The following information is from the Alabama Small Business Development Center Network.
In talking with SBDC colleagues and lenders throughout the US:
• No one has received any portion of the $10,000 forgivable advance that was supposed to arrive “within three days.” Current guidance is “5 to 7 days, maybe longer”.
• We have heard that the “up to $10,000” forgivable advance (part of the Disaster Loan program) may be based on an employee formula: Based on guidance from Treasury, SBA has allotted $1,000 per employee, up to ten employees. While we have yet to confirm this formula, SBA employees have stated that this topic was discussed on an internal agency calls. We may not know more until the first disbursements arrive.
• To calculate the number of employees for the Paycheck Protection Program (PPP), SBA considers 30 hours per week as Full Time. (IRS and GAO use 40 hours.) Two employees that work 15 hours per week equal one FTE.
• “Payroll costs” include the employee salaries plus healthcare and other employment expenses.
• The basics: Applications should include your ZIP+4 location. The date of formation should match Alabama Secretary of State records. Companies with equal owners must nominate a “controlling owner.”
• SBA confirmed that religious organizations are eligible.
• Lenders may request Form 941 for payroll verification. Companies that use Professional Employer Organizations (PEO’s) can submit payroll processor records instead.
Sole Proprietors and Independent Contractors can begin submitting their applications next week; we are expecting additional application guidance from SBA. Some banks have accepted these applications, but will not process them until next week.
SBA released the operating guidelines for the Payroll Protection Program (PPP) late Thursday. The document clarifies several items that have been discussed on our webinars over the last two weeks.
• Lenders are capped at 1% interest rate, and a 2-year term.
• The PPP application form has been updated; Make sure your Form 2483 is dated 04/2020 (bottom left corner).
• Do not count independent contractors when calculating average monthly payroll.
• Any portion of employee compensation that exceeds $100,000 (per employee) cannot be included in the calculation.
• Early versions of the application indicated that PPP loans are not available to entities owned 20% or more by individuals who are not US citizens or green card holders; the final application form does not include this language. The payroll calculation should only include employees that reside in the US.
• The guidelines do not clarify the Payroll Date discrepancy between Congress (12 months preceding the loan date) and SBA’s form (previous calendar year). Applicants are advised to discuss their calculation with their lender.
Our next webinar is at 11AM on Wednesday, April 8th.
• Register Online. 1,000 seats available; a recording will be posted.
• Coming soon: Streamlined question submission process to connect with the SBDC Disaster Response Team and Capital Access (CAP) Team.