COVID-19 Business Resources
Update as of Friday, May 15th
The SBA and Treasury Department announced a safe harbor that will apply to reviews of good-faith certifications concerning the necessity of Paycheck Protection Program loan requests.
In the latest update to their frequently asked questions on the program, the agencies said any borrower that, together with its affiliates, received PPP loans with an original principal amount of less that $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
The agencies said:
- Borrowers with loans below this threshold are generally less likely to have access to adequate sources of liquidity, and the safe harbor will promote economic certainty for them.
- The SBA previously said all PPP loans over $2 million - and other loans as appropriate - will be subject to review.
- Borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification.
- If SBA determines that a borrower lacked an adequate basis for the required certification, it will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness.
- If the borrower repays the loan after receiving notification from SBA, the agency will not pursue administrative enforcement or referrals to other agencies.
- SBA's determination on these certifications will not affect its loan guarantees, which remain in place.
Update as of Monday, April 27th at 3 pm
The second round of PPP funding opened this morning. Due to the overwhelming volume, bankers throughout the U.S., including our lenders, are experiencing technical issues uploading completed applications to the SBA portal. SBA application processing times are taking longer than expected. We are continuing to accept completed applications and are uploading to the SBA portal as we can, despite technical issues. You may submit your completed application to SBA@UnitedBank.com.
How United Bank supports business
Our world and nation are currently experiencing unprecedented disruptions, affecting everyone in some way. No one was expecting this, but here we are, and you are trying to manage your business in the midst of uncertainty and chaos. Know that at United Bank, we are working diligently to provide ideas and resources to assist you in navigating these uncharted waters.
Recognizing the threat that the Coronavirus (COVID-19) pandemic is to your business, we have created a special webpage for our business clients, www.unitedbank.com/CovidBusinessResources. On this page you will find
- Links to small business assistance organizations
- Specific information about the SBA Economic Injury Disaster Loan Program & Paycheck Protection Program
- Helpful tips for managing your business during times of crisis
- Additional information that may assist you in the current situation
Information about new resources for businesses is becoming available daily. We will continually update www.unitedbank.com/CovidBusinessResources with information as it becomes available, so please check back with us frequently.
United Bank is committed to you and your business. Please do not hesitate to contact us, we will help in any way possible.
President & CEO
The following are local offices and partner organizations in our area who can help you with questions about applying for SBA loans, preparation of financial statements, and loan application assistance.
Small Business Development Centers of Alabama
Primary SBDC office in Alabama
SBDC at University of South Alabama
Florida SBDC Network HQ
SBDC at University of West Florida
SCORE Business Mentors
South Alabama SCORE
Fairhope Chamber of Commerce
Alabama Capitol SCORE
Panama City SCORE
Veterans Business Outreach Center
For Veterans living in Alabama:
Veterans Business Outreach Center at Mississippi State
For Veterans living in Florida:
Veterans Business Outreach Center of Florida
Gulf Coast College-Panama City
Small Business Administration
District Office - Mobile, AL
District Office - Birmingham, AL
District Office - Jacksonville, FL
Regional Office - Atlanta, GA
Disaster Field Operations Center East - Atlanta, GA
Office of Women's Business Ownership
U.S. Chamber of Commerce
SBA Economic Injury Disaster Loans
SBA Economic Injury Disaster Loans
Counties in Alabama and Florida have been officially designated as SBA Disaster areas as a result of the Coronavirus (COVID-19) pandemic. This designation allows businesses to apply for SBA's Economic Injury Disaster Loans (EIDL program). These loans are available for working capital purposes at loan amounts up to $2 million. Additional information on the EIDL program is available, however, some important tips to consider.
YOU MAY REQUEST UP TO A $10,000 ADVANCE ON YOUR LOAN REQUEST FOR YOUR EIDL REQUEST. YOU ARE NOT REQUIRED TO PAY THESE FUNDS BACK EVEN IF YOU ARE NOT APPROVED.
- Apply as soon as you possibly can. The sooner you apply, the sooner you receive an answer.
- Make sure your application is complete. Incomplete applications slow down the process.
- Use available resources to assist you like this website and your United Bank bankers.
SBA Economic Injury Disaster Loan Basics
- SBA Economic Injury Disaster loans are underwritten and approved through SBA
- Loan Amount: Up to $2 million, subject to credit approval
- Interest Rate: 3.75% fixed for businesses; 2.75% fixed for nonprofits
- Term: Up to 30 years based on ability to repay
- Uses: Working capital to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had Covid-19 crisis not occured
- Collateral: Loans over $25,000 require collateral. SBA takes real estate collateral when available. SBA will not decline a loan for lack of collateral, but requires borrowers to pledge what is available
- Loans $200,000 or less do not require guarantors
- Must have credit history acceptable to SBA
- Must show the ability to repay the SBA loan
Paycheck Protection Program
Payroll Protection Program Loan Information Sheet
- Loan amount: 2.5 times average monthly qualifying costs, up to $10 million (detailed formula included)
- Interest Rate: 1%
- Fees: None
- Collateral: None
- Borrower Guarantees: None
- Prepayment Fees: None
- Purpose: To pay qualifying costs for the 8-week period following date of loan closing
- Loan Forgiveness: If business has the same average number of employees or more, with each employee being paid the same amount or more at end of the 8-week period following date of closing, up to 100% of the loan amount will be forgiven. (Options available on starting number of employees.) Forgiven loan amounts are not taxable.
- Unforgiven Portion: Up to 2-year term. Payments required to be deferred for 6 months, additional 6 months allowed.
- SBA Guarantee: 100% until 12/31/2020; reverts back to 85% after 12/31/2020
- “Credit Elsewhere”: Waived
Loan Amount Calculation
Average Monthly Payroll Costs X 2.5 = Maximum Loan Amount (Previous 12 months)
Average Monthly Payroll Costs X 2.5 = Maximum Loan Amount (Period from 2/15/19 -6/30-19 or 3/1/19-6/30/19, borrower option)
New Business (since 6/30/19)
Average Monthly Payroll Costs X 2.5 = Maximum Loan Amount (Period from 1/1/2020-2/29/2020)
Uses for Loan and Qualifying Expenses for Forgiveness
- Payroll Costs
- Costs for employer paid insurance and health care benefits
- Employee salaries and commissions
- Interest payments on mortgages originated prior to 2/15/2020
- Rent on leases signed prior to 2/15/2020
- Utility payments for utilities started prior to 2/15/2020
- Interest on any other debt originated prior to 2/15/2020
PPP Loan Calculator Spreadsheet
Payroll Protection Program Loan Application Packet
SBA Faith Based FAQs
SBA Payroll Protection Program Affiliation Rules
U.S. Department of the Treasury - Assistance for Small Businesses
Best Practices for PPP Forgiveness
Updates on Paycheck Protection Program Loans
Forgiveness of PPP Loans
PPP loans are there to help you retain your employees, maintain payroll, and cover other specified essential business expenses. According to the current program rules, PPP loans are eligible for complete forgiveness if certain requirements are met. As of now, there is very limited guidance from the SBA and Treasury on what will be needed to establish that your PPP loan is eligible for forgiveness. Below is a summary of the PPP rules related to forgiveness, as they currently exist. We expect Treasury and the SBA to release additional guidance in the next few days. Despite this uncertainty, it is not too early to start closely documenting how your business uses the PPP funds.
- To be 100% forgiven, a minimum of 75% of your PPP loan proceeds must be used to cover qualifying payroll costs during the eight week period immediately following receipt of loan proceeds.
- 25% of the proceeds may be used for other qualifying non-payroll expenses over the eight-week period immediately following your loan date. These qualifying non-payroll expenses must not total more than 25% of the requested forgiveness amount.
Good Faith Certification
What is “good faith” when it comes to certifying that a PPP borrower needs the PPP loan to sustain the borrower’s ongoing business operations? While there is no black-and-white definition of “good faith” in the PPP rules, we are certain that the overwhelming majority of small business borrowers made their applications in good faith. The lack of clarity surrounding how Treasury and the Small Business Administration will review applications for evidence of good faith is the reason why United Bank is sharing what we believe to be some best practices to help protect your business in the unlikely event that a question arises around your good faith certification.
The first action we suggest is to write a memo that explains why your business needed the PPP money. Some questions you might want to address are:
- Why did you believe the PPP loan was necessary to sustain your ongoing business operations at the time you took the loan?
- What was the economic conditions that you faced in the immediate weeks and months after taking the loan? Would you have to permanently lay off employees? Would you suffer long-term harm to your business?
- Did you have other sources of capital? If so, what did you have planned for that money before the pandemic happened? Explain why taking the PPP loan helped avoid damage to your ongoing business operations.
- Explain why you could not access other liquidity sources on reasonable market terms during this pandemic. For instance, if you have a line of credit, explain why drawing on it instead of taking the PPP loan would have been harmful to your business.
- Explain any other reasons not listed above why the loan was necessary to sustain your business. In other words, why you really needed the money.
Answering these questions is not mandatory and is not meant to substitute for professional legal or accounting advice. This is simply a suggestion on a best practice to protect yourself and your business should questions arise about your good faith certification that you needed the PPP loan to sustain your business.
Additionally, we suggest that you implement the following practices that will simplify documenting your expenditures:
- Keep PPP funds in an account that is separate from your day-to-day operating account.
- Keep a spreadsheet or other register of how you used the PPP funds.
- Save all paperwork and electronic data that could be used to document how you spent the funds.
- Review your expenditures regularly. DO NOT assume that your payroll outsourcing company or bookkeeper is spending the money appropriately. You, as principal or business owner, must review these expenditures as they happen. You are the one responsible if the funds are misspent.
United Bank will work with you to collect all documentation needed to apply for forgiveness and we will keep you updated as the PPP rules develop. Also, please check the Department of Treasury’s Frequently Asked Questions guidance at https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf for updated guidance on specific questions regarding PPP loans.
DISCLAIMER: The information contained here is simply a summary of general guidelines and not intended to, and does not serve as, substitute legal or professional accounting advice. Please contact your attorney or CPA with questions that are specific to your situation.
If you have concerns about whether you can meet the good faith certification standards, we suggest that you immediately talk to your CPA or attorney, as the deadline for repayment of the PPP funds without penalty from the SBA or Treasury is Thursday, May 29, 2020.
To maximize the amount of your loan forgiveness, United Bank strongly recommends that PPP borrowers use the funds only for eligible purposes. If you have questions about whether an expenditure is appropriate, we urge you to reach out to your attorney or tax professional. United Bank cannot provide advice on whether an expenditure is eligible for forgiveness. Please be aware that using the PPP funds for ineligible purposes may result in a denial of loan forgiveness, as well as other punitive measures from Treasury and the SBA.
Best Practices Now That You Have Your PPP Loan
Maximize your Paycheck Protection Program Loan Forgiveness
PPP Loan Forgiveness Application
Your Dedicated United Bank Team
Please feel free to call your local lender with questions.
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