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A GUIDE TO SBA PROGRAMS FOR SMALL BUSINESSES, NON-PROFITS, AND INDEPENDENT CONTRACTORS.

Begin application process SECURELY SUBMIT PPP DOCUMENTS
 

The SBA has developed two initial programs to assist businesses, non-profits, and independent contractors during the Coronavirus pandemic - the Paycheck Protection Program and the Economic Injury Disaster Loan. These programs both provide working capital but are different. The Paycheck Protection Program is facilitated through banks, requires more information, and has clearly defined forgiveness criteria. The Economic Injury Disaster Loan is facilitated through the SBA, requires economic injury, has an expedited funding function, and has forgiveness criteria that are less clear at this time.

Treasury PPP Fact Sheet

SBA PAYCHECK PROTECTION PROGRAM

The Paycheck Protection Program provides small businesses with emergency operating funds in the amount of 2.5 times the average monthly payroll costs up to $10,000,000. Funds can also be used to pay interest on mortgages, rent, and utilities.

 

1. When Can I Apply?

A second round of funding has been approved by Congress. Contact your Banker to begin preparing your application.

2. DO I QUALIFY?

You are eligible if you are:

  • A Business with fewer than 500 employees (including all full-time, part-time and any other status employees)
  • A small business that otherwise meets the SBA size standard
  • A 501(c)(3) with fewer than 500 employees
  • A sole proprietor
  • An independent contractor Self-employed and regularly carry on a trade or business
  • A tribal business concern that meets the SBA size standard
  • A 501(c)(19) veterans organization that meets the SBA size standard

You may be eligible according to these special rules:

  • If you’re in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
  • If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company, the normal affiliation rules do not apply

3. HOW MUCH CAN BE BORROWED?

How do I calculate my average monthly payroll costs?

You can borrow up to 2.5x your average monthly payroll costs, not to exceed $10 million.

The sum of INCLUDED payroll costs - the sum of EXCLUDED payroll costs = PAYROLL COSTS.

INCLUDED: Salary, wages, commissions, tips (capped at $100,000 annualized for each employee). Employee benefits including vacation, parental, family, medical or sick leave; an allowance for separation or dismissal; payments for group health care benefits including insurance premiums and payment of any retirement benefit. State and local taxes assessed on compensation. EXCLUDED: Salary portions above $100,000. Employer-paid life insurance premium.

What are the loan terms?

Rates and terms may change throughout this process according to SBA guidelines. Please talk to a Banker for current rates and terms.

4. HOW MUCH OF MY LOAN WILL BE FORGIVEN?

You are eligible for loan forgiveness equal to the amount you spent on the following items during the 8-week period beginning on the loan’s date of origination:

  • Payroll costs (using the same definition outlined above)
  • Interest on your mortgage obligation incurred in the ordinary course of business
  • Rent on a leasing agreement
  • Utility payments (electricity, gas, water, transportation, telephone or internet)
  • Additional wages paid to tipped employees

How could forgiveness be reduced?

75% of proceeds must be used for payroll. If you have a reduction in your number of employees or a reduction of more than 25% in wages paid to employees, the amount of loan forgiveness is reduced. Loan forgiveness cannot exceed the principal.

5. WHAT WILL SANDHILLS STATE BANK NEED?

All applicants:

  1. Completed Paycheck Protection Program Application
    Borrower Paycheck Protection Program Application
  2. Copies of Payroll Tax Reports Filed with the IRS for 2019 and the Q1 of 2020.
    This includes forms 941, 944, State Income and Unemployment Tax Filing Reports.
  3. Copies of Internal Payroll Reports for Each Pay Period for the Preceding 12 Months.
    Reports should include gross wages including PTO (which might include vacation, sick and other PTO) and documentation that includes additional employer-paid benefits (retirement plan matches, health insurance, etc.).

Additional documents for new customers:

  • Articles of Incorporation / Organization
  • By-Laws / Operating Agreement
  • 2019 Tax Return or P&L + 2020 YTD P&L
  • Current Balance Sheet

 


 

 

SBA ECONOMIC INJURY DISASTER LOAN

The Economic Injury Disaster Loan (EIDL) is a government-direct loan program to provide immediate working capital to businesses that have suffered a substantial economic injury.

The EIDL was the first SBA program in response to this pandemic. It has a quick funding timeline and an initial advance of $10,000 is available to businesses independent of the decision on the loan application. If a loan application is denied, the $10,000 advance is forgiven. If a loan application is accepted, the initial $10,000 advance would be converted to a loan and could be increased. Portions of this loan could be forgivable, although SBA guidance is unclear of the requirements at this point. EIDL loans can be converted to the PPP loan program, but PPP loans cannot be converted to the EIDL program. Businesses should not participate in both loan programs.

1. DO I QUALIFY?

You are eligible if you are:

  1. A business, 501c3 nonprofit organization, cooperative, or employee stock ownership plan up to 500 employees that has suffered substantial economic injury.
  2. A sole proprietor or independent contractor that has suffered substantial economic injury.
  3. A private non profit organization that has suffered substantial economic injury.
  4. A small agricultural cooperative that has suffered substantial economic injury.

2. HOW MUCH CAN BE BORROWED?

  1. Up to $2,000,000.
  2. The disaster loans come with low fixed interest rates set by SBA.
  3. The repayment term is up to 30 years, reducing the monthly cash flow burden.
  4. There are no prepayment penalties.
  5. Although interest will accrue, payments may be deferred for six months.
  6. The time-in-business requirement has been waived, provided your business was operational on January 31, 2020. Rates and terms are subject to change.

3. HOW MUCH OF MY LOAN WILL BE FORGIVEN?

The SBA may advance up to $10,000 of the proceeds of an EIDL to an applicant on an expedited basis, within three days after the SBA receives the application. If the SBA ultimately rejects the application, the applicant may retain this initial $10,000 advance without the need to repay it. If the loan application is approved, the forgiveness guidance is unclear at this time.

These working capital loans may be used only to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or to pay for the expansion. Funds cannot be used to pay down long-term debt. They also cannot be used to consolidate debt.

4. WHAT INFORMATION IS NEEDED TO APPLY?

  1. Business Information (EIN, Org Type)
  2. Financial Info (Gross Revenues, Cost of Goods Sold, Operating Expenses for Trailing 12 Months)
  3. Business Owner Information (Name, Number, Email, DOB, Address, etc)
  4. Verification Questions. Info on party completing the application if the applicant did not complete it. Fund transfer information (Bank Name, Routing Number, Account Number)

ALL EIDL applications are made through the SBA website SBA.gov/Disaster

 

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