The latest answers to your questions

Coronavirus Relief Loan – The CARES Act’s Paycheck Protection Program (PPP)

We’re here to help keep you informed. Answers will be updated as new details become available based on guidance from the US Treasury Dept., the Small Business Administration, and lenders processing and issuing PPP loans.

Read the PPP archived daily updates from BoeFly’s CEO, Mike Rozman

Can I know what bank you have assigned my loan to and when my application was approved?

First, congratulations that you are one step closer to obtaining your PPP loan! If you were one of the small businesses that did receive an approval notice, your lender will contact you directly to handle the next steps in coordinating disbursement of funds. An email will be sent directly from the bank with closing documents and directions on signing. Lenders have 10 business days to finalize the disbursement of loans.

In addition, your application status within the portal will shift from Lender Approved (Pending SBA Authorization) to SBA Approved.

Please do not contact the lender or BoeFly directly, as they are working as quickly as possible to finalize your loans. At BoeFly, our main focus right now is to get the loan applications to banks. Providing each applicant with the bank information that they’ve been assigned, prior to the lender contacting the applicant, would delay others.

Why has my portal status changed from lender-approved to submitted or lender-submitted (i.e., seemingly going “backwards”)?

There are some instances where we have decided to pivot loan applications from one BoeFly lender to another in an effort to expedite SBA approval. Status updates in the portal have oftentimes adjusted in connection with this. Do not be alarmed; status updates in the portal are often delayed due to feedback from our lending partners being delayed itself.

Why has my loan status within the Portal remained unchanged for an extended time?

All of BoeFly’s lending partners remain fully focused on processing as many PPP applications as possible. Due to the nature of the SBA’s online authorization system (E-Tran), there has been a backlog of pushing approvals through. As such, the status updates in the BoeFly portal may be significantly delayed as they are dependent on BoeFly receiving details from our lending partners.

On April 30th, BoeFly sent an email to applicants that asks for their quick response to the question “Are you still in need of a PPP loan?” In order to expedite the process, make sure you respond.

The amount of forgiveness of a PPP loan depends on the amount of the loan proceeds spent on the borrower’s payroll costs (and other eligible expenses) over an eight-week period; when does that eight-week period begin?

The eight-week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower.

View the Loan Forgiveness Webinar here, and learn the most important tips to maximize your loan forgiveness.

How do I calculate the total loan amount?

For businesses with employees:

Average monthly payroll costs, excluding compensation above $100,000 in wages (based on prior 12 months or from the calendar year 2019) X 2.5. That amount is subject to a $10 million cap.

In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.

Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months).

Rent does not count as “payroll costs” and should not be included in your loan calculations. However, proceeds from the loan can be used for working capital.

For individuals with self-employment income (such as an independent contractor or a sole proprietor) who file a Form 1040, Schedule C:

How you calculate your maximum loan amount depends upon whether or not you employ other individuals. If you have no employees, the following methodology should be used to calculate your maximum loan amount:

  1. Find your 2019 IRS Form 1040 Schedule C line 31 net profit amount (if you have not yet filed a 2019 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less, you are not eligible for a PPP loan.
  2. Calculate the average monthly net profit amount (divide the amount from Step 1 by 12).
  3. Multiply the average monthly net profit amount from Step 2 by 2.5.
  4. Add the outstanding amount of any Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid). Regardless of whether you have filed a 2019 tax return with the IRS, you must provide the 2019 Form 1040 Schedule C with your PPP loan application to substantiate the applied-for PPP loan amount and a 2019 IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record that 7 establishes you are self-employed. You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020.

If you have employees, the following methodology should be used to calculate your maximum loan amount:

  1. Compute 2019 payroll by adding the following:
    1. Your 2019 Form 1040 Schedule C line 31 net profit amount (if you have not yet filed a 2019 return, fill it out and compute the value), up to $100,000 annualized, if this amount is over $100,000, reduce it to $100,000, if this amount is less than zero, set this amount at zero;
    2. 2019 gross wages and tips paid to your employees whose principal place of residence is in the United States computed using 2019 IRS Form 941 Taxable Medicare wages & tips (line 5c- column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips; subtract any amounts paid to any individual employee in excess of $100,000 annualized and any amounts paid to any employee whose principal place of residence is outside the United States; and
    3. 2019 employer health insurance contributions (health insurance component of Form 1040 Schedule C line 14), retirement contributions (Form 1040 Schedule C line 19), and state and local taxes assessed on employee compensation (primarily under state laws commonly referred to as the State Unemployment Tax Act or SUTA from state quarterly wage reporting forms).
  2. Calculate the average monthly amount (divide the amount from Step 1 by 12).
  3. Multiply the average monthly amount from Step 2 by 2.5.
  4. Add the outstanding amount of any EIDL made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid). You must supply your 2019 Form 1040 Schedule C, Form 941 (or other tax forms or equivalent payroll processor records containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or equivalent payroll processor records, along with evidence of any retirement and health insurance contributions, if applicable. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation on February 15, 2020.
Will this loan help with working capital?

Yes. You should use the proceeds from these loans on your:

  • Payroll costs, including benefits;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.
  • Note: SBA Disaster loans made between 1/31/20 and the date the PPP funds are available may be refinanced with a PPP loan.

For individuals with self-employment income (such as an independent contractor or a sole proprietor) who file a Form 1040, Schedule C, please review the new interim final rule, issued on April 2, 2020, by the SBA to understand how PPP loans can be used.

Will I have to pay back my loan?

You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, no more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: 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.
  • 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. If you offer to rehire and the employee declines, you will want written proof of both.

View the Loan Forgiveness Webinar here, and learn the most important tips to maximize your loan forgiveness.

Will a borrower’s PPP loan forgiveness amount be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.

View the Loan Forgiveness Webinar here, and learn the most important tips to maximize your loan forgiveness.

Can I take out a PPP loan and an EIDL?

You can take out a PPP loan and an SBA Disaster Relief Loan (EIDL) only IF the EIDL loan is used for purposes other than what’s covered by the PPP loan. Given the unique forgiveness aspect of the PPP, borrowers are advised to take the endeavor to secure a PPP loan. Borrowers with an EIDL loan unrelated to COVID-19 are still eligible.

  • EIDL is available in states subject to a Disaster Declaration.
  • Business must have been in operation on 1/31/20.
  • Proceeds can be used to pay payroll, fixed debts, accounts payable, and other bills. If you apply for a PPP loan, you cannot use EIDL proceeds for the same purposes, but you can get an EIDL loan for other purposes.
  • Loans under EIDL may be refinanced into a PPP loan. In addition, if you apply for an EIDL, you can get a $10,000 advance while the application is pending, which does not have to be repaid if your application is denied. If you get the $10,000 advance and then get a PPP loan, the $10,000 will be deducted from the amount of the PPP loan forgiven.
What’s the difference between the PPP loan and a traditional SBA 7(a) Loan?

PPP loans are being overseen by SBA, but that is where the similarities stop. PPP loans can be forgiven, have more borrower-friendly terms like no personal guarantee, and are less cumbersome and restrictive.

Can you explain how forgiveness of the PPP loan works?

You will need to submit an application for forgiveness to your lender, including documentation verifying the number of full-time equivalent employees and pay rates for the 8-week or 24-week period commencing when the loan is made. The documentation should include payroll tax filings with the IRS, state and local income, payroll, and unemployment insurance filings, cancelled checks, payment receipts, or other documents verifying payments. You will need to certify that the documentation is true and correct and that the amount of the requested forgiveness was used for the permitted purposes. The amount forgiven will be reduced to the extent that there was a reduction in the number and/or salaries of employees, unless restored by June 30, 2020.

For individuals with self-employment income (such as an independent contractor or a sole proprietor) who file a Form 1040, Schedule C, please review the new interim final rule issued on April 2, 2020, by the SBA to understand what amounts shall be eligible for forgiveness.

View the Loan Forgiveness Webinar here, and learn the most important tips to maximize your loan forgiveness.

Let’s get started

Simply click on the APPLY NOW button, and you will be taken to a secure portal where you can fill out your application to start your loan request. Millions of businesses will apply, swamping the majority of lenders. Using our dynamic compatibility technology, we only match loans with lenders ready to close, so you get your loan as soon as possible.

NOTE: You can take a Paycheck Protection Program loan and an SBA Disaster Relief Loan (EIDL) only IF the EIDL loan is used for purposes other than what’s covered by the Paycheck Protection Program loan.

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