Experts answer small business questions about applying for PPP loans


  • Starting subsequent week, the Small Business Administration (SBA) will open picks for the following spherical of Paycheck Protection Program loans.
  • Certain lenders would possibly want the pliability to provide loans to first-time debtors on Monday and Tuesday, then to second-timers on Wednesday.
  • All completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely fully fully completely completely fully completely fully fully totally totally completely totally different collaborating lenders would possibly want the pliability to course of loans all by the circumstances following. 
  • Insider submitted readers’ questions to attorneys, accountants, lenders, and educators to get the alternate alternate picks you want forward of the following spherical of PPP picks.
  • Visit Business Insider’s homepage for additional tales.

Starting subsequent week, the Small Business Administration (SBA) will open picks for the following spherical of Paycheck Protection Program loans. 

Certain lenders together with group enchancment monetary establishments (searchable database acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable related acceptable acceptable associated related acceptable associated related acceptable associated related related associated acceptable related associated acceptable related acceptable acceptable related associated acceptable related acceptable acceptable related acceptable related related acceptable related related acceptable related related related acceptable related acceptable associated related acceptable associated related acceptable related acceptable acceptable associated acceptable acceptable acceptable acceptable related acceptable acceptable associated acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable associated acceptable related associated associated related associated related acceptable acceptable acceptable acceptable acceptable related associated acceptable related associated acceptable related associated acceptable acceptable acceptable associated related acceptable acceptable related acceptable acceptable related acceptable associated associated acceptable associated related associated acceptable associated associated acceptable acceptable associated acceptable correct applicable appropriate correct proper right here) and minority depository establishments (itemizing acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable related acceptable acceptable associated related acceptable associated related acceptable associated related related associated acceptable related associated acceptable related acceptable acceptable related associated acceptable related acceptable acceptable related acceptable related related acceptable related related acceptable related related related acceptable related acceptable associated related acceptable associated related acceptable related acceptable acceptable associated acceptable acceptable acceptable acceptable related acceptable acceptable associated acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable associated acceptable related associated associated related associated related acceptable acceptable acceptable acceptable acceptable related associated acceptable related associated acceptable related associated acceptable acceptable acceptable associated related acceptable acceptable related acceptable acceptable related acceptable associated associated acceptable associated related associated acceptable associated associated acceptable acceptable associated acceptable correct applicable appropriate correct proper right here), would possibly want the pliability to provide loans to first-time PPP debtors on Monday and Tuesday, then to second-time debtors on Wednesday. All completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely fully fully completely completely fully completely fully fully totally totally completely totally different collaborating lenders would possibly want the pliability to course of loans all by the circumstances following. 

Insider held a webinar to answer business homeowners’ questions about getting loans. The reside Q&A stuffed up shortly forward of we would get to all of us’s questions. Many of us requested simple methods to calculate payroll as a sole proprietorship, how loans is liable to be forgiven, and simple methods to doc 25% earnings loss. 

We submitted these questions to attorneys, accountants, lenders, and educators to get the alternate alternate picks you want forward of the following spherical of PPP picks. 

But first, we’ll go over the fundamentals. 

Businesses that did not pay money for PPP loans all by the primary spherical are nonetheless eligible to intention from this time all by the occasion that they’ve 500 or fewer workers, whereas the PPP “second draw” is geared in path of smaller and harder-hit companies. 

Existing PPP debtors can apply for a second mortgage all by the occasion that they’ve 300 or fewer workers and present not decrease than a 25% loss in earnings all by the primary, second, or third quarter of 2020 relative to the equal interval in 2019. There are completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely completely fully fully completely completely fully completely fully fully totally totally completely totally different calculations for seasonal companies and companies began after 2019. Businesses began later than February 15, 2020 or are publicly traded mustn’t eligible.

Read additional data on second-time debtors acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable related acceptable acceptable associated related acceptable associated related acceptable associated related related associated acceptable related associated acceptable related acceptable acceptable related associated acceptable related acceptable acceptable related acceptable related related acceptable related related acceptable related related related acceptable related acceptable associated related acceptable associated related acceptable related acceptable acceptable associated acceptable acceptable acceptable acceptable related acceptable acceptable associated acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable associated acceptable related associated associated related associated related acceptable acceptable acceptable acceptable acceptable related associated acceptable related associated acceptable related associated acceptable acceptable acceptable associated related acceptable acceptable related acceptable acceptable related acceptable associated associated acceptable associated related associated acceptable associated associated acceptable acceptable associated acceptable correct applicable appropriate correct proper right here and eligible companies acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable related acceptable acceptable associated related acceptable associated related acceptable associated related related associated acceptable related associated acceptable related acceptable acceptable related associated acceptable related acceptable acceptable related acceptable related related acceptable related related acceptable related related related acceptable related acceptable associated related acceptable associated related acceptable related acceptable acceptable associated acceptable acceptable acceptable acceptable related acceptable acceptable associated acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable associated acceptable related associated associated related associated related acceptable acceptable acceptable acceptable acceptable related associated acceptable related associated acceptable related associated acceptable acceptable acceptable associated related acceptable acceptable related acceptable acceptable related acceptable associated associated acceptable associated related associated acceptable associated associated acceptable acceptable associated acceptable correct applicable appropriate correct proper right here. 

You can uncover the SBA’s official pointers for second-time debtors acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable related acceptable acceptable associated related acceptable associated related acceptable associated related related associated acceptable related associated acceptable related acceptable acceptable related associated acceptable related acceptable acceptable related acceptable related related acceptable related related acceptable related related related acceptable related acceptable associated related acceptable associated related acceptable related acceptable acceptable associated acceptable acceptable acceptable acceptable related acceptable acceptable associated acceptable acceptable associated acceptable acceptable associated acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable acceptable associated acceptable related associated associated related associated related acceptable acceptable acceptable acceptable acceptable related associated acceptable related associated acceptable related associated acceptable acceptable acceptable associated related acceptable acceptable related acceptable acceptable related acceptable associated associated acceptable associated related associated acceptable associated associated acceptable acceptable associated acceptable correct applicable appropriate correct proper right here. 

The deadline to intention from is March 31, 2021, nonetheless funds is liable to be allotted on a first-come-first-served foundation.

Now, for your questions. 

Some questions and picks have been edited and condensed for readability. We’ll proceed so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as in order so as to add responses as we pay money for them.

How do I calculate my payroll prices if I lease 1099 contractors nonetheless haven’t purchased W2 workers?

“1099 employees do not count towards your payroll costs. They are eligible to apply for PPP loans independently. Salary that you pay yourself is eligible towards your payroll calculations.” — Brock Blake, founder and CEO of small business mortgage market Lendio

Can I cowl new workers? 

“Payroll for new employees hired in 2020 can be factored into the calculations for new PPP loans since the maximum loan amount is based on the allowable costs from the one-year prior to the loan. It is important to note that a first-time borrower has the option to use either 2019 or 2020 to calculate their maximum loan amount. This was done to ensure that first time borrowers are treated even-handedly.” — Robbin Caruso, CPA and accomplice at Prager Metis

Are payroll prices for second loans measured over the equal interval as the primary batch of PPP?

“The legislation allows businesses to choose between two periods for second loans. This is the same as the CARES Act so it should apply to both first and second draw loans: Multiply average gross monthly payroll cost for the one-year period before the date the loan is made by 2.5 or multiply average gross monthly payroll cost for 2019 or 2020 (borrower’s choice) by 2.5.” 

“Businesses in the food and accommodation industries, with a NAICS code beginning in 72 can multiply by 3.5. In addition, there are alternative calculations for newer or seasonal businesses.” — Gerri Detweiler, Education Director at Nav, a fintech firm that matches small companies with loans and monetary establishment collaborating in collaborating in having fulfilling with collaborating in having good with having satisfying with collaborating in collaborating in having fulfilling with having pleasurable with having satisfying with collaborating in having satisfying with collaborating in collaborating in collaborating in having pleasurable with collaborating in having gratifying with having pleasing with having gratifying with having fulfilling with having good with having gratifying with collaborating in collaborating in having gratifying with collaborating in collaborating in collaborating in collaborating in collaborating in having good with collaborating in having pleasing with having gratifying with having fulfilling with having pleasing with having pleasurable with having satisfying with having pleasurable with having gratifying with collaborating in having satisfying with collaborating in having satisfying with having pleasing with collaborating in collaborating in collaborating in collaborating in having fulfilling with collaborating in collaborating in having pleasing with having pleasing with collaborating in collaborating in collaborating in having good with having gratifying with collaborating in having good with having gratifying with collaborating in collaborating in collaborating in collaborating in collaborating in having pleasing with collaborating in collaborating in collaborating in collaborating in collaborating in collaborating in having good with having pleasing with collaborating in collaborating in collaborating in collaborating in having pleasing with collaborating in collaborating in having gratifying with collaborating in collaborating in collaborating in having pleasing with collaborating in having fulfilling with collaborating in collaborating in having fulfilling with having satisfying with having fulfilling with having pleasing with collaborating in collaborating in collaborating in collaborating in having good with collaborating in having gratifying with having pleasurable with having fulfilling with collaborating in having pleasing with having pleasurable with collaborating in having satisfying with collaborating in having pleasurable with collaborating in having good with collaborating in having pleasing with having satisfying with having good with having satisfying with having satisfying with collaborating in having good with collaborating in having pleasing with collaborating in having gratifying with collaborating in having pleasing with collaborating in collaborating in having pleasing with collaborating in having enjoyable with having fun with enjoying playing cards

I’m an LLC promoting e-commerce on-line, I began my firm in September 2020, and don’t have any workers. Would I nonetheless qualify if I’ve no payroll?

“Current guidance from the SBA requires a business to have been in operation as of February 15, 2020, to qualify for PPP. Businesses started after that date are ineligible.” — Brock Blake, founder and CEO of small business mortgage market Lendio

I’m a sole proprietor with a part-time worker. Does the quantity I pay myself get calculated contained contained contained all by the route of the 60% payroll of the PPP?

“Yes, it does. Qualifying salary for each individual is capped at $100,000 annually, so anything you pay yourself over that (prorated for the calculation period), won’t be counted.” — Brock Blake, founder and CEO of small business mortgage market Lendio

If I am self-employed, is it okay to analysis from an estimated Schedule C for 2020 if that provides you the following mortgage?

“Yes, effectively payroll costs are to be calculated using either estimated 2020 payroll costs or the 12 months preceding the loan.” — Bruce Sacerdote, economist and professor at Dartmouth College

As a sole proprietor, would prices incurred for contractors be a part of the 60% payroll funds?

“It’s not explicitly mentioned so I would guess no.” — Bruce Sacerdote, economist and professor at Dartmouth College (Note: Paying your self does rely as payroll funds so long as it is lower than $100,000.)

To resolve if there was a 25% low value in earnings, will we try this comparability on a money or accrual foundation?

“The borrower will determine revenue for these purposes based on their gross receipts, defined as all revenue in whatever form received or accrued, according to the entity’s accounting method.” — Robbin Caruso, CPA and accomplice at Prager Metis

“You may use either quarter comparisons, or you may use 2020 annual compared to 2019. It also specifies that any forgiveness amount of a first-draw PPP loan that a borrower received in calendar year 2020 is excluded from a borrower’s gross receipts.”

“Generally, receipts are considered ‘total income’ (or in the case of a sole proprietorship, independent contractor, or self-employed individual ‘gross income’) plus ‘cost of goods sold,’ and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms.” — Gerri Detweiler, Education Director at Nav

Are there categorical paperwork I’ve to present to diploma out the 25% low value?

“The guidance says the business may use relevant tax forms (including annual tax forms), or if not available, a copy of the quarterly income statements or bank statements.” — Gerri Detweiler, Education Director at Nav

What if funds have been obtained in 2020 for companies rendered in 2019? Can we current this by the decline in companies, since 2020 earnings was elevated attributable to funds obtained the following yr?

“Because the SBA language says received or accrued, it appears that the revenue does not have to hit the bank account to be considered received.” — Gerri Detweiler, Education Director at Nav

I am a 1099 agent. How do I present my earnings misplaced if I’ve actually not obtained my 1099 to diploma out the proof of lack of earnings from this yr?

“Fortunately, the rules provide for the use of alternative records such as invoices because most people won’t have 1099s available at the time they apply.” — Bruce Sacerdote, economist and professor at Dartmouth College

Being a begin up doing R&D in 2019 and 2020, we’re pre-revenue. Can I qualify for the PPP mortgage?

“If the ‘entity’ was organized in a corporate form, the payroll cost calculation likely works and there is no requirement to show a loss for a [first-draw] PPP loan. Note that additional facts are probably needed here.”  — Joseph Lynyak, monetary companies accomplice at Dorsey & Whitney

Can I reap some good advantages of This fall 2020 earnings vs This fall 2019 earnings if applying after January 1, 2021?

“The language of the Second Draw Act states that if the ‘entity was not in business during 2019, but was in operation on February 15, 2020, had gross receipts during the second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter of 2020 that demonstrate not less than a 25% reduction from the gross receipts of the entity during the first quarter of 2020.'”

“Remember, the SBA has not yet issued regulations, but the above-quoted language appears to allow the use of 4th quarter 2020 results for calculation purposes.”  — Joseph Lynyak, monetary companies accomplice at Dorsey & Whitney

Is lease a coated expense whether or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not or not it’s paid to an affiliated firm?

“My best understanding is that the rules for rent as a covered expense when paid to an affiliated company are consistent with the guidance from ’round one’ of the Payroll Protection Program which only allowed for the interest component related to the rent to be included.” — Robbin Caruso, CPA and accomplice at Prager Metis

Are banks incentivized to provide loans to people who solely qualify for $15,000 and contained contained all by the low value of?

“A difficult question — it goes to whether a borrower has an established relationship with a bank because small loans may not be deemed profitable for a bank to deal with for an off-the-street applicant. Remember, however, that regular 7(a) loans and EIDL and other smaller SBA loan programs have also been enhanced. Also, as to the PPP, non-bank entities can qualify to be lenders — so community development organizations may be available and willing to assist.” — Joseph Lynyak, monetary companies accomplice at Dorsey & Whitney



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