PPP & EIDL Updates
Alabama Small Business Development Center Network | PPP & EIDL Updates
· On April 8, the U.S. Treasury published updated FAQs on the Paycheck Protection Program (PPP). Notable guidance includes:
· Timing: The lender must make the first disbursement of the loan no later than ten calendar days from the date of loan approval. The eight-week period begins on the date of the first disbursement.
· Payments to independent contractors: Payments to an independent contractor or sole proprietor should not be included in the business’s payroll costs.
· Time period to use to calculate average payroll costs: In general, either the previous 12 months or calendar year 2019 (seasonal businesses and newly opened businesses have alternatives).
· PEOs and similar Payroll Providers: If you use a PEO or similar payroll provider, you may include the payroll paid by the third-party provider and attach supporting documentation showing the amount of wages and payroll taxes paid. The employees of the eligible borrower will not be considered employees of the payroll provider or PEO.
· Salary Cap of $100,000: The cap is on the salary, not additional non-cash benefits such as health insurance, state and local taxes, and retirement contributions.
· Owner Draws - To include, or not to include? Lenders are taking different approaches to including owner draws in the payroll cost calculation. SBA and Treasury guidance is ambiguous. Our advice? Talk to your lender. If you have owner draws that can be supported by bank statements, and you have paid self-employment tax on these draws, you may be able to include them under payroll costs.
· Sole Proprietors, Eligible Self-Employed, & Independent Contractors: Applications are scheduled to open for Sole Proprietors, Eligible Self-Employed, & Independent Contractors on Friday, April 10th. Lenders are waiting on guidance from the SBA & Treasury; applications are likely to be delayed until they get that guidance. However, we know that lenders will look to the following to document 2019 earnings:
· 2019 Form 1040, Schedule C, Line 31 OR
· 2019 Form 1040 Schedule 1, Line 3 OR
· 2019 Forms 1099-MISC, Box 7.
ECONOMIC INJURY DISASTER LOAN (EIDL)
· EIDL (up to) $10,000 Advance (News from the Field): To date, no Alabama SBDC clients that we know of have received the advance from the EIDL program. We have heard from other SBDCs that the calculation of the advance may be based on number of employees ($1,000 per employee, up to $10,000).
· If you applied for the EIDL before they were offering the advance (March 29), you must reapply through https://covid19relief.sba.gov/#/. If you applied through this link and did not check the box that you wanted the "up to $10,000" advance and have since decided that you do, you should go back and apply again.
· Loan Amount Calculations: Per the SBA SOP for Disaster Loan Programs, the SBA utilizes two methods to calculate the loan amount. In the Phase I method, the loan officer will use a simple calculation: (Annual Sales - Annual COGS) ÷ 12 × 4. Phase I eligibility cannot exceed $300,000. If it does, or if the Applicant needs more than $300,000, the Loan Officer will move on to Phase II. Phase II includes adjustments to the economic injury calculation based on a balance sheet analysis and identification of extraordinary items, frozen receivables, frozen inventory, and accelerated debt.
Recorded Webinars & Presentation Slides
The On-Demand Recorded Webinar and Presentation Slides are available at ASBDC.org
The latest recorded webinar is April 8th. Information presented in that webinar does not include the notes posted above. As always, please ensure that you have up-to-date information before making strategic decisions about your company.
Coming Soon: Daily Q&A Webinars
We plan to host a daily webinar next week that will focus on Q&A with small business owners.
Stay tuned for details!
SBA Lenders
Is your bank not participating in the PPP yet?
We are still in the process of compiling a list of lenders that will accept non-customer applications. Unfortunately, it is not yet ready for distribution.
Until then, please refer SBA's Lender Locator website:
Do you have the tools needed to conquer a business crisis?
We have a guide with suggestions on Cash Management, Pricing / Cost Containment, Supply Chain Management, and Marketing.
Thank You
We wanted to pause for a minute, and thank everyone for sending in their comments regarding our webinars, the one-on-one advising (via video-conference and phone), and the thousands of questions that we've handled via email.
Thank you for your kind words, and for your patience. The Alabama SBDC is passionate about helping small businesses, and your comments mean the world to this tireless team. We admire the drive and tenacity of Alabama's small business owners, and are in this with you for the long haul.
· "You guys did a very thorough job on a tough and quickly-changing topic. Thanks for keeping it concise and accurate. This was the best of the 5 or 6 webinars that I've participated in so far!
· Your Webinars are OUTSTANDING! Thank you!!
· Thanks for the Great Presentation, more questions answered than any of the other nonsense floating around out there. Thanks so much!
· Thank you for all the time you're dedicating to this. When this all blows over, stop by the <redacted beer hall> -- first beer or wine is on me! (Note: Confidentiality rules say we can't mention your name. But trust us- we will be there!)
· Solid coherent presentation of what you know as of today. Remarkably professional.
· Thank you very much for being so informative. I'm still very overwhelmed with info that I'm trying to process. I hope you'll continue these webinars.
· Today's webinar was great... this is my 2nd day in a row sitting in on it, and I got a lot more clarity on the PPP program today. So thank you ASBDC for putting on these webinars!
· Thank you all SO much for doing this! It's so comforting to know I'm not having to figure all of this out by myself.
· So refreshing to talk with a real live expert - and not a robot or dead-end email. Or someone that is trying to sell me something. My father will disown me, but UA is ok in my book. You're helping me save my business."
On Friday, from 9-12, several of our SBDC Business Advisors will participate in the BCA's Small Business Exchange.
In addition to Disaster Loans, BCA has also invited experts on unemployment, tax relief, and government COVID orders.
Call 1-833-BCA4BIZ
Alabama SBDC, The University of Alabama | 621 Greensboro Ave, Tuscaloosa, AL 35401-1761