PPP Loans: Required information, Applications and Loan Forgiveness Calculator Estimator

Working through a few local SBA-Approved lenders, here is information and that may help you think through the PPP

04/06/2020

COVID-19 CARES ACT – PPP Application Process:

Depending on the SBA-Approved lender you choose, the application submission process varies based on several factors including your relationship with the lender and need. Approved Lender search: https://www.sba.gov/paycheckprotection/find

Below you will find what information and forms are required to apply for this support. In addition, a Loan Amount Forgiveness Calculator (Excel spreadsheet), which will hopefully help you collect the information required for your lender.

What you will need to gather

Payroll Tax reports (forms 941 for the past four quarters and 1099s) for the previous 12 months.

Historical tax returns for three years on business
Organizational documents of the business (Articles, Partnership Agreement, Bylaws)
Total # of employees as of 2/15/2020
Copy of Driver License for each owner
Complete attached Beneficial Ownership Certificate

Required application documentation for the submission process

Paycheck Protection Program Borrower Application Form - https://www.sba.gov/sites/default/files/2020-04/PPP%20Borrower%20Application%20Form.pdf

Appendix A to § 1010.230 – Certification Regarding Beneficial Owners of Legal Entity - https://www.fincen.gov/sites/default/files/shared/CDD_Rev6.7_Sept_2017_Certificate.pdf

Loan Amount Forgiveness Calculator

This Loan Amount Forgiveness Calculator is provided to better understand the information that may be required. You should consult your CPA, accountant or certified financial advisor for their counsel.

Click to download (PPP Loan Amount-Forgiveness Calculator v.2 (003).xlsx)

Overview of PPP Program

The CARES Act provides businesses with fewer than 500 employees, including sole proprietorships and non-profits, access to up to a $10 million loan through the "Covered Period", which runs from February 15, 2020 through June 30, 2020. The program includes a provision that allows these loans to be forgiven by the Small Business Administration ("SBA"). It is possible for the entire principal of the loan to be forgiven. Borrowers of this loan program will receive the loan without the need to pledge collateral or provide a personal guarantee.

PPP Critical Definitions

1. "Maximum Loan Amount" is calculated as the lessor of:

A) $10,000,000

B) 2.5 times average monthly "Payroll costs" for the previous 12 months before the loan date

2. "Payroll Costs" include:

A) Wages, commissions, salary or other similar compensation to an employee or independent contractor,

B) Payment of a cash tip or equivalent,

C) Payment for vacation, parental, family, medical or sick leave,

D) Allowance for dismissal or separation,

E) Payment for group health care benefits, including premiums,

F) Payment of any retirement benefits, and

G) Payment of state or local tax assessed on the compensation of employees.

Important: "Payroll Costs" do NOT include:

A) Compensation in excess of $100,000 per employee (capped at $100,000 annualized),

B) Payroll taxes,

C) Any compensation of an employee whose principal place of residence is outside the U.S., or

D) Any qualified sick leave or family medical leave for which a credit is allowed under the Coronavirus Relief Act

3. "Loan Forgiveness Amount"

This is the amount of the loan that can be forgiven and is based on specific costs incurred during the 8-week period after the loan origination. Any amount of loan forgiveness is tax-exempt. It is calculated as the sum of the following:

A) Payroll costs

B) Mortgage interest

C) Rent obligations

D) Utility payments

Important: The loan forgiveness amount can be reduced based on the following:

A) The ratio of reduction in FTEs during the 8-week period following the loan origination when compared to periods in either 2019 or 2020, and

B) Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019

C) Re-hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

IMPORTANT: This information has been prepared by Knake Dodge & Company for informational purposes only. It is general in nature and based on authorities that are subject to change. It is not intended as legal and/or financial advice. Readers should consult with and seek the advice of their own counsel with respect to any individual situation.

Click to Download