As COVID-19 still ravages the United States, small business owners across the country have been struggling to keep their doors open and pay their existing employees during this unprecedented economic crisis. To combat this downturn, the government implemented a new program designed to subsidize small business expenses and prevent mass closures as part of their CARES Act economic relief stimulus – the Paycheck Protection Program (PPP). The PPP provided much-needed relief for thousands of small businesses nationwide in the form of the PPP loan, which promised billions of dollars to approved applicants to use to pay their employees and cover business expenses. Although the initial period of PPP loan acceptance is over as of August 8th, 2020, a new and improved PPP loan is currently in the works for those who missed out the first time, thanks to the Small Business Administration (SBA) and Congress.

Do I Qualify?

An eligible business will still need to satisfy the requirements for the new PPP loan, but understanding the previous application process can make the next one even easier.

To start, the PPP loan is only available for mid- to small-sized businesses characterized by 500 or fewer employees. Luckily, according to the Small Business & Entrepreneurship Council, 99.7% of all businesses in the US meet this requirement, so it is likely your business will qualify. The loan includes tribal businesses, independently owned franchises, self-employed workers, and qualifying food or hotel establishments.

How Do I Apply?

The loan may only be distributed by SBA-approved lenders, participating farm credit institutions, and federally insured banks or credit unions. Unfortunately, scammers have already begun preying on small business owners and claiming they can simplify and expedite the application process. Only apply on the SBA website to avoid fraudulent activity. No approved lender will ever request your Social Security number, credit card number, or bank account information.

The application process begins with the completion of an application and the submission of verifying documents to the lender. These documents may include your payroll records, utility records, and lease payments for a previous 8- or 24-week period. To facilitate the application process, keep both paper and digitized records of these documents on hand before beginning your application. If you need help collecting all these records, feel free to hire an accountant or other professional to help you with this section of your application. According to the SBA, small business owners are not responsible for any fees accrued directly relating to the completion of their application whether by lenders or other professionals. Your lender will be responsible for reimbursing your accountant or bookkeeper.

How About Forgiveness?

The PPP loan is part loan-part grant. Many business owners may be scared off by the word “loan”. After all, if you can barely afford to keep your electricity on, how can you afford monthly loan payments? However, the PPP loan may be eligible for full forgiveness as long as you utilize at least 60% of the funds received for payroll and retain your full-time employees. The other 40% of your received funds may be used for qualifying business expenses.

I Could Still Use More Help.

If you still need more assistance, the CARES Act also reinstated the Economic Injury Disaster Loan (EIDL) which provides relief for businesses during crises such as hurricanes, earthquakes, or yes, pandemics. Small business owners can apply for both loans with the stipulation that the funds are used for different expenses. For example, if you use the PPP loan for payroll, you cannot also use the EIDL for payroll. However, the EIDL acts more as a true loan. It provides a $10,000 advance which is entirely forgivable, but the rest of the sum will be treated as a loan due for repayment. So, choose wisely when you apply for either the EIDL or PPP loan.

Protecting Small Business Owners in the Inland Empire

Throughout the COVID-19 crisis, people have come together to help keep hard-working Americans on their feet – from the passing of the CARES Act to ordering delivery from their local mom-and-pop restaurant. Unfortunately, despite the provisions legally set in place to protect small business owners and to help them acquire financial assistance, some companies are taking advantage of those who may not be aware of their rights.

McCune Wright Arevalo, LLP, has made it their mission to seek out the banks and credit unions who are underhandedly charging exorbitant overdraft or NSF fees and bringing them to justice. Small business owners in California and across the country do not deserve to be blindsided and left on the hook for unfair fees during a nationwide economic crisis. Our team of class action attorneys are highly experienced in reaching positive resolutions for victims of unfair corporate practices, including a $203 million trial verdict and a $70 million settlement against banks for deceptive overdraft fees. If you are a business owner struggling with unfair bank or credit union fees or are blindsided by the bill for services you employed while preparing your PPP loan application, contact us today or call (855) 976-3154.