By Simon Albaugh – YAN – Detroit.
Yesterday, the Small Business Administration reopened its Paycheck Protection Program. This means that small businesses that are struggling are now able to apply for the funding assistance that they may need to get through the COVID-19 Crisis.
The Yemeni American News has compiled everything you need to know about what businesses are eligible to apply for these loans, how to apply, and what businesses need to do in order to have these loans forgiven.
We recommend any small business that’s eligible consider applying for this program. The funding will be able to go toward costs of doing business that have been affected by the economic crisis that resulted from the COVID-19 pandemic.
Dr. Hayg Oshagan is the Director of New Michigan Media and a Professor of Communication at Wayne State University. This story, and other reporting efforts to expand access of information for minority-owned small businesses have been in collaboration with New Michigan Media.
Who’s eligible to apply?
According to the Small Business Administration, any business with less than 500 employees can apply for this program. Businesses with 500 or more employees can apply as long as they show that they are relatively small compared to the industry-standard size of other businesses.
Any business, 501(c)(3) nonprofit organization, 501(c)(19) veteran organization, or tribal business concern that meets the SBA size criteria can apply for the PPP Loan. Businesses that provide food service or hospitality – like hotel rooms – can apply if they have more than one physical location and employ less than 500 people.
Sole proprietors, independent contractors, and self-employed people are also eligible to apply for the Paycheck Protection Program.
If someone is the owner of a franchise like Burger King, then they should check the SBA Franchise Directory to see if they’re eligible for the Paycheck Protection Program.
The Paycheck Protection Program Application form is only two pages long. Although applicants will need documented proof of their payroll cost as well.
How do you apply for the Paycheck Protection Program?
The application process is relatively simple. People who apply need to fill out only one form, that is two pages long. The form will ask for the business owner’s information – Name, Address, Primary Contact, Business Tax ID and phone number.
Applicants will need to calculate the amount that they’ll need through the Paycheck Protection Program. Part of what goes into this figure is documentation of the monthly payroll cost for two and a half months. Payment to the loan will be automatically deferred for six months. (Later in this article, we’ll tell you how the loan can be forgiven, according to the SBA.)
The form will then ask if the applicant was: 1.) in operation on Feb. 15, 2020, 2.) affected by the economic uncertainty of the COVID-19 Pandemic so much so that the loan will be necessary, 3.) intending to use the funds to retain workers, maintain payroll, or make necessary business-related purchases, and 4.) that the applicant has not received another Paycheck Protection Program Loan.
The form will also ask to confirm that the applicant is eligible for the paycheck protection program loan, according to the rules of business size and business type. Franchise owners will be asked if their business is listed on the SBA Franchise Directory.
In order to confirm this information for the lender, you’ll need to provide:
– EIN Number (or, if a sole-proprietor without an EIN, your SSN)
– The legal name and operating name (doing business as) of your business.
– Full name, home address, title, and ownership percentage of each owner of this
business with greater than 20% ownership.
– Be ready to input the required payroll information (for two and a half months) to
calculate your loan amount.
You’ll also need to provide:
– IRS form 940 (annual payroll tax filing form) and other documentation to
substantiate the payroll figures you enter in this application (failure to provide
documentation to substantiate payroll will result in an inability to approve your loan).
According to one person who was approved through the first round of PPP loans, the most important advice is to ask a bank any questions that you might have about the application process.
The loan must be processed through an authorized institution. Most major banks will be able to process the loan and many credit unions will be authorized to process the loan.
How can the Paycheck Protection Program Loan be forgiven?
According to the Small Business Administration, the loan could be forgiven if at least 75% of the funding goes toward payroll expenses. So by paying your employees at least 70% of the funding through this program, an applicant could be removed from its responsibility to pay back the loan.
Why is it important to apply?
This is an exceptional time. For the foreseeable future, many businesses and industries will be negatively impacted by the COVID-19 Crisis. By applying for this program, small businesses will be able to maintain their eligibility to do business when the economy eventually opens back up.
The purpose of this economic aid is to help small businesses be able to get back to business when this is over. Not only for the sake of the business owner, but also for the employees who depend on their paycheck, and the people who depend on the business.
This is a difficult time. Programs like this are meant to help small businesses get through this difficult time. Major corporations have already been able to cash in on the first round of relief. Now, this is the most important time for small businesses in cities like Detroit, Dearborn and Hamtramck to get the funding they need in order to maintain the communities that they serve.
