PPP Loans

What’s going on. And the purpose of this video is to cover PPP Loans, the Paycheck Protection Program around COVID-19. Now, depending upon when you’re watching these videos, these loans may or may not still be available to you. All right? So here’s what we’re going to cover. Number one, what is a PPP loan. PPP loan and eligibilities and the application process. First draw, second draw, and then PPP loan forgiveness. So what is a PPP loan? Well, the paycheck protection program is a loan designed to provide a direct incentive for small businesses to keep their workers on payroll during the COVID-19 crisis and or pandemic. Borrowers may be eligible for PPP loan forgiveness if assuming they do the first things. So the SBA is currently offering PPP loans originated by participating community financial institutions, including certified development companies, CDCs. SBA micro-lenders, community development, financial institutions, and minority depository institutions.

MDIs until May 31st 2021, or until remaining funds are exhausted. So if you’re watching this at this, after this, this may or may not be available to you. But, you know, assuming it still is, I would take advantage of it. Now, first draw, essentially, this means if you have not received a paycheck protection program loan before, first draw loans may be available to you. And first draw PPP loans can be used to help fund payroll costs, including benefits, and also may be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs causing by looting vandalism during 2020 in a certain supplier costs and expenses for operations. Now entities typically affected by COVID-19 may be eligible. Sole proprietorships, independent contractors and self-employed persons. Any small business concern that meets the SBA loan size standards, either industry size or the alternative size standard, a small business, 501 (c)(3) non-profit organization, or 501 (c)(19) veteran organization or tribal business concern, section 31 (b)(2)(C) of the small business act with greater of the following things, 500 employees, or that meets the SBA industry standard size of more than 500 employees.

Okay? And then any business with NAICS code that begins with 72 accommodations and food services that has more than one physical location and employees, less than 500 per location. So the application process works like this. So all first draw application PPP loans will have the same terms regardless of the lender or borrower. And if you wish to begin preparing your application, download the following PPP borrower application from the SBA website, to see more information. You can request that what that lender and there’s some lenders that are just straight up asking you to just apply directly on the website without going to the SBA. So the PPP first draw borrow application form is really how you would do that. The first draw borrower application from schedule C filers using gross income. So schedule C means that you’re are sole proprietor or an LLC filing and using individual tax return.

And then a second draw PPP loan is if you’ve previously received a paycheck protection program loan. Certain businesses are eligible for a second draw. Okay? And the way that works is PPP now allow certain eligible borrowers that previously received PPP loan to apply for a second draw loan with the general terms as the first draw loan. Okay? So in order to be eligible for the second draw, the borrower must, number one, previously received the first draw PPP loan and will, or has used the full amount only for authorized uses. And typically your lenders may have already applied for second draw loans on your behalf or reached out to you if you already have the first draw. Okay? Has no more than 300 employees and could demonstrate at least 25% reduction in gross receipts between comparable quarters in 2019 and 2020. So that is very, very important with that.

So the process is fairly simple. So the second draw. Well the, the terms will be the same regardless of the lender. And if you wish to begin preparing your application, it can be downloaded at the PPP borrower application from the SBA website and or directly with the lender that you use to get the first draw. So PPP second draw borrower application form will be used for that. And then the second draw borrower application from your schedule C, assuming you’re a schedule C followers from your personal tax return. So loan forgiveness, the way this works. So first and second draw loans are made up for eligible borrowers to qualify for the full loan amount of forgiveness during the 8 to 24 week period covered by the following disbursements. So number one, employee and compensation levels are maintained. Number two, the loan proceeds are spent on payroll costs and other eligible expenses.

and at least 60% of the proceeds are spent on payroll costs. So, again, this is when you should apply for loan forgiveness. So a borrower can apply for loan forgiveness once all loan proceeds with the borrowers requesting forgiveness have been used, and then also borrowers comply for forgiveness any time at the maturity date of the loan. So this is a really, really powerful thing. If you haven’t taken advantage of, I didn’t personally take advantage of it, but it still is. Borrowers do not apply for forgiveness within 10 months after their last day covered of the covered period, then PPP loan payments are no longer deferred and borrowers will begin making loan payments towards a PPP lender. So the application process is fairly simple. Contact your PPP loan lender. Your loan lender is going to provide you with either an SBA form 3508, SBA form 3508 Easy or SBA form 3508 S or any type of vendor equivalent. And they’ll complete, they’ll compile all your documentation and that’s going to include payroll, W-2 payroll,

non-payroll. And also, they’re going to submit any additional forgiveness forms and documentation to your PPP ninja to include all those additional information that they request, continue to communicate with the lender throughout the process. All right? So that way they can have everything that they need, but that’s how those program works. If you happen to be watching this video before that, I would take advantage of it. If not, this is just information that may or may not come available to you, depending upon how things go with the COVID.