As the COVID-19 pandemic creates unprecedented situations, Guidant Financial is here to help you understand what’s happening, find resources available to assist your small business, and keep you up to date on everything you need to know about small business financing.
Jump to Resources:
- Paycheck Protection Program Reform – Everything You Need to Know
- Additional PPP Funds: Setting Yourself Up for Success
- Your Guide to Small Business Coronavirus Relief: SBA Economic Injury Disaster Loans and the Paycheck Protection Program
- Coronavirus Small Business Relief Loans FAQ
- Google My Business COVID-19 Changes
- Resources for Small Businesses
As of Friday, June 5th, the Paycheck Protection Program Flexibility Act was signed into law. This Act helps reform some of the guidelines that were part of the original Paycheck Protection Program (PPP), which originated in the CARES Act.
What You Need to Know About PPP Reform
- Revised: Recipients now only have to spend 60% percent of loan funds on payroll costs, decreased from 75%. The remaining 40% can be used for business costs like rent and utilities. If you use at least 60% of the PPP loan funds on payroll costs within the covered period, the eligible expenses can be forgiven up to the full loan amount.
- Increased: Loans that aren’t fully forgiven can now be paid back in: 5 years, increased from 2 years.
- Extended: The covered period when a loan recipient can use loan funds for certain expenses while remaining eligible for forgiveness: extended from 8 weeks to 24 weeks.
- Extended: The period when an employer can rehire or eliminate employee headcount, salary, or wages that would otherwise reduce the forgivable amount of a PPP loan: extended to December 31 from June 30th.
- The forgivable amount must be determined without regard to a reduction in the number of employees if the recipient is (1) unable to rehire former employees and is unable to hire similarly qualified employees, or (2) unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
- Revised: The deferral period for PPP loans, which allow recipients to defer payments until they receive compensation for forgiven amounts. Recipients who don’t apply for forgiveness will have 10 months from the program’s expiration to begin making payments.
- Added: Recipients can now use the CARES Act provision that allows deferment of the employer’s payroll taxes for Social Security. Previously, PPP didn’t allow deferment of these taxes on the forgivable portion of the loan.
Additional PPP Funds: Setting Yourself Up for Success
More money for the Paycheck Protection Program (PPP) is now available. You can take action immediately to improve your chances of getting approved for a PPP loan.
Here’s what we’ve learned most recently from our network of lenders and loan professionals.
1. I already applied for a PPP loan, but the first round of money ran out. Do I need to apply again with this second round?
While it will depend on your lender, in most cases if you already applied for the PPP with one lender, you don’t need to apply at that lender again. If your lender has said otherwise, follow their guidance. The best way to know for sure is to contact your lender and ask.
2. How does the PPP application process work?
You’ll start by working with your lender to apply. Your lender could be a national bank like Wells Fargo, your local community bank, an online loan marketplace like Lendio, or an online bank. Once approved, your lender will file your loan with the SBA, which reserves the funds out of the SBA’s allocation. The bank will receive an “eTran number” from the SBA at that time. Then you’ll finalize your loan documentation with your lender to complete the process. The lender has 10 business days to deposit your loan funds once an eTran number is obtained.
3. Should I apply with more than one lender?
Yes. Many small businesses have been approved for their PPP loan by reaching out to multiple lenders. Here are some lender options:
- The bank you hold your business accounts at
- Local community banks
- Online banks
- Online loan marketplaces
If you do apply with multiple lenders and are approved through one (to confirm, make sure you’ve received your eTran number), reach out to the other lenders you applied with and inform them you no longer need the PPP loan. This helps protect you from any concerns about fraudulent behavior.
We’ll continue to work to keep you updated with more information and resources as they become available – because we’re all in this together.
Your Guide to Small Business Coronavirus Relief: SBA Economic Injury Disaster Loans and the Paycheck Protection Program
The US government has two main loan resources for small businesses to gain economic relief from the coronavirus outbreak: the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).
You can apply for both loan programs. If you’re approved for both, you’ll just need to use the funds for different costs. For example, you can use PPP funds to cover your payroll costs and use your EIDL to pay your mortgage or lease.
Here’s a quick comparison chart of the two programs. See below for further details.
The Paycheck Protection Program
What Is It?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act made $349 billion dollars available to small businesses adversely affected by the pandemic.
Part of the CARES Act is the Paycheck Protection Program (PPP). The PPP provides capital to small businesses to make sure they can continue funding payroll and specific expenses. PPP loans are 100 percent guaranteed by the Small Business Administration (SBA) and may be forgiven if you use loan proceeds to fund payroll through the crisis.
What You Need to Know
Paycheck Protection Program loans include:
- Amounts of 2.5x average monthly payroll over 12 months (up to $10 million)
- A fixed interest rate of 1%
- Terms of two years
- Deferred payments for the first 6 months
- No personal guarantee or collateral required, and loans are non-recourse
- Loan is 100% guaranteed by SBA
- Loan must be processed by June 30, 2020
- Up to 100% of the loan can be forgiven
Loans made through the PPP are made via a borrower’s good-faith certification.
What Is Good Faith Certification?
To access a loan, you’ll have to provide good faith certification. In this case, good faith certification means that your business and your loan usage fit the following criteria:
- The current economic conditions make the loan necessary
- Funds will be used for payroll, mortgage, rent or utilities
- You won’t receive another loan under this program
- You’ll provide to documentation to the lender that verifies the number of employees, payroll costs, mortgage interest payments, rent payments, and utilities for the eight weeks after getting the loan
- All the information you provide in your application and all supporting documents and forms is true and accurate
- You affirm that your tax documents are identical to the ones you submitted to the IRS
What’s the Amount of My Loan?
Your loan amount will be equal to the lesser of:
- 2.5x the average total monthly payroll costs over the 12-months prior to getting the loan
- Loan amounts that were made beginning January 31, 2020 and ending when the loan is received (assuming they’re eligible)
Here’s a walkthrough from Guidant on how to estimate your monthly payroll:
What Payroll Costs are Included?
Your maximum loan amount is based on applicable payroll costs. These include:
- Salary, wage, variable compensation (bonuses, tips, commissions)
- Severance payments
- Payments made for vacation, parental, family or sick leave
- Payments required for group healthcare benefits including insurance premiums
- Retirement benefits
- State and local tax paid as a result of the compensation for employees
What Payroll Costs are Excluded?
- Compensation of anyone whose salary is above $100,000 (as prorated for the period of Feb 15 – Dec 31, 2020)
- Compensation for any employee whose principal residence is outside of the U.S.
- Qualified sick or family wages covered by a credit under the Families First Coronavirus Reponse Act
- Payroll, income, or railroad retirement taxes
- Compensation paid to independent contractors (independent contractors can apply for their own PPP loan starting April 10, 2020)
Can My PPP Loan Be Forgiven?
Yes. You’re eligible for forgiveness of the loan equal to the amounts paid for qualifying costs. The forgiveness covers eight weeks – starting the day the loan was originated. Qualifying costs include:
- Payroll costs (see “What Payroll Costs are Included?” above)
- Mortgage interest
- Lease/rent payments
- Utilities paid
- Interest on debts established before February 15, 2020
The loan amount forgiven can’t exceed the principal. Seventy-five percent or more of the forgiven amount needs to have been used for payroll. The lender has 60 days after receiving your application for forgiveness to make a decision. Any amount forgiven won’t be subject to taxes.
Who Is Eligible?
The SBA predicts 99 percent of businesses in the U.S. will be eligible for PPP loans. Here are the types of businesses eligible:
- Small businesses with less than 500 full-time or part-time employees (or per-location if your business is recognized under NAICS 72)
- A 501(c)(3) with less than 500 employees in total
- An individual who is either a sole-proprietor, independent contractor, or is self-employed
- A small business, tribal business, or 501(c)(19) Veterans Organization that meets the SBA’s size standard
Borrowers are ineligible for a PPP loan if they’re engaged in illegal activity, are a household employer, were recently incarcerated or convicted of a felony, are delinquent on a federal loan, or defaulted on a federal loan within the last seven years.
How Do I Apply?
Banks can begin processing PPP loans on 04/03/2020 for most small businesses. Bank processing for sole-proprietors, independent contracts, and self-employed individuals begins on 04/10/2020. Working directly with your bank is the fastest way to access a PPP loan at this time.
- Fill out the Paycheck Protection Program application form.
Here’s a walkthrough from Guidant on how to fill out the application:
- Prepare documentation:
- 2019 and 2020 year to date monthly profit and loss statements
- 2019 and 2020 year to date payroll reports
- State income, payroll, and unemployment insurance filings
- TAX ID/ EIN and complete ownership information
- Additional documents may be needed and may vary by bank
- Call your bank to find out if they’re participating in the Paycheck Protection Program.
SBA Economic Injury Disaster Loan
What Is It?
Right now, small business owners in all 50 U.S. states, Washington D.C., and U.S. territories are eligible to apply for COVID-19 disaster relief loans from the SBA. The Economic Injury Disaster Loan (EIDL) is typically only available within counties that a state governor has identified as a disaster area. Because of the coronavirus outbreak, these loans are now available to small businesses nationwide.
What You Need to Know
- Up to $2,000,000
- Funds disbursed directly from the SBA
- 3.75% interest rate
- Terms up to 30 years
- Collateral and personal guarantee required
- Payments are deferred through December 12, 2020
- $10,000 grant provided less than 1 week after applying
What’s the Amount of My Loan?
EIDLs can provide up to $2 million. The actual amount of your loan will be based on the amount of economic injury. That amount will be determined by your application and lender.
Can My EIDL Loan Be Forgiven?
There are no loan forgiveness provisions applicable to EIDLs.
Who Is Eligible?
All small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan due to the COVID-19 outbreak.
How Do I Apply?
Here’s a walkthrough from Guidant on how to apply:
Coronavirus Small Business Relief Loans FAQ
The Paycheck Protection Program, SBA Economic Injury Disaster Loans, and More
Here at Guidant Financial, we’ve been getting a lot of questions from our clients, industry partners, and small business or franchise owners wanting to know more about what loans are currently available for small business financial relief – and how to access them.
We’ve answered the most common questions here, but we’re learning more every day. We’ll keep updating the FAQ as we learn more.
Google My Business COVID-19 Changes
Your Google My Business (GMB) profile is a great tool for visibility and marketing even during the coronavirus pandemic. Like many other companies, Google is limiting workers in their offices, which is driving them to prioritize critical services. As Google My Business powers millions of Google Maps and Search listings, there are some significant changes to understand.
- You can mark your business as “temporarily closed” if you’ve had to temporarily shut your doors because of COVID-19. If you don’t see this option on your profile, contact Google My Business to request it.
- You can now to add “delivery available” or “take-out available” to your business name – this is usually against GMB guidelines.
- Google will be manually reviewing new listings, claims, and verifications for health-related businesses.
- While Google’s manual review for health-related businesses will delay reviews of other business types, they are prioritizing “reviews for open and closed states, special hours, temporary closures, business descriptions, and business attributes edits for other verified businesses.”
- New reviews, review replies, and questions and answers are currently disabled.
- The Q&A profile section has been removed from all listings.
- If your business has events listed, users will see this warning above your profile’s events section:
We’ll keep you informed of any further GMB changes caused by the coronavirus outbreak.
Resources for Small Businesses
We’ll be regularly updating this list as more resources become available.
Government Resources for Small Businesses
- US Treasury – Paycheck Protection Program loan application form
- US Chamber of Commerce – Coronavirus Response Toolkit
- US Chamber of Commerce – Coronavirus Small Business Guide
- US Chamber of Commerce – Find Your Local Chamber of Commerce
- US Chamber of Commerce – Customizable Safety Steps Flyer For Your Business
- CDC – Guidance for Businesses and Employers
- SBA – Asistencia de Desastre de la SBA en Respuesta al Coronavirus
- SBA – Find Local SBA Assistance
- FEMA – Emergency Planning Exercises
- OSHA – Guidance on Preparing Workplaces for COVID-19
- US Department of Labor – COVID-19 Topics and Resources
- SCORE – Small Business Mentoring and Education
- SCORE – Find a Local Chapter
Other Resources for Small Businesses
This initiative, spearheaded by Kabbage, lets small businesses offer online gift certificates as a means of continuing to generate revenue during the pandemic.
Facebook’s Small Business Grants Program is offering $100 million in cash grands and ad credits for small businesses.
Yelp is providing $25 million in relief for independent, local restaurants and nightlight businesses impacted by the coronavirus. The relief will take the form of waived advertising fees as well as free advertising, products, and services.
- National Federation of Independent Business (NFIB) – Webinar: Congressional and Legal Update for Small Businesses (03/20/2020)
- Restaurant Workers’ Community Foundation (RWCF) – Resources for Restaurants and Workers
- RWCF – COVID-19 Emergency Relief Fund
- Eater’s Master List of Relief Funds for Restaurants, Bars, and Food Service
Assistance and Relief from Financial Institutions
Information is provided for educational purposes only and should not be taken as advice. The above is based on our interpretations, however many details are yet to be clarified. Information continues to change rapidly, so please include your financial professionals (CPA, Attorney, Financial Advisers) in any decisions.