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Gianelli Nielsen News Blog

Monday, April 13, 2020

The Mad Dash for PPP Loans for Small Businesses

As most of you know, it is extremely difficult to get a bank to submit your application for a Paycheck Protection Loans if you don’t have an existing business-banking relationship with that bank. Worse still is even customers that have such a relationship are being put in the back of the line.

If you have had a tough time after chasing down every business contact and your bank has yet to launch your PPP application, there are some other options. There are limited funds available to businesses (although $350M seems like a lot) and the clock is ticking with Bank of America alone having processed $22 billion dollars of loan applications in one day ten days ago. There is even a possibility according to some writers that Bank of America and the community banks who have already launched applications could claim all of the $350 billion available as the other large banks continue to delay in getting their applications up and running. While Secretary Mnuchin told reporters that if the funds run out, they would ask Congress for more, there is no certainty that will happen.

Even if you don’t have a banking relationship or your bank is slow in processing your loan application, it appears that online banking companies like Pay Pal are soon going to be allowed to submit applications. PayPal’s website says that the process should be available any day now (well… we’ve heard that before).

If you’re waiting on your bank to get its application up and running, you may want to consider completing the SBA PPP LOAN APPLICATION, which you can get on the SBA website https://www.sba.gov/sites/default/files/2020-04/PPP%20Borrower%20Application%20Form.pdf even if your bank will be using an online process and application. Going through the application now will force you to gather your records and information to properly answer and calculate the questions on the application. And if you haven’t already, you’ll also want to gather your company’s payroll records, such as your payroll reports and 941 IRS payroll filings. 

The loan amount is determined by taking your company’s average monthly payroll over the prior 12-month period and multiplying that by 2.5. In the end, the amount you will obtain will be 2.5 times your average monthly payroll. Let’s run through a few of those common questions.

Payroll costs include salary, wage, commissions, and tips, as well as vacation, medical, parental, and sick pay. It also includes payment for group healthcare benefits, including insurance premiums paid. They also include employee and employer contributions. Payroll costs include state and local payroll taxes paid (e.g., state unemployment taxes), but does not include the employer-paid portion of federal payroll taxes known as FICA (e.g., Social Security and Medicare payroll taxes).

~ Michael L. Gianelli, Partner, Gianelli | Nielsen



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