Donna Genie walks through the Treasury's PPP application form, covering which legal entity box to check, how to calculate your loan request (average monthly payroll times 2.5), reporting existing EIDL loans, and required ownership disclosures and certifications.
Multiply average monthly payroll by 2.5.
Between January 31 and April 3.
Owners with more than 20% ownership must be listed.
If the sole proprietorship has no employees.
We will now walk through the Paycheck Protection Program or PPP application. This is a default application developed by the Treasury Department and your bank or lender's application may be slightly different, but they should contain similar information. So the first section is going to ask you about the type of business entity. Now this is your legal entity. If you have formed a corporation through your Secretary of State, you will be checking the C or S Corp, depending on which one you are taxed as if you formed a limited liability company through your Secretary of State, you should be checking the limited liability box for all others. There is a little bit of confusion. Obviously a partnership is if you're filing the Form 1065 and you have not formed an LLC, a sole proprietor should be used. If you're filing a Schedule C contained on your Form 1040 tax return, again, you have not formed any entity formally through the Secretary of State. If you're checking this box now, there is some controversy over what independent contractor and eligible self employed individual status means. Those are exactly the same as being a sole proprietor. We do not recommend that you check either of these boxes as there is supposed to be a delayed application date associated with them and we're not really sure that the SBA understands that there is no difference that those are also sole proprietors. If your business is a private nonprofit A501, you would use that box as well as a veterans organization or a tribal business. I don't recommend using other in any case that I've heard of yet to the right DBA or trade name versus the business legal name the business legal name should be the formal name that was used with the Secretary of State when forming your entity. If you are the ABC LLC doing business as subway restaurant or McDonald's, the trade name is what's above the door if you're a retail location or what name you operate under as a doing business as if your business legal name is the same, you do not need to list anything in the DBA or trade name. Your business address should be listed as well as your federal ID number. The only case where you should not have a federal ID number is if you are a sole proprietorship with no employees. Then you may use your Social Security number. List your business phone contact and email address. All right, now when we reach down to the average monthly payroll number, this is again payroll costs as previously defined in our other videos and in the calculation worksheets. You will list that number multiplied by two and a half. Now they're mentioning the EIDL here. It says Eidl net of advance, if applicable. So if you applied for an Eidl grant of the $10,000 or up to and you receive that, you don't need to enter anything at all. If you have an Eidl loan already outstanding, let's say it was a $50,000 loan and you received the $10,000 in advance, you should be adding 40,000. Basically, if you have an Eidl loan, not the grant outstanding at the time of applying for the ppp, you should be listing that amount here and it will be added to your loan amount that you're applying for. The number of employees, again, with some controversy. We discussed this before. It is probably the number of people you have working for you before the COVID crisis began. The purpose of the loan, you can select more than one. I would suggest that you select payroll. If you have a lease or mortgage, please list that. And also if you have utilities, I would not suggest marking the other button at all. Applicant ownership. Now this is who owns your business. If there are more than 20% owners, they all need to be listed. If they are less than 20%, they do not. So this should be the owner's name, percentage of ownership, their Social Security or federal ID number. If it is indeed a business owner, the address. If you need more space than these two lines, you would attach a separate sheet. All right. Please note that it says if questions 1 and 2 below are answered yes, the loan will not be approved. So if you've been suspended, disbarred, proposed for debarment, declared ineligible or voluntary, excluded from participation in the transaction by the federal department or agency, or presently involved in a bankruptcy, you cannot apply. Secondly, if you have ever obtained a direct or finance loan through the SBA and it is delinquent, or you defaulted in the last seven years, you may not apply. All right. It's also going to ask you some other common questions here. Is the applicant and owner of another business or have common management with. If you have multiple businesses, you should be describing that relationship on a separate sheet of paper attached as addendum A. Has the applicant received an Eidl loan between. Pay attention to these dates between January 31 and April 3. So prospectively, this was prior to the Eidl grant and all the changes to the application. If you did, you'll mark yes there. To my knowledge, very few people have achieved the status of getting that loan in process before. They had to have been very early in the process. All right, next up, number five and six. If you answered yes or no here, your loan will not be. I'm sorry, yes, your loan will not be approved. So on number five and six, if you have any criminal issues going on, pretty much you can read the description here. You'll answer that. You also need to initial to confirm your answer on questions five and six. And number six, if you were in the past five years, had any felonies or convicted of some things, please read that question. Answer that appropriately. Again, initial it both 5 and 6, we don't want your application to be denied because you forgot to put your initials all right. Your principal place of residence for all employees, is it included in the applicant's payroll calculation? Above, Is the United States the principal place of residence for all employees? Now, in an earlier position we had the question of if the employee is working, their business address is outside the U.S. this is asking if their residence is in the U.S. are you a franchise? That's in the SBA franchise directory. You can list yes or no there. All right. If you have further questions, please make sure you're reading all of the certifications below. There are several different things here to make sure that you understand you will want to initial each one of the certifications to show that you've read each one and understand what they are telling you. You're going to need to use the funds for and the application of this loan. Once you reach the bottom, please make sure to sign Print your title. Please make sure you're using the appropriate legal title. If you are in an LLC and you are the primary owner, you are most likely a member. That should be your appropriate title. The only other title that should be used there is a managing member and that is if you have a manager Managed llc. If your organization is a corporation, you should be signing either as president, vice president, Secretary, or Treasurer. Do not list owner as your title. If it's an LLC or a corporation, that is not a valid legal title to allow you to sign a contract or take out a loan. If indeed you are a sole proprietor, that is fine. I would list sole proprietor as the title. All right, please follow through and read the instructions. If you have any questions about any of the detail, I will tell you they're pretty short and sweet and there are a lot of pieces of government requirement disclosures here, but that is the application. Again, many of your banks or lenders may have this similar application and in their own format, but if prior to going through that online you've completed this application, you should have all of the information that they require. They may also require you to upload some documentation if you're doing it online. So check those requirements prior to and make sure you have those documents ready and available.
