Loans – PPP & More

Urgent News for businesses and non-profits with fewer than 20 employees!

The government is in the process of making the following changes. Your bank will help you apply and you can choose to wait to file it until these changes are finalized. You can also start the process here. The SBA will allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants. If you filed a schedule C, this round will be based on gross income and not net. Waiting until these changes are final could increase what funds you get by a lot.

The agency will eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal. 

Also, the SBA will eliminate PPP access restrictions on small business owners who have struggled to make federal student loan payments by eliminating federal student loan debt delinquency and default as disqualifiers to participating in the PPP. 

Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.


Act Now! The portal to all participating lenders is open.

Slideshow about PPP, EIDL, and PPP Forgiveness from Steve Burke, subject matter expert for WA State SBDC

The SBA put out this webinar explaining the Shuttered Venue Operators Grant that has some great info on the difference between the SVOG, EIDL, and PPP.

The latest on PPP Loans:
Congress passed $284 billion for another round of Paycheck Protection Program  loans.
You can apply for a new PPP (forgivable) loan, whether or not you received one before. This can be your first or second PPP loan, but you cannot get more than two PPP loans.

You need to be prepared. Checklists and applications can be found here:

First Time Borrower Application Form

First Time Borrower Checklist

Top Line Overview for First Time Borrowers

PPP Loan Documents and Information for Second Time Borrowers:

Second Time Borrower Application Form

Second Time Borrower Checklist

Top Line Overview Second Time Borrowers

Will they run out of money again? 
There are set-asides from the $284 billion but you need to apply early to access them:
–First-time borrowers:  $35 billion; $15 billion of which will be for smaller, first-time borrowers with 10 or fewer employees, or loans less than $250K in low- income areas;
–Second draw PPP borrowers:  $25 billion for smaller borrowers with 10 or fewer employees, or loans less than $250,000 in low-income areas.

The American Rescue Plan Act added an additional 7.25 Billion for the PPP, including to expand eligibility to additional nonprofits and digital news services.

When can I apply?
The Paycheck Protection Program (PPP) will re-open the week of Monday, January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter. The list below contains links to the banks and credit unions that provided the majority of the PPP loans in Clallam County in 2020.

If you don’t wish to go through your bank, or if your bank doesn’t offer to do your PPP loan, HERE is a great resource to facilitate it.
Sound Community Bank – Portal open now, applications period extended. If you have questions, please email paycheckprotectionloan@soundcb.com
First Federal Savings & Loan of Port Angeles – Accepting Applications Jan 13th. The Application portal will open Jan 15th, closing date extended.
US Bank – Accepting applications until May 31, 2021 —– NDC– Accepting apply here
Key Bank – Accepting applications until April 30th, 2021
Umpqua Bank – We are not currently accepting new applications while we perform system maintenance, but will provide updates as soon as they are available.
Kitsap Bank – Not open at this time to non-clients.  If interested, contact your local banker.  
JP Morgan Chase – Application deadline extended until May 31, 2021
1st Security Bank of Washington – Accepting applications now for existing clients.
Square Capital deadline May 31,2021
Wells Fargo – deadline May 31, 2021
CRF Small Business Loan Company – Customer care #: 1-844-530-2724
Cross River BankStill accepting applications.
Bank of America – Accepting applications until May 31, 2021
Coastal Community Bank – They have a link to the Commerce website so I am not sure they are processing them themselves.
Washington Federal Bank– Still accepting applications
What are the Loan Terms:
–Generally, you can get up to your average monthly payroll in 2019 times 2.5. As an example, if your total 2019 monthly payroll cost averaged $10,000, you would apply for $25,000.
–“Payroll” expenses include all costs for W-2 employees, including wages, commissions, bonuses, health insurance, retirement, state and local taxes.
–Maximum new loan amount of $2 million.
–No Fees.
–1% interest (non-compounding and non-adjustable) for any portion of the loan that is not forgiven.
–In general, a business owner may receive a loan amount of up to 2.5X the average monthly payroll costs during 2019 or 2020, with the following exceptions:
—-Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020.
—-Businesses with multiple locations that are eligible entities under the initial PPP requirements may employ not more than 300 employees per physical location.
—-Non-profits and veterans’ organizations may utilize gross receipts to calculate their revenue loss standard.

Important to Note:

Generally, you can get up to your average monthly payroll in 2019 times 2.5, Restaurants can receive 3.5 times.


What types of businesses are eligible for these funds?
In order to receive a second PPP loan under this section, you must:
•    Employ fewer than 300 employees;
•    Have used or will use the full amount of your first PPP loan; and
•    Demonstrate at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter.
–Provides applicable timelines for businesses that were not in operation in Q1, Q2, Q3, and Q4 of 2019.
–Applications submitted after January 1, 2021 are eligible to utilize the gross receipts from the fourth quarter of 2020.
•    Eligible entities include businesses, certain non-profit organizations (see more info below on 501c6’s and DMOs), housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives.
How much can I apply for?
–The maximum amount is $2 million.
–There are some differences for restaurants, hotels and sole proprietors so see the “Special Treatment for certain types of businesses on PPP Loans” below.

PPP Loan Forgiveness
What are the rules on Forgiveness of the PPP loans?
You can get forgiveness for this PPP loan by spending at least 60% on payroll expenses (wages, salaries, retirement, group health insurance, etc.) and a maximum of 40% on other qualifying expenses during an eight or 24 week period. More expenses now qualify (see allowed PPP Expense section below).  
If I got a loan in the first round or in this round can I deduct my expenses on my taxes? Yes! Expenses covered by PPP loans and then forgiven are now tax deductible. When Congress passed the CARES Act,  lawmakers indicated that PPP funds should not be taxable. However, the US Treasury then issued guidance that those expenses that the PPP funds covered could not be deducted on your taxes.  This new law reverses that decision.
As a small business will I be able to get a PPP loan before the big businesses use up the funds?
Because the smallest businesses and those located in low-income areas were often shut out of the first round of PPP funding, this bill includes set-asides for small businesses with fewer than 10 employees, those in low/moderate income areas, and funds for small community banks, credit unions and community-based lenders. This will hopefully give the small businesses on the Olympic Peninsula a fighting chance. 
More expenses qualify for loan forgiveness:
You still need to use at least 60% of PPP funds on payroll expenses, but now you can use the funds other non-payroll expenses beyond rent/loan payments and utilities, such as payment for software, cloud services, accounting and human resources, property damage due to civil unrest, personal protective equipment and COVID-19-prevention equipment and, supplier costs that were contracted or ordered before you got the loan or costs of perishable goods ordered before or during the life of the loan.
Repeals the EIDL Advance Deduction from PPP forgiveness.
Repeals section 1110(e)(6) of the CARES Act, which requires PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount.
Establishes the Sense of Congress that EIDL Advance borrowers should be made whole without regard to whether those borrowers are eligible for PPP forgiveness.
Requires the Administrator to issue rules that ensure borrowers are made whole if they received forgiveness and their EIDL grant amount was deducted from the forgiveness amount paid.
Simplified form for forgiveness for PPP loans from $50K to $150K:
If your PPP loan was for $150,000 or less, there will be a new, simple, one-page form to apply for forgiveness. Your bank will provide you a link to a form soon in the new year.
How soon do I have to spend the money for it to be forgiven?
The covered period for PPP loans will go through March 31, 2021.
Do I have to hire back all of my employees that I had before the pandemic for my loan to be forgiven?
–No, not necessarily. The existing “safe harbors” on restoring FTE and salaries and wages are extended. Specifically, the statute applies the rule of reducing loan forgiveness for the borrower reducing the number of employees retained and reducing employees’ salaries in excess of 25%.
–This funding is called Owner Compensation Replacement and it is considered personal income and has very few limitations. It means your entire PPP loan could be used for personal purposes—essentially free money.
–This funding is called Owner Compensation Replacement and it is considered personal income and has very few limitations. It means your entire PPP loan could be used for personal purposes—essentially free money.

PPP Loan Forgiveness Application

Special Treatment for certain types of businesses on PPP Loans:
Sole Proprietors and Independent Contractors:
–If you own your own business without any employees, you can receive up to 2.5 times your 2019 income up to $100K. So, the calculation is 100,000/12 months times 2.5 months or $20,833.
–This funding is called Owner Compensation Replacement and it is considered personal income and has very few limitations. It means your entire PPP loan could be used for personal purposes—essentially free money.
Restaurants and Hotels:
–Recognizing these industries have been especially hard hit, Congress upped the amount to 3.5 times average 2019 monthly payroll costs.
–Your business must have a NAICS code that begins with 72. |
–In other words, if your restaurant’s 2019 monthly payroll averaged $10,000, you can now apply for $35,000.
Farmers and Ranchers:
–Establishes a specific loan calculation for the first round of PPP loans for farmers and ranchers that: (1) operate as a sole proprietor, independent contractor, self-employed individual; (2) report income and expenses on a Schedule F; and (3) were in business as of February 15, 2020.
–These entities may utilize their gross income in 2019 as reported on a Schedule F. Lenders may recalculate loans that have been previously approved to these entities if they would result in a larger PPP loan.
–Applies to PPP loans before, on, or after the date of enactment, except for loans that have already been forgiven.
Startups:
–Clarifies that a business or organization that was not in operation on February 15, 2020 shall not be eligible for an initial PPP loan and a second draw PPP loan.
Churches and religious organizations:
–The statute expresses the sense of Congress that the Administrator’s guidance clarifying the eligibility of churches and religious organizations was proper and prohibits the application of regulations otherwise rendering ineligible businesses principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs.
News Organizations:
–Makes eligible FCC license holders and newspapers with more than one physical location, as long as the business has no more than 500 employees per physical location or meets the applicable SBA size standard; and makes eligible section 511 public colleges and universities that have a public broadcasting station if the organization certifies that the loan will support locally focused or emergency information.
–Waives affiliation rules for newspapers, TV and radio broadcasters, and public broadcasters, as long as the organization has no more than 500 employees per physical location or meets the applicable SBA size standard.
–Waives the prohibition against publicly-traded news organizations being eligible if the business certifies that the loan will support locally focused or emergency content.
501(c)(6) and Destination Marketing Organizations:
Expands eligibility to receive a Paycheck Protection Program loan to include the following organizations:
501(c)(6) organizations if:
—-The organization does not receive more than 15% of receipts from lobbying;
—-The lobbying activities do not comprise more than 15% of activities;
—-The cost of lobbying activities of the organization did not exceed $1,000,000 during the most recent tax year that ended prior to February 15, 2020, and
—-The organization has 300 or fewer employees.
—-The organization is not a professional sports leagues or organization with the purpose of promoting or participating in a political campaign or other political activities.
Destination Marketing Organizations if:
—-The organization does not receive more than 15% of receipts from lobbying;
—-The lobbying activities do not comprise more than 15% of activities;
—-The organization has 300 or fewer employees; and
—-The destination marketing organization is registered as a 501(c) organization, a quasi- government entity, or a political subdivision of a state or local government.
Seasonal Employers:
Defines a seasonal employer to be an eligible recipient which: (1) operates for no more than seven months in a year; or, (2) earned no more than 1/3 of its receipts in any six months in the prior calendar year.
–Applies to any loan made before, on or after enactment including the forgiveness of the loan.
–Election of 12-week Period by Seasonal Employers.
–Expands the seasonal period to any 12-weeks between February 15, 2019 and February 15, 2020, elected by the borrower.
–Applies to loans before, on, or after the date of enactment, except for loan for which the borrower has already received forgiveness.
Shuttered Venue Operators:
–Prohibits eligible entities that receive a grant under the Shuttered Venue Operator Grants from obtaining a PPP loan.

EIDL Loan Applications Extended Until the End of 2021!

Loans are offered at affordable terms, including a 3.75% interest rate for small businesses and 2.75% for non-profit organizations, a 30-year maturity, and an automatic deferment of one year before monthly payments begin. All eligible small businesses and nonprofits are encouraged to apply.
This week, SBA announced that the deadline to apply for a COVID-19 pandemic Economic Injury Disaster Loan has been extended to December 31, 2021.To date, SBA has approved $197 billion in low-interest loans, which provide U.S. small businesses, non-profits, and agricultural businesses working capital funds.
Economic Injury Disaster Loan applications will continue to be accepted through December 2021, pending the availability of funds.
Click here to learn more and apply for an Economic Injury Disaster Loan
More information will be shared as new programs are rolled out.

The American Rescue Plan Act added 15 Billion in available funds for the EIDL payments, including 5 billion for supplemental for those hardest hit.

Coastal Communities Loan Fund: 
Great loan option for small businesses impacted by Covid-19 if you need accessible, low- interest, deferred loans.
–Loans up to $25,000 for working capital 
–Streamlined application and approval process 
–Low interest rates, deferred loan payments
–Located in Clallam, Jefferson, Grays Harbor, Pacific or Wahkiakum County 
–Operating business, not a passive real estate entity 
–In business for a minimum of one year, and able to provide a 2018 Federal Tax Return 
–Viable, demonstrating profitability before disruptions from COVID-19
–Have a plan to recover post-disruption 
–Current on federal income taxes
Size and Terms: Loan Size: up to $25,000 (must justify amount in application) Interest Rate: 2.44% (variable; 75% of WSJ Prime) Term: 7 years Repayment Schedule: Principal and interest payments will be deferred for six (6) months. Interest will accrue during deferral period. Deferral may be extended based on demonstrated need. Loans may be prepaid, in part of whole, at any time without penalty. Fees: No application fee; a closing fee of up to $500 can be amortized in the loan. 
Uses of Funds: Loan proceeds may be used for working capital (examples include but are not limited to payroll, rent, insurance, utilities, etc.). 
Collateral
1. A UCC lien on business assets
2. All owners owning 20% or more of the business will be required to execute a personal guarantee 
For more information or to apply, contact: Melissa LaFayette mlafayette@ndconline.org

Main Street Lending Program: The MSLP is intended to provide support for small and mid-sized businesses through four-year term loans (the “Main Street Loans”) from eligible lenders to eligible US businesses, which together with their affiliates, have up to 15,000 employees or revenues of up to $5 billion. First Federal and other local community banks are participating in the US Federal Reserve program.

SBA 7(a) Business loans7a loan proceeds can be used for short-term or long-term working capital and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures and supplies.

SBA 504 loans A 504 loan may be used to purchase fixed assets such as: land and improvements, including owner-occupied buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or to modernize, renovate or convert existing facilities; or to purchase long-term machinery and equipment with a useful life of at least 10 years. Soft costs like architectural and legal fees, environmental studies, appraisals, and interest and fees on the construction and/or interim bank financing can also be rolled into the loan. Financing for other needs such as working capital, inventory, debt consolidation or refinancing are eligible through a separate SBA 7(a) Loan Guaranty Program.
SBA Microloans – The Microloan program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000.
The U.S. Small Business Administration provides funds to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries administer the Microloan program for eligible borrowers.
For more information go to: SBA 7(a), 504 and microloans
SBA Seattle District Office phone number: 206-553-7310

Craft3 Business Resiliency loans:

  • Loan size of $15,000 to $50,000
  • Interest rate is 5% fixed
  • Term is 48 months (4 years)
  • Payments are:
    • Fully deferred for months 1, 2, 3
    • Interest-only for months 4, 5, 6
    • Principal & interest on the balance amortized over the remaining 42 months
  • Fees:
    • are 2 percent
    • no other closing costs required
    • There is no penalty for early repayment
  • Minimum Eligibility:
    • In business in Clallam County 2+ years
    • Profitable in 2019
    • Personal credit score of 640+
    • Business negatively impacted by Covid-19
  • Learn more:

UDSA Loan Programs:
USDA Business & Industries Loan
Fact Sheet >> Click here
Checklist >> Click here
Pre-Application Guide >> Click here

Our local Washington Small Business Development Center (SBDC) Advisor is Mike Rieckhoff.  He can be reached at mike.rieckhoff@wsbdc.org
We do our best to keep this page updated but if none of these programs work for your needs contact us @ info@clallam.org or there are sometimes programs that may fit a niche industry need at:  https://www.commerce.wa.gov/open-grants-loans/
SBA Programs – Scams and Fraud Alertshttps://www.sba.gov/document/report–sba-programs-scams-fraud-alerts?utm_medium=email&utm_source=govdelivery

As mentioned in the video CIE employees would love to help you with this process if you have questions.

Mike Rieckhoff: mike.rieckhoff@wsbdc.org 360.417.3375

Micah Jonet: micah.jonet@cie-nw.org or you can click HERE to make an appointment with him.

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