Apr 27, 2020
Prep For Your Paycheck Protection Program Application Now!
To learn how to manage your SBA Paycheck Protection Program loan wisely, read our guide here.
With President Trump signing the Senate Amendment to H.R. 266—Paycheck Protection Program and Health Care Enhancement Act reauthorization Friday, $250 billion was injected for round two of the stimulus for American businesses with fewer than 500 employees.
The quick distribution of funds from the first round saw the U.S. Small Business Administration (SBA) issue 1,661,397 loans totaling $342,277,999,103 (source: SBA.gov). Those loans were granted with the help of 4,975 lenders, and that’s how the next round will succeed as well: via bankers who can help you get your paperwork completed properly. The Regional Hispanic Contractors Association (RHCA) webinar held April 24, on “How to Prepare for the Next Paycheck Protection Program,” shared valuable insight for contractors.
RHCA President John H. Martinez acknowledged banks have a backlog of loan applications from the first round of funding, which, according to an SBA press release, “processed more than 14 years’ worth of loans in less than 14 days.”
The experts participating in the webinar anticipate the funds for this second round will “last” one to two days. That means it’s vital to prepare your application quickly, completely and accurately, and to submit it in time for an anticipated third round of PPP funding. Here are some tips to help.
Assemble your team—CPA and banker
All experts agreed the larger banks are swamped with applicants and, frankly, unable to give one-on-one attention. It is in your best interest to work with your CPA to gather all your documentation and approach your personal banker. If you don’t have a bank with whom you’ve developed a relationship, look for a reputable, smaller lending institution in your neck of the woods. Miguel Reyna, owner of Reyna CPAs in Dallas, said, “Try to find a small lender. If you have a personal banker, that’s great. Don’t try to do this online.”
Your banker will also provide the best form for you to use. You can also go to SBA.gov to download forms.
Sign and initial by hand
Julio Ayala, the vice president at Frost Bank, warns applicants the SBA has been kicking back applications that are electronically signed. Now, Paul Rodriguez, a contractor and president of Rodriguez Mechanical Contractors Inc., was able to submit his application using Docusign, and was approved early in the month, but experts suggest caution. Make sure you check all the boxes and initial in all the places where initials are required. Proofread your application before handing it in to your bank to ensure you’ve initialed everywhere you should. If your application is returned to you, you go to the back of the line.
Use your full zip code
Strangely enough, the experts spent quite a bit of time discussing the use of the nine-digit zip code for the business address. Make sure you have this on your application or it will be returned to you, and you’ll go to the back of the line.
Make a folder before you begin
While you will print out your application to sign and initial by hand, the entire package will be submitted electronically. You will need documents in digital format. You will want these documents to be readily available before you begin the application process. Once you begin the process, the system will kick you out if you take too long to respond to a request. By working with your CPA and banker ahead of time, you can gather all the necessary information and documents before you begin. The experts on the webinar offered their suggestions for what they’ve seen banks gathering so far, and I’ll include that combined list below. Again, check with your preferred banker to see what they require.
Have Your Digital Info Ready for Input
- The PPP application form—completed and signed (the OMB control # in the upper right corner should be 3245-0407)
- Affiliated companies report (if you own 20%)
- Some states require a franchise status report, certificate of good standing
- 2019 business tax return (or 2019 year-end financials, balance sheet & income statement)
- 2019 employee payroll summary
- 2019 payroll reports (IRS forms 941, 940, TWC)
- List of employees paid more than $100,000 per year
- Borrowing entity documents
- Copy of borrowing authority
- SS-4 IRS letter assigning EIN
- certificate of incorporation filed with the state
- articles of incorporation and by-laws
- partnership agreement
- assumed name certificate filed with the state