Webinar FAQ's: Understanding COVID-19 SBA Disaster and Small Business Loans
This information is provided to bring attention to developments in the law. The responses are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.
What is the timing of the Program?
Although timing is fluid and banks need guidance from SBA, applications will open on Friday, April 3 for small businesses & sole proprietorships. Applications will open April 10 for independent contractors and self-employed individuals. How long it takes banks to process applications will depend on the bank and when they get guidance from SBA.
Are sole-proprietorships and self-employed individuals eligible?
Yes, subject to the other qualification requirements.
Are 501(c)(3) Churches eligible?
The statute appears to make them eligible, but this may conflict with existing SBA regulations. Banks may require further guidance from SBA before making PPP loans to 501(c)(3) churches.
Can I get an SBA Economic Injury Disaster Loan and a PPP Loan?
Generally, no unless you get the loan for a separate disaster or obtained the loan prior to the application date. Please consult an advisor or SBA with your specific circumstances.
Have SBA affiliation rules been waived for all businesses?
No, the statute waived SBA affiliation rules only for certain businesses. Please consult an advisor or SBA with your specific circumstances.
Does 2.5x Loan Amount apply to just payroll costs or does it include rent, utilities, and mortgage payments?
Just payroll costs.
Are 1099 Employees included in calculations?
Generally yes if they report such payments as self-employment income, subject to a $100,000 annualized cap per person. Please consult an advisor or SBA with your specific circumstances.
Does PPP Loan require owner guarantee?
No.
What if my business is seasonal or has not been open for a full year?
Different periods apply for calculating payroll. Please consult an advisor or SBA with your specific circumstances.
What documents am I required to submit for a PPP Application?
It is unknown exactly what each bank will require. Treasury released a sample application, however it will be up to each specific bank what information they require.
Are 501(c)(6) / country clubs / private clubs eligible?
No.
Can I take member/partner draws or shareholder distributions?
Please consult an advisor or SBA with your specific circumstances.
What is measurement period for average monthly payroll?
2019 for most companies, excluding seasonal companies and companies not in business for all of 2019. Some banks may still want YTD 2020 payroll information.
Is a business that shows a yearly loss eligible for PPP Loan?
Please consult an advisor or SBA with your specific circumstances.
Are there loan/guaranty/origination fees on PPP Loan?
Not for the borrower. SBA pays lending banks a fee based on the size of the loan.
Are benefit costs and payroll taxes included in payroll costs?
Some are some are not, please consult an advisor or SBA with your specific circumstances.