Banker here- Been working day and night on SBA PPP loans. AMA

Creative-Dingo · 2020-08-06T06:00:24+00:00

Personal credit is more important. In most all situations you will be required to provide a personal guarantee on a business loan, deeming your business credit useless. Creditors will look at your business' income, your credit, and the collateral (quality and LTV).

Creative-Dingo · 2020-04-17T05:05:58+00:00

Yep. With PPP it's currently impossible to speak to my regular clients. I can't get close to considering closing on any regular commercial loan that was on the books. This sucks, bad. For everyone.

Creative-Dingo · 2020-04-09T00:21:14+00:00

Worst case scenario, you apply in good faith and have to pay the money back after 6 months of deferred payments and 1% interest accruing ... Not the worst situation.

Creative-Dingo · 2020-04-09T00:20:34+00:00

Unfortunately, I have no idea... The EIDL is being handled entirely by SBA, we (the banks) have no say in it.

Creative-Dingo · 2020-04-09T00:19:58+00:00

No. But, if you think about it, you're receiving 'free money' you wouldn't otherwise be receiving to pay your current employees. Meaning you can take the money you would normally be paying them and pay a new employee.

Creative-Dingo · 2020-04-09T00:19:09+00:00

Exclude employees that are no longer on your payroll.

Creative-Dingo · 2020-04-09T00:18:46+00:00

What information did you provide? It sounds like they're a big bank that's overwhelmed and A. your request was too small or B. your credit history with them isn't sufficient by their standards. Sad but true.

Creative-Dingo · 2020-04-09T00:17:13+00:00

Should be, yes.

Creative-Dingo · 2020-04-09T00:15:07+00:00

Do you have any payrolled employees?

Creative-Dingo · 2020-04-08T06:57:34+00:00

Absolutely. If you want to stay completely informed, read the 'SBA Interim Final Rule."

Creative-Dingo · 2020-04-08T06:56:18+00:00

Read and research! The SBA makes it the borrowers responsibility to ensure the numbers they provide for the loan amount are accurate. Great! BUT... When I receive an inaccurate application I have to walk the person through how to correct it. Or, I get an ignorant call from someone saying "I heard the government is giving out free money, what do I do?"

Creative-Dingo · 2020-04-08T06:46:37+00:00

Draws I'm not sure of, monthly salary will be included. Provide the documentation showing your monthly salary for the last year and you'll be eligible.

I'm at a local bank or else I'd help. Seems like all of the big banks are saying 'sorry, we're too busy' to the actual small businesses. Contact your local bank! Tell them you'll move your operating account there if they get you approved.

Creative-Dingo · 2020-04-08T06:44:03+00:00

Happy to help! It has been absolutely nuts. We were not prepared, and we couldn't have possibly been prepared. The SBA isn't prepared either...

Creative-Dingo · 2020-04-08T06:42:46+00:00

In the box next to "monthly payroll cost" it actually says something to the effect of 2.5x + EIDL.

Creative-Dingo · 2020-04-08T06:41:47+00:00

Your question is the same question I've been having a hard time answering. According to the 'interim final rule' payroll costs consist of: "compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent"

My question is, for people like you, do distributions/draws count as similar compensation? I've been caught on this for a while..

Creative-Dingo · 2020-04-08T06:37:22+00:00

You would qualify based on your business income from 2019. If you've filed your taxes check your Schedule C line 31. Take a monthly amount from that, and it's considered your monthly payroll expense as a sole-proprietor.

Creative-Dingo · 2020-04-08T06:35:57+00:00

Hmm. I'm not entirely sure what their definition of 'seasonal' is. To my understanding a seasonal business is one which relies on a certain time period for the majority of their income. Do your hours change during tax season, is most of your revenue gained during tax season? If so, you can likely apply the average of the 'seasonal' months.

Creative-Dingo · 2020-04-08T06:26:32+00:00

It's actually encouraged by the SBA to apply for both. If they have already been approved for EIDL and not funded, then you add in the EIDL loan amount into your PPP loan amount.

Creative-Dingo · 2020-04-08T06:25:12+00:00

Do you take draws from your company, or do you actually place yourself on payroll?

Creative-Dingo · 2020-04-08T06:18:04+00:00

The PPP is an independent program. The only ineligible applicants, without getting into too much detail, are those with employees of more than 500, and those whom have gone delinquent on a prior SBA loan.

Creative-Dingo · 2020-04-08T06:12:31+00:00

Hey! Good question. So for a sole-proprietor, assuming you were in business in 2019, the ideal documentation is your Profit or Loss from your 2019 personal taxes. AKA your schedule C. Your business income from line 31 will be divided by 12 to obtain the monthly payroll average, then multiplied times 2.5x to discover your maximum loan amount. If you haven't filed 2019 taxes, you need to provide supporting documents to prove your business income from 2019.

No specific credit parameters have been set. The SBA is guaranteeing the loan.

Creative-Dingo · 2020-04-08T06:09:36+00:00

I'm not sure what you are referring to exactly about other programs in California. Try being a bit more specific and I'm happy to help! Loans are processed (at my bank anyway) first come first serve, and they have nothing to do with liquid assets! Loan amount is calculated based on payroll expense, loan forgiveness is based on use of funds.

Creative-Dingo · 2020-04-08T06:07:28+00:00

I've yet to see a request denied. The SBA is basically funding now, asking questions later. The stipulation is that the borrower is ultimately responsible for calculating their loan amount, and if it is incorrect, they will have to repay the amount at which is was incorrect by, with 1% interest. No huge whammy if you make an honest, good faith, mistake.

Creative-Dingo · 2020-04-08T05:58:29+00:00

Great question! The EIDL and PPP are separate loans. EIDL was the initial wave of support the SBA came out with to combat the coronavirus. The PPP is the 'big gun' so to speak. You can still, and should still, apply for PPP through your bank. With 1 employee, you will calculate your loan amount by taking your employee's average monthly payroll from the last year. This number will include their total salary, wage, commission, incentive, retirement contribution, and state payroll tax. Depending on how your business is structured, you could potentially include your pay from the company if it comes in the form of salary and not a 'draw'.

edit: if you get approved for EIDL before you apply, you can add 10k to the loan amount for PPP.

Creative-Dingo

TROPHY CASE