Dear clients and friends,
As so many of us are working through this process of preparing and applying for new emergency funding through the U.S. Small Business Administration (SBA), our team wanted to share some key points with you to help. We will also post this on our blog for handy reference.
Tip #1: Nearly everyone should apply (even solopreneurs).
Small business owners with payroll employees absolutely must, but even those who are solopreneurs and freelancers, or those with contracted teams, are still eligible for the Economic Injury Disaster Loan Program (this is the direct application program — https://www.sba.gov/page/disaster-loan-applications).
Tip #2: Be careful with entity selection.
The application is confusing for those who lead LLCs, LLPs and other non-incorporated business entities. Our advice: Select “Business with less than 500 employees” and not “Individual sole proprietor”.
Tip #3: Assume entity ownership is simple.
The SBA will ask if your entity is owned by another entity. Unless the owner of the entity whose EIN you are using is literally another entity with an EIN, assume the answer is ‘no’.
Tip #4: Be careful with bank information entry.
When you apply directly online, the SBA will ask for bank information in an order that makes little sense. Some users are accidentally swapping account and routing numbers, or confusing the bank name field with the others. Be cautious and careful when entering this data.
Tip #5: Prepare key documents when applying for the Paycheck Protection Loan and other programs.
This is the other major SBA program and in this program, you apply through a more traditional process involving your bank. For these programs, you need to compile key financial documents:
– Profit and loss statements
– Form 941 Quarterly Income Tax Returns Accounting for the Past 12 Months
– 1099 Payroll for the Past 12 Months
– Sole Proprietors – 2019 1040
– # of full time employees with their pay rate
Tip #6: Get online banking set up and tested.
Make sure you have online banking access set up with your primary business bank, as some banks are requiring this to be active in order to process applications.
Tip #7: Review the application for the SBA’s Paycheck Protection Program (PPP):
You can review the application on the SBA website here:
Note: This is an SBA official sample, you will need to request your actual application directly from your business bank.
Tip #8: Prepare for constant changes to these programs.
The details of these programs are changing minute-by-minute so be prepared for some confusion in the process. For example, your bank may require tenant leases and utility bills as additional submission documents, or other additional information that the SBA may be asking banks to examine. Work closely with your banker as they work through this with you.
Ready to proceed? Have more questions? Use the Contact Us link on this website to get in touch with the BradyRenner CPAs team.
Image Credit: GotCredit (Flickr @ Creative Commons)