PPP Loan Update
With the newest round of PPP (Paycheck Protection Program) loans going out you might be wondering how to get your PPP. In order to shed some light on the subject, Lindsay Wiley provides a quick breakdown. Watch the video above or click here to watch the video on our YouTube channel.
What are the new changes to the PPP?
So, the new changes are this. On February 22nd, Biden announced a series of changes, obviously, to the SBA’s relief package. One of the biggest changes is a 14-day exclusivity period for businesses and nonprofits with fewer than 20 employees. This, essentially, will break down to your sole proprietorships. You may be an S-corp, you may be an LLC, you may be a nonprofit, but if you’re the sole proprietor, meaning you own 100% of your business, and you have less than 20 employees, then this is for you.
During this period, if a business owner with 20 employees or more, you can submit an application. These are considered second draw loans. So what will happen is they’re going to base this on your gross income, not on your net income. And that was what a huge part of the confusion was for a lot of people with the second stimulus package, because if you applied after that went into effect in January, which a lot of people I know did because they were desperate for money, they were basing your loan amounts on your net. Even though you were showing a 25% decrease, which was a requirement, of your gross income for the year, your net is even going to be worse, obviously. That’s stupid because you’ll end up with a third of the amount that you originally received from the first stimulus.
They changed it when Biden did the sole proprietor extension, that little window between February 24th and March 9th. So obviously with this video, that deadline is gone, but it doesn’t mean you can’t still apply. And if you do still apply, you have up until March 31st.
And with these, you actually will, they base your loan amount on your gross, not your net, but there are the requirements still that you have to have less than 300 employees and you have to show at least a 25% reduction in sales or in income from 2019 to 2020. You have to show that COVID affected your business, essentially. So if you can do that, then they will… And I would suggest going through the same lender you did the first time, even though I know things like Wells Fargo, they’re being a butt, Bank of America are being a butt because they’re requiring 941s and 944s. You’re a sole proprietor. You don’t have those because obviously you don’t have employees. You might, if you’re a sole proprietor, but if you don’t have employees, they’re just going to deny you immediately.
How to Get Your PPP
But you should be able to receive PPP. You can through companies like Lendio, look them up. Lendio right now is number one. There’s Intuit, Square, PayPal, BizFile, much different third party lenders. And they will not require that you have to show 941s and 944s, only if you say you’re a sole proprietor.
So that’s another thing. Make sure if you file a PPP application and you’re doing it and you actually don’t have any employees but yourself and you’re taking draws, you have to file as a sole proprietor and put your social security number down, not your EIN. If you do that, then they won’t require those documentations. And then you will… They’ll ask you what you monthly give yourself. I always say it’s around $5,000. They’ll times that by 2.5 and then that’ll be what they’ll end up trying to get for you, which I think relates around about $12,500.
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If you are interested in learning more about or applying for PPP loans please contact us today to learn more and see if you qualify.
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