage interest, rent and utilities Interest rate is a flat 1.0% for a max 2-year term. However, full amount may be forgiven (see PPP Loan forgiveness below) PPP loans are SBA loans, serviced through your local SBA lender – it is recommended to reach out to your primary bank or local lender first Only one PPP loan can be taken out per business (not per individual) Personal guarantees are not required What does this mean for my business? Businesses may qualify for forgivable loans in order to retain employees. The SBA can provide up to $10 million OR 2.5 times the average monthly salary over the 1-year period before the loan – whichever is less Each employee salary may not exceed $100k These loans may be used for payroll costs (including benefits), interest on mortgage obligations (incurred before Feb. 15, 2020), rent (under lease agreements in force before Feb. 15, 2020) and utilities (for which service began before Feb. 15, 2020) The first 6 months payment will be deferred, however, the loan will accrue interest Who Qualifies for a PPP Loan? All businesses which either: Have 500 or fewer employees Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries. Meet applicable NAICS Code-based size standard or other applicable SBA 7(a) loan size standard, both alone or together with its affiliates Eligible businesses include nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors. In addition, businesses should show documentation of: Operation as of February 15, 2020 with paid employees or independent contractors Necessity of loan to support ongoing operations Funds will be used for payroll, mortgage obligations, rent or utilities How Long will PPP Funding Take? PPP applications will be accepted through your local lender and funding typically takes 2 days from receipt of completed application. Timeline is subject to change based on current volume. How do I apply for a PPP Loan? PPP applications will be accepted through your local lender beginning April 3, 2020. The SBA is continuing to provide guidance to the banks. At this time, we recommend gathering the following: Completed Paycheck Protection Program Application (SBA Form 2483) 2019 IRS Quarterly 940, 941, or 944 payroll tax reports Payroll reports for a twelve-month period (ending on your most recent payroll date), which will show the following information: Gross wages for each employee, including officer(s) if paid […]

The Small Business Administration (SBA) is providing Economic Injury Disaster Loans (EIDL) to businesses affected by Coronavirus (COVID-19). While Texas has been added to the current declared disaster areas , this is no longer required for eligibility. Businesses in all 50 states may begin the application now. What are Economic Injury Disaster Loans (EIDLs)? Loans available through the SBA to businesses suffering substantial economic injury Substantial economic injury is defined by a business’s inability to meet obligations and pay the regular operating expenses required. Provide necessary working capital to help small businesses stay afloat during disasters causing temporary loss of revenue The interest rates will not exceed 3.75% percent per year. Long-term payments are available (not to exceed 30 years). Repayment terms are determined by the borrower’s ability to repay the loan. The interest rate is 3.75% for small businesses and 2.75% for non-profits Businesses with credit available elsewhere are not eligible What does this mean for my business? The SBA can provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the Coronavirus disaster not occurred Loan amount is based on actual economic injury and your business’s financial needs, regardless of whether the business suffered any property damage. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact Who Qualifies for an EIDL Loan? Small businesses and private, non-profit organizations within designated disaster areas of a state or territory – due to the current COVID-19 crisis, all 50 states are eligible Businesses suffering substantial economic injury as a result of Coronavirus Businesses who are unable to otherwise secure credit How Long will EIDL Funding Take? Typically, up to 4 weeks, through the three steps below. Apply Online Loan Processing Information is verified and credit checked Forecasts are completed to determine the loan amount An SBA case manager will contact you to make a recommendation and discuss next steps Decisions typically take 4 weeks Loan Closes and Funds Sign and submit loan documents Initial disbursement of $25k within 5 days An SBA Case Manager is assigned to assist you moving forward How do I apply for an EIDL Loan? Apply online: https://www.sba.gov/funding-programs/disaster-assistance You may also contact the SBA disaster customer service center: 1.800.659.2955 disastercustomerservice@sba.gov TTY: 1.800.877.8339 In addition to the loan application, you will need to complete IRS Form 4506-Ts for: Owner Each principal that owns 20% or more Each general partner or managing member Each owner who owns more than 50% of an affiliate business At least two years complete business tax returns with all schedules Personal Financial Statement for each applicant Schedule of Liabilities for all fixed debts Optional: Items above plus 2 years complete financial statements P&L, Balance Sheet, Cash Flow Monthly revenue records for at least two years What other loan options are available? SBA 7(a) Paycheck Protection Program (PPP) loans are also available. Click here to learn more about the difference between EIDL and PPP. Borrowers may apply […]