PPP Loans Update and Other SBA Funding Changes

Apply, Apply, Apply is Key Take-Away from The Kitsap Digital Hour

This week’s presentation from Jaime Forsyth, Certified Business Advisor with the Kitsap Small Business Development Center, issued a heads up that applications for the special round of First Draw PPP loans for very small businesses (businesses that have not already received PPP funding in 2020) must be made by 2pm PST next Tuesday, March 9 (5pm on the East Coast).

If you are still wondering whether to try to gain federal funding, Jaime’s advice is, “Apply! Apply! Apply! – let the SBA tell you that you don’t qualify, don’t assume it.” The rules keep changing and loosening, and even if you don’t qualify right now – for example, for being in a “low-income area” – those restrictions may be lifted in the future and you will then already be in the queue. The only small businesses (no matter how small) that are left out completely right now are those involved with cannabis, due to Federal law.

She cautioned businesses that there may be complications with PPP loans applied for with FinTech online lenders such as Square, Intuit, Biz2credit, etc. – these companies may well not hold the loans themselves, but rather bundle and sell them to other investors, who could also choose to sell them further. This is already causing problems for some of her clients when they try to contact their original lenders to satisfy the requirements for the loans to be forgiven, and cannot find out or track down who currently owns their loan.

Jaime has heard her clients find that local banks and credit unions have been easier to talk to and to work with for PPP loans than the large national banks. She recommends working with a local provider, even if it requires opening a new business account with them.

New First Draw applications for all types of businesses and Second Draw PPP applications for businesses that have already received a PPP loan in 2020 are due no later than March 31, 2021. These applications will open up again on March 10, once the very small loan period is over.

Although sole proprietors have been eligible in the past, many have not qualified because the application was based on net income. The New PPP application forms allow Schedule C filers to use gross income rather than net income when calculating the PPP loan amount.

All lawful U.S. residents have access to the PPP and ITINs are permitted as the identifier for a business owned by a sole proprietor and for a principal. (ITINs are issued by the IRS for persons not able to obtain a Social Security Number such as green card holders.) The SBA has eliminated restrictions to businesses with owners who have prior non-financial fraud felony convictions. The agency has also eliminated the restriction on businesses owned or controlled by owners who have federal student loan debt that is currently delinquent or has defaulted.

For businesses that are still grappling with laying off workers, Jamie recommended checking out the Shared Work program offered by the WA Dept. of Employment Security. This largely under-used program allows workers to be partially employed and also collect some unemployment, and the payroll cost to the employer may be covered by a PPP loan.

Regarding EIDL loan applications: the SBA emailed notification of grant awards to some applicants in early February although there was no expectation that the notifications would be received that way. If you applied and have not received any information, check your junk email for a message with the sender starting with “TargetAdvance” – some of Jaime’s clients have reported finding unexpected funding lurking there.

Jaime Forsyth is available on an on-going basis to answer specific questions about all the SBA funding opportunities and other pandemic-related business resources. But she also wants to remind everyone that the Kitsap SBDC is not focused only on COVID recovery, but is part of a state- and nationwide organization offering free consulting to businesses in any stage of their development.

A video recording of the presentation and slide show materials from the Kitsap Digital Hour is available on the KEDA website.

Contact Jaime Forsyth at 360-447-8788 or [email protected]