Newsletter from

Steve Richardson & Company

Certified Public Accountants

April 5, 2020

Timely! SBA Releases Third Version of
Paycheck Protection Program Loan (PPPL)
Application Rules

Dear Clients and Friends:

A new PPP loan application
We have a 3^rd draft of the PPP Loan application rules. These will likely be the ‘mostly’ final rules. I suspect a tweak here and there, but what we have now will be the rules and procedures that will be followed throughout this SBA Program.

Not bad news!
To the best of my knowledge, no PPP Loans have been processed by the SBA. These final rules put all applications back to the same starting point.

I believe that this progression from 1^st, 2^nd and now to the 3^rd and, hopefully, final application is a deliberate progression by the SBA. This program was sprung on the SBA with blinding speed; they were not prepared. The SBA, for many reasons, ill-prepared though they were, needed to be doing something to ease business fears.

These prior applications did help SBA customers organize their data as the SBA prepared for the onslaught of PPP Loan applications.

Online applications
The biggest news is that the PPP Loan applications will be made through your banks, but will be filed online via internet access.

Not all good news
A new starting point for all borrowers fails to take into account several important factors:

1. Not all banks will have their web-based PPP Loan portals open immediately; the bigger banks will be open first simply because their IT departments are more robust.
2. Not all banks and lenders are SBA-approved and, consequently, will not be able to make SBA Loans.
3. Many banks that are SBA-approved will not process PPP Loans for new customers.
4. And banks can legally play favorites. Their best and biggest customers will get preferential treatment.
5. For the SBA, the PPP Loans are still first-come, first-served.

Documentation – Part 1
In addition to the application, we now know in more detail the documentation that the SBA and lenders will require. I strongly advise that you provide all the suggested documentation with the application. If required documentation is missing or hard to understand, the banks have many thousands of applications behind yours. If your application is set aside for lack of appropriate documentation, it could be months before it finds its way back in the queue again. By then, it may be too late.

Documentation – Part 2
PPP Loan documentation will be uploaded by internet portal directly to the bank.

The required documents are:

• 2019 IRS Form 940
• 2019 IRS Forms 941: all four quarters
• 2019 state unemployment tax forms: all four quarters
• 2019 IRS Forms W-2 with supporting IRS Forms W-3
• 2019 Payroll summary with corresponding bank statements*
  • Required data:
    • Number of full-time employees as of December 31, 2019
    • Number of full-time employees as of February 15, 2020
    • Documentation for health insurance premiums paid
    • Documentation for employer retirement contributions paid
• List of all employees with compensation in excess of $100,000*
• Breakdown of payroll benefits*
• *Note: for new businesses, provide payroll data using the time period from January 1, 2020 to February 29, 2020.
• Miscellaneous documentation
  • Include our Authorized Representative letter
    • Without that letter, we will not be given access to that portal
    • We will likely draft a new Authorized Representative letter on Monday.
  • Other documentation in support of your application that is:
    • Requested by the bank or SBA, or
    • Determined by you to be helpful to your application

No deviations
Do not deviate from the above list. The more work required of bankers and underwriters, the more likely the application will simply be tossed aside. Try to give the bank exactly what they ask for.

If you must!
If, for whatever reason, you must deviate from the exact documentation requested by the SBA, write and upload a short but clear explanation as to why.

These are scary times
Please stay safe!

This virus is real. It is dangerous. It will continue to kill. It will kill a lot of people before things get better.

These loans will not mean a thing if our friends and loved one start to die.

Hunker down! Stay down! And, be safe!

Sincerely,

Steve Richardson, CPA