COVID-19 Relief through the Payroll Protection Program – Where to Begin

Business owners are doing everything within their power to sustain operations, maintain employees, and find the working capital to weather the difficult months ahead. A new relief program called the Payroll Protection Program offers significant financing opportunities with the promise of loan forgiveness for many applicants. However, a week after the program was signed into law as part of the CARES Act, tremendous uncertainty remains about the process and timeline.

As of Friday, April 3^rd, the government has opened the application system for businesses and sole proprietors. Yet banks who are acting as SBA approved lenders only received interim guidance a few hours before the applications opened. Small businesses across the nation are struggling to interpret often vague program rules and rushing to secure a spot in line with their financial institutions. All the while, banks are quickly formulating their own paths forward as they decide how to vet borrowers and what supporting documents will be required.

In this dizzying time, here are six steps you can take now to be ready for quick action:

1. Contact your banker and let them know you’re eager to apply.

Now more than ever, it’s crucial to have a close relationship with your team of financial advisors and business consultants – especially your banker and CPA. While they may still be awaiting clarification on specific points in the guidance that’s available, they can help you understand the issues at play. Be sure to contact them and check in often, keeping communication open so you are top of mind. When assistance programs are clarified and application processing begins, you’ll want to act fast. Many banks will not be processing applications from borrowers who are not already clients.

2. Request a list of the supporting documents that your bank will need for an application.

Application requirements may vary depending on each financial institution’s process. At a minimum you can expect to provide payroll support such as wage and benefit reports per employee, plus health insurance and retirement costs. If you use a payroll company, they should be able to gather payroll records quickly. And if you don’t outsource your payroll, make sure your CFO or accounting team can gather the items on your preliminary list. Your bank may require additional items once they have worked out the details but you’ll have a head start.

3. Complete the SBA application to return to your banker in accordance with their intake process.

Different banks are implementing different processes and setting their own criteria for how applications may be accepted and processed. However, the SBA released an application that will likely provide needed information to your bank. Have a completed application available and ready to submit. Your banker can help make changes or adjustments further down the line.

4. Keep clean books and records.

You’re going to have to account for how you use loan proceeds, plus you need accurate reports for operational management during challenging times. Your finance and accounting functions should be keeping timely, detailed records, now more than ever. Your CPA can help evaluate your current system and determine whether changes are needed to provide the level of insight you’re seeking.

5. Consider the “first come first served” nature of the PPP program.

Don’t put this off. The PPP Program is described as first come first served. Many people share concerns that the $349B allocated to this program won’t last very long. Take action now to consider whether this program is right for you and get ready to take the next steps.

6. Know you’ll have lots of questions.

And that’s okay. Experts across the spectrum have been digesting new information around the clock and collaborating with one another to understand new rules and discuss nuances. We will continue to monitor news and new guidance on assistance programs for business owners, and we’ll be advising our clients on the best way to proceed. If you are unsure of how to press forward during these trying times, reach out to me or another member of our COVID-19 Response Team.