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New PPP Guidelines and Deadlines

The New Mexico Economic Development Department released this statement today concerning new guidelines and deadlines for Paycheck Protection Program loans:
Economic Development Cabinet Secretary Alicia J. Keyes announced that new forgiveness and flexibility rules for the federal government’s Paycheck Protection Program (PPP) will benefit more New Mexico businesses and she is urging those who have not yet applied to take another look at the program.
With the PPP deadline for loan funding on June 30, there are just a few days left for businesses still interested to receive funding from private lenders who are partnering with the U.S. Small Business Administration (SBA).
As of this week, there is $129 billion left for PPP lending. The new forgiveness guidelines were presented by SBA leaders in New Mexico as part of an EDD webinar on June 17.
With the new PPP Flexibility Act, signed into law by President Trump on June 5, many more businesses in New Mexico who apply for forgiveness should be able to receive it. That means more of the money going to New Mexico businesses will stay in the state and not have to be repaid.
“The new guidelines mean that New Mexico businesses can reopen at their own pace and work toward a safer, stronger recovery,” Cabinet Secretary Keyes said. “The businesses can take more time to prepare and have until the end of the year hire back employees. The changes are a good thing for many small businesses in the state that are still under some health restrictions. I urge businesses who have not yet applied for PPP to take another look at this program before it closes for good on June 30.”
The biggest change allows PPP loan recipients until Dec. 31, 2020 to restore the employee headcount to pre-pandemic levels. The provision does not require hiring back a specific worker, just reaching the same headcount pre-pandemic in order to qualify for some loan forgiveness.
The new rules also reduce the percentage of PPP dollars required to be spent on payroll — to 60 percent from 75 percent. That change is particularly beneficial to galleries and specialty retailers with few employees but higher overhead in other areas such as rent, utilities, and mortgage interest.
The term for new loans is also extended from two to five years for any repayment amounts that would be due back to the lender, and the time period to use PPP money has been extended from 8 to 24 weeks.
“Small businesses are breathing a sigh of relief that they now have more time to bring back employees,” John Garcia, New Mexico SBA District Director, said on the EDD webinar.
“The changes are really important for hospitality businesses, gyms, and restaurants — many of the businesses that are still under COVID-19 restrictions,” Russell Wyrick, Executive State Director of the Small Business Development Center (SBDC) Network, said.
The SBDC centers provide guidance and technical assistance for all SBA loan services and applications in New Mexico. For more information, go to nmsbdc.org.
The SBA also reopened its application portal for the Economic Injury Disaster Loan Program (EIDL), a low-interest loan up to $2 million with payback periods of 20 to 30 years.
Wyrick emphasized on the webinar there are several other SBA loan options that might work for specific circumstances and his experts are available to advise business owners and nonprofit managers at no charge.
“The new guidance for PPP loan forgiveness is a welcomed action by the SBA. Many borrowers and lenders in New Mexico have been seeking clarification and a simplified process for asking for the intended forgiveness,” Jerry C. Walker, President & CEO Independent Community Bankers Association of New Mexico, said. “This is a positive action which moves us in that direction. Taken together, these actions benefit New Mexico’s small businesses who have been recipients of PPP loans.”
Some 650 New Mexico banks, credit unions, and community lenders have been active in SBA lending over the past several months with $2.2 billion in PPP money going to 20,431 New Mexico businesses and non-profits. Nationwide, $511 billion has been distributed under PPP.
The June 30 deadline for the program is fast approaching. “People often like to wait until the last minute,” Wyrick said on the EDD webinar. “Well, this is the last minute.”
For information on PPP and all the SBA loan programs go to SBA.GOV
For information on the state assistance, including the COVID-19 Loan Guarantee Program and the No-interest LEDA loan program, go to the EDD website, GONM.BIZ
For technical help and advice on SBA programs and loan applications go to NMSBDC.org.
For a list of SBA lending partners go here.
For comprehensive information from the State of New Mexico on the COVID-19 health emergency, including data, testing, economic, and food assistance, go to NEWMEXICO.GOV.

Resource Roundup – PPP Loan Forgiveness Updates

The United States Chamber of Commerce has shared the following updates on PPP loan forgiveness amidst some confusion on the subject.

For employers whose employees have chosen not to return to work, the Treasury Department has clarified its position on loan forgiveness. Specifically, if you’re an employer and want to bring an employee back who had previously been laid off, you will not be penalized if the employee chooses not to return. If you issue a written invitation to invite the employee back to work and the employee declines your written offer, you will not be penalized in PPP loan forgiveness application.

There is still PPP loan money available and businesses should continue to apply.

It is not known yet whether the window for loan use and forgiveness will be expanded beyond June 30, 2020, or if terms will be extended to more non-payroll expenses. While some of these rules could change, businesses are advised to assume the current program guidelines will not change.

 

 

Note: This is a summary of aggregated information from other parties and does not express the direct advice of Sam Goldenberg & Associates.

Resource Roundup – NM Lenders Available for SBA Loan Applications

Lenders in New Mexico are still able to help businesses with loan applications for the U.S. Small Business Administration’s Paycheck Protection Program (PPP), Economic Development Department Cabinet Secretary Alicia J. Keyes said in a recent virtual roundtable discussion.

As reported, Congress appropriated another $310 billion for crisis relief funding last week. As part of that bill, about 20 percent of the money ($60 billion) was reserved for small banks and community lenders. Applications reopened on April 27.

During the roundtable last Friday afternoon with the EDD Cabinet Secretary Alicia J. Keyes, U.S. Rep. Ben Ray Lujan, D-New Mexico, said there was about $200 billion left for PPP loans, “but this will go quickly.”

Rep. Lujan added that nearly all the community banks and credit unions in New Mexico “have completely cleared their backlog, and most of the community lenders are soliciting new loan applications and taking on new customers.”

“There are still lenders in New Mexico that have lending capacity, especially among the community banks and federal credit unions,” said John Garcia, New Mexico District Director for the U.S. Small Business Administration.

“For New Mexico to have a full recovery we need businesses to be healthy,” Secretary Keyes said. “I would urge any businesses who have not yet applied for SBA assistance, to do so.”

As of April 29, the U.S. Small Business Administration (SBA) has approved over 960,000 loans in the second round of the PPP. The dollar value of those loans was $90 billion, with smaller banks accounting for 587,000 loans or 61 percent of the volume.

The average loan size for round 2 of the Paycheck Protection Program is $95,000 compared with $206,000 in the first round of the program, according to the SBA’s New Mexico Office.

For SBA program information go to SBA.GOV

For a list of qualified SBA lenders in the state go to the EDD COVID-19 Resources page or click here.

For information on all the state and federal emergency economic assistance, go to the EDD website, GoNM.biz

For comprehensive statewide information on the COVID-19 health emergency, visit NEWMEXICO.GOV.

 

 

 

Note: This is a summary of aggregated information from other parties and does not express the direct advice of Sam Goldenberg & Associates.

 

Resource Roundup – PPP and Business Support 2.0

President Trump signed the legislation today to replenish business relief programs and support hospitals and COVID-19 testing.

The package totals $484 billion and includes:

  • An additional $310 billion in funding for the Paycheck Protection Program (PPP), with $60 billion reserved for small banks and lending institutions
  • $75 billion for hospitals
  • $25 billion to support testing efforts
  • $60 billion for emergency disaster loans and grants (EIDLs)

In a recent virtual town hall hosted by Inc., U.S. Chamber of CommerceExecutive Vice President and Chief Policy Officer Neil Bradley advised applying for this second round if you own a business and need support, despite frustrations shared by many about the first round’s allocations. “I would apply for the loan. If you look at loans already pending, I think the $310 billion is going to go quickly,” he says. “If you get it, great. If you don’t, there might be another tranche. You’re going to want to be in line.”

The funds reserved for smaller lending institutions are just under 20% of the PPP replenishment. It is hoped that portion will prevent more of the stories we’ve been reading in the last week in which large businesses with stronger bank relations were allocated maximum loans while small businesses wait in Limbo.

Credit unions, Community Development Financial Institutions (CDFIs), and FinTech lenders are potentially a good place to start for small businesses, says Michelle Sourie Robinson, President and CEO of the Michigan Minority Supplier Development Council. If you plan to apply through such a lender, be sure to call ahead to make sure the lender has been approved by the SBA to participate. Not all institutions are involved and some that wish to be are still awaiting approval, cautions Bradley.

The EIDL program is a good option for businesses with non-payroll related needs. Unfortunately, with the extremely high demand, Bradley anticipates the grants will remain capped at the recently adjusted rate of $1,000 per employee, as opposed to the original $10,000 per approved business.

If you are concerned about rent (which EIDL money is well suited to cover if you get it), Bridget Wetson, Acting CEO of SCORE, suggests negotiating with landlords. They would likely prefer to deal with current tenants rather than seek new ones, she reasons. Rent reductions, deferrals, or (for retail businesses) switching from base rates to percentage rates may be possible. Be sure to formalize such agreements in writing.

 

 

Note: This is a summary of aggregated information from other parties and does not express the direct advice of Sam Goldenberg & Associates.

Resource Roundup – Approval for Second Small Business Funding Package

Congress and the White House have reached an agreement for the second round of funding for business relief programs. Details are forthcoming.

It’s expected that the package will total $450 billion and include:

  • $300 billion for the Small Business Administration’s popular Paycheck Protection Program (PPP)
  • $50 billion for the Economic Injury Disaster Loan (EIDL) program
  • $25 billion for testing
  • $75 billion for hospitals

Notably, $125 billion of the PPP money will be set reserved for small businesses that don’t have strong relationships with local banks. (Hopefully this will address one of the primary problems with the first round.)

The replenishing of the EIDL program is coming sooner than some expected. This program is potentially a good fit for businesses with non-payroll related needs.

Many businesses find themselves in a  Limbo state, having applied for PPP assistance before the first round’s funding was depleted and not having heard if they were approved. The SBA generates a unique loan origination number upon approval.

“If you’ve already gotten that loan origination number from the Small Business Administration or your lender has that, you are part of that [original round of funding] and you should be getting your loan disbursed,” said Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce Neil Bradley said. “The thing to check on is where you are in that approval process.”

Stay tuned for updates!

 

Note: This is a summary of aggregated information from other parties and does not express the direct advice of Sam Goldenberg & Associates.

 

Resource Roundup – Independent Contractors and PPP

The Paycheck Protection Program is now open to 1099 workers and independent contractors, of whom there are over 23 million in the U.S.. There has been a lot of confusion around how independent contractors interact with this program, and not a lot of guidance from the SBA or Treasury. In a virtual town hall hosted by Inc., a panel of experts shed some helpful light on this murky area.

Panel:

Kimberly Weisul, Inc. editor-at-large (Moderator)

Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce

Keith Hall, President and CEO of The National Association for the Self-Employed

Sarah Jennings, Principal of Accounting and Outsourced Solutions and Director of Strategic Initiatives and Community Engagement at Maner Costerisan

Tanya Motta, Vice President of Domestic & Global Programs at California Asian Pacific Chamber of Commerce

Bridget Wetson, Acting CEO of SCORE.

Qualifying for PPP loans

Keith Hall is sanguine about qualifications. “You do qualify. It’s going to be a very rare situation that you as a self-employed business owner don’t qualify. If you have a business, you qualify,” he says.

How to calculate a 1099 salary for a PPP loan

Contractors and sole proprietors are eligible for up to $100,000 in annual income, prorated. “Definitionally, payroll is net earnings for self-employment,” said Bradley.

To calculate this, add up all 1099 revenue for 2019 and then divide that by 12 (months) and then multiply that by 2.5 (months).

What to know about defining 1099 payroll and loan forgiveness

PPP loan forgiveness requires that 75% of the amount is going to payroll.  “Your payroll is your net earnings from self-employment,” says Hall. “Say you get a PPP loan for $15,000. By definition, that $15,000 is indeed used for payroll because it goes to your family, helps you buy food, or pay your mortgage. It is my expectation from a practical standpoint that these PPP loans for 1099 people will be forgiven.”

What documents 1099 workers need to apply for PPP loans

Independent contractors currently use  the same form as small businesses to apply for these loans. Where small business employers write in “average payroll,” independent contractors substitute income. “Contractors or the self-employed should use 1099 forms and other tax documents to help them verify these forms,” says Bradley.

Hall points out that your Schedule C form will be hugely helpful in your calculations. Your net earnings will be your payroll, stated on the bottom line of your Schedule C.

Where to apply

Bradley suggests that FinTech lenders may be good sources for independent contractors as banks are prioritizing clients with existing relations and debt. We cover FinTech companies’ recent authorization for PPP lending here. Exercise caution. A good rule of thumb is to never give information to anyone reaching out to you.

 

Note: This is a summary of aggregated information from other parties and does not express the direct advice of Sam Goldenberg & Associates.

Resource Roundup – FinTech Joins PPP

It’s fair to say that the Paycheck Protection Program’s launch hasn’t been perfectly smooth. The adjustment period as lenders familiarize themselves with unprecedented terms and the enormous volume of demand created a significant bottleneck. As some experts have warned, banks are prioritizing applicants with whom they have existing relationships. The systems to process all of this didn’t immediately exist.

After weeks of lobbying, FinTech (technology that supports banking and financial services) companies, including PayPal, Intuit, and Square, have been authorized as PPP lenders. Many have also joined the fray as facilitators of the loan application process.

This gives businesses some new options, which might be helpful if your bank is balking. In a letter to lawmakers last month, an alliance of FinTech leaders called Financial Innovation Now outlined the capabilities of their industry. Specifically, digital payroll records, analysis, and delivery systems help remove friction, they say.

“Collectively, FIN member companies alone have a direct deposit and underwriting capability with over 20 million small businesses. FIN estimates that our companies could rapidly disburse approximately $100 billion in capital to vulnerable small businesses, in many cases within weeks. Through payment processing data and other technologies, these alternative online lenders have direct visibility into real-time hardship of a small businesses and they have the credit models and the digital infrastructure to move money rapidly.”

“The tech integration issues for the banks trying to participate for the first time were considerable (unique application forms not matching SBA required fields etc.) but my hope is that the lessons learned in the last week and some upgrades and standardization will help speed the second iteration,” says Nat Hoops Executive Director of the Marketplace Lending Association.

“Our goal is to get relief money into the hands of as many eligible applicants as possible, as fast as possible. Validation of payroll information is necessary to complete the PPP application. For QuickBooks Payroll customers, the customers’ data is already in the QuickBooks system. As a result, we are well positioned to help expedite the loan application process for this group. One in 12 American workers are paid through our payroll systems, which makes this an impactful place to start,” says Luke Voiles, VP and Business Leader of QuickBooks Capital.

This Forbes article provides a list of FinTech companies helping with loans. If you do explore alternative, non-bank lending options, exercise caution to avoid scams. This Inc. article outlines some steps to take to protect yourself in a fraught lending market.

 

 

Note: This is a summary of aggregated information from other parties and does not express the direct advice of Sam Goldenberg & Associates.

Resource Roundup – Independent Contractors and Payroll Calculations

There has been a lot of confusion around how independent contractors engage with the Paycheck Protection Program.  See, for example, this letter to Treasury Secretary Mnuchin y Forbes Senior Contributor Tony Nitti delineating some vexing points.

To clarify, independent  contractors are not included in an employer’s PPP loan amount.

“As an employer and borrower, what you pay independent contractors and 1099s does not count toward your payroll cost in calculating how much you can borrow and how much can be forgiven,” says U.S. Chamber of Commerce Executive Vice President Neil Bradley.

While small businesses and solopreneurs have had access to PPP loans since last Friday, April 3, there is a separate PPP loan process for 1099 workers. 1099 workers will be eligible to apply for PPP support this Friday, April 10. We will share more information as it’s available.

Resource Roundup – Paycheck Protection Program or Economic Injury Disaster Loans?

What are the relative merits of the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) options? This question comes up a lot lately amidst the whirlwind of new information about business relief programs.  The infographic below, by Live Oak Bank, provides a helpful and concise comparison.

Steve Mariani, President and Founder of Diamond Financial Services, shared some additional insights in a webinar hosted by the International Business Brokers Association. Key takeaways from Mariani’s talk include the following:

  • The EIDLs are available now if you need funds to keep your business afloat.
  • 75% of PPP funding must be used to cover payroll. Only 25% can be used for other expenses like rent, utilities, etc.
  • Be careful calculating payroll. If you ask your payroll company for a report, it might not include things like simple IRA employee expenses and health insurance reimbursements. Be thorough!
  • If you receive $10 thousand dollars or less from an EIDL, there is an option to roll that amount into a PPP loan.
  • If you plan to apply for PPP support, Mariani suggests you do so quickly and through a lender with whom you have a current relationship. He says lenders are prioritizing current clients.

Lenders are working to interpret and implement the approximately 1,000 pages of information released in the last week. Updates will become available soon as procedures are put in place to process applications. Stay tuned!

Note: This is a summary of aggregated information fro other parties and does not express the direct advice of Sam Goldenberg & Associates.