I got funding. Now what?

  • EIDL grants are starting to be processed via direct deposit. Anything under $10,000 does not need to be paid back. PPP funds are trickling in, and these dollars will be scrutinized. You have up until eight weeks after you receive the funds to USE the funds, and there are limitations. Here’s what I found online:

    PPP funds are to be used for rent, utilities, and payroll.

    How may the applicant use the loan proceeds?
    A recipient of these funds may use such funds to pay for payroll costs, costs related to the continuation of health care benefits during periods of paid sick, medical, or family leave, and insurance premiums, employee salaries, commissions, or similar compensation, payments of interest on any mortgage obligation (which do not include any prepayment or a payment of principal on a mortgage obligation), rent (including rent under a lease agreement), utilities (including electricity, gas, water, transportation, and phone and internet access for service incurred in the ordinary course of business), and interest on any other debt obligations that were incurred before the covered period.

    The borrower will treat the loan forgiveness as cancelled indebtedness by a lender authorized under Section 7(a) of the SBA.

    However, the loan forgiveness amount will be reduced by multiplying the total of all payments made by the quotient obtained by dividing the average number of full-time equivalent employees (“FTE”) per month employed by the applicant during the covered period by either the average number of FTEs per month employed by the applicant during the period beginning 2/15/19 and ending 6/30/19 or the average number of FTEs per month employed by the applicant during the period beginning 1/1/20 and ending 2/29/20. For seasonable employers, the average is the number of FTEs per month employed by the applicant during the period beginning 2/15/19 and ending 6/30/19.

    Furthermore, the amount of loan forgiveness may be reduced by the amount of any reduction in total salary or wages of any employee during the covered period that is in excess of 25% of the total salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period.

    What requirements must be met in order to achieve forgiveness?

    An applicant that intends to seek loan forgiveness must submit to the lender that is servicing the covered loan application documentation verifying the number of FTEs on payroll and pay rates for the periods described, payroll tax filings reported to the IRS, and state income, payroll, and unemployment insurance filings, cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered mortgage obligations, payments to covered lease obligations, and covered utility payments.
    Furthermore, an applicant must present a certification by a representative of the applicant to certify that the documentation presented is true and correct and the amount for which forgiveness is requested was used to retain employees, make interest payments on a covered mortgage obligation, make payments on a covered rent obligation, or make covered utility payments and any other documentation the SBA requires.

    Without exception, the applicant must submit this required documentation in order to achieve the loan forgiveness pursuant to this law.

  • Note of interest, most outsourced payroll companies are more than happy to provide the documentation needed to not only assist with getting the PPP loan funded, but will also provide the required documentation as needed for your lended. Our company received the loan and funded quickly, an interested point with the loan is that the SBA wires the funds to your bank, however, it is set up in a completely separate checking account so that all transactions may be easily reviewed. Final thought to provide, if you are a restaurant or in the hospitality sector, there is an abundance of legislature being presented to the State of Texas, and it is quite possible that a special session will be in order for restrictions on the loans to be lifted, ie, without vendor purchases, business can’t operated, etc., etc., I will post the information I have from the Texas Restaurant Association and National Restaurant Association if anyone would like to review it. Additionally, there are many private grants available, apply for everything!

  • I would talk with your banker to be sure that you manage this money most judiciously. Your banker can help you ensure that you spend the money in the way that makes the most sense-- so that you are able to stretch the resources to maximum amount.

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