More Funding for the PPP and EIDL is SO Close

Yesterday evening the House passed the $484 Billion relief package that passed the Senate early in the week, and now it is on to the President’s desk for it to be signed into law at noon today.  This is another lifeline after the PPP and EIDL programs ran out of money in less than two weeks.  If you are looking for things you can do now, you can skip to the bottom of this email.  Also you can register for this free webinar from the US Chamber that will cover this new legislation and some steps you can take to find helpful resources during the pandemic.

Before we get into what is in this bill, however, let’s look to see how the first tranche of funding was spread out through April 16th. 

  • Paycheck Protection Program (as of April 16)
    • Over 1.66 Million Loans and over $342 Billion  were approved (not necessarily disbursed)
    • Average Loan size was $206k
    • Loans $150k and under represented 74% of all loans but only 17% of money disbursed
    • Loans over $1 Million represented 4% of all loans but 35.53% of money disbursed
    • Indiana accounted for 35,990 loans (2.17%) and just under $7.5 Billion (2.19%)
  • EIDL Advance Program (as of April 19)
    • 755,476 Advances Processed and almost $3.3 Billion
    • $4,360 average advance
    • Indiana accounted for 9,658 Advances (1.28%) and $46 Million (1.4%)
  • EIDL Loans Program (as of April 19)
    • 26,919 Loans approved and $5.567 Billion
    • $206,802 Average Loan
    • Indiana accounted for 385 loans (1.4%) and just over $75 Million (1.36%0

The most outrageous part that most of us already know, and I have already written about, is that $243.4 Million of the first $349 Billion of the PPP went to publicly traded companies, including $20 Million to Ruth’s Chris Stake House parent and $10 Million to Shake Shack.  Since that time, Shake Shack has decided to give back the money, which will go back into the PPP program and will be reallocated with this new round of funding.

What is in this new package?

  • $310 Billion goes to replenish the Paycheck Protection Program (PPP)
    • $30 Billion of this is earmarked for banks and credit unions with less than $10 billion in assets.  State Bank of Lizton, Home Bank, Stockyard Bank and Trust, and Citizens Bank are in this category.
    • $30 Billion of this is earmarked for banks and credit unions with between $10 and $50 Billion in assets.  Old National and First Merchants are in this category.
  • $10 Billion additional added to the Economic Injury Grants Program
  • $50 Billion additional funding for EIDL Loans, which now is available to our farmers
  • $75 Billion goes to Hospitals
  • $25 Billion goes to testing
    • $11 Billion of this is to help the states with testing

What is not in the package, but might be fixed with guidance?

Well, there are no additional safeguards in this package to make sure that large companies do not gobble up all of the money that was supposed to go to small businesses.  However, there is some good news.  On Thursday morning the SBA and Department of the Treasury issued new guidance that would “make it unlikely that a public company with substantial market value” would be able to qualify for the loans.  This will hopefully keep them from requesting PPP during this next round.  They also ask that the companies who are not able to certify that the PPP loan request was necessary pay back the funds by May 7th, but no guidance on where those funds will go once paid back. All of the loan parameters are staying in place, including the 1% interest rate, 2 year term, funding criteria, and forgiveness requirements.

What steps can you take to give you the best chance to qualify for this round of funding?

  1. If you have already applied for the PPP or EIDL and your loan is in limbo (IE you got a loan number but no funding yet), you are not able to apply for another PPP loan.
  2. If you think your particular bank has not been up to the task or slow in handling your loans, and you have not gotten an SBA loan number, get ready to apply with Paypal, Square, or Intuit, which may be better to suited to handle a higher volume of applicants based on their technology.
    1. Know that you can only apply for one PPP loan, so if yours in currently in the SBA queue, you should not apply with another lender.  If it has not been put in the queue, contact your bank and ask where you are in line, and if you are far behind, take your app somewhere else.
    2. Some larger banks including Chase has been asking some of their clientele to request funding from other sources.
    3. Home Bank is accepting PPP applications from businesses that are not currently customers as well.
  3. If you have not applied for the PPP loan yet
    1. Fill out the PPP application
    2. Get your Formation documents, Entity report, structure, ownership and legal organization documents ready.
    3. Payroll Reports if you have employees
    4. Mortgage or Rent Documents
    5. Utility Expense documents
    6. Proof your business is active and in good standing
      1. Run a Business entity report on INBiz to make sure you are in good standing, if not, get it fixed ASAP
    7. Documentation on how the pandemic has impacted your business
    8. If your business is seasonal, make sure you have information based on your February 15 – June 30th time frame.
    9. If you are Self-Employed or an Independent Contractor:
      1. You can qualify for 2.5x your 2019 monthly net profit up to $100,000
      2. You need to have your 2019 Schedule C even if you have not filed taxes
      3. You can use proceeds on Owner Compensation (see 1), employee payroll costs, mortgage interest payments, and a few other things.
  4. Remember, you can apply for both the PPP and EIDL programs, but you have to spend the money from each program on different items.
    1. EIDL Advance Grants up to $10,000 should be available again, and have been funded at $1000 per employee.  This advance does not have to be repaid if used for:
      1. Providing paid sick leave to employees
      2. maintaining payroll to retain employees
      3. making rent or mortgage payments
      4. repaying obligations that cannot be met due to revenue loss
    2. The EIDL Loan is a 3.75% loan up to 30 year term, payments deferred for a year, and requires collateral for loans over $25,000
      1. EIDL Loan can be used for any of the above items as well as fixed debts, payroll, utilities, accounts payable and other bills that cannot be paid
    3. To qualify for forgiveness, at least 75% of the PPP has to be spent on payroll costs.
      1. Besides Payroll, you can use the PPP for healthcare costs and insurance premiums, rent, utilities, etc.
  5. If you are self-employed or an independent contractor and your business has been impacted by COVID-19, you can file for the $600 weekly federal unemployment benefit from the CARES Act.  Indiana has been working tirelessly to update their systems and can now accept applications today!  PUA payments will be made in May and can be retroactive back to March 29th.

We know this process is not perfect, and there have been a lot of challenges and frustrations in this program, but we will continue to try and provide the most up to date information and resources as information comes out.

Good luck and stay safe out there.

John C. Anderson
Executive Director, Level Two Inc

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Trackbacks & Pingbacks

  1. […] Grants in mid-April, and only reopening to Ag businesses after the second tranche of funding was passed into law on April 24th, the EIDL Grants are now open to all small businesses, and allow for advance payments of the EIDL […]

  2. […] Check and double check your math and information, so that you can certify that everything on your application is right, and that you are using them for the correct purposes.  We all remember the hullabaloo that ensued with the last PPP certification.    […]

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