By now, you have all heard about the Paycheck Protection Program, designed to help small businesses hang on through the COVID-19 economic crisis. At this point, you likely fall into one of three categories in regards to this program:
- You applied and received a PPP loan.
- You applied for a PPP loan, but they ran out of money
- You haven’t applied for a PPP loan yet
ZümiFi would like to take a moment and offer some advice for the next steps for businesses in any of the three situations listed above.
For businesses that received a PPP loan – now is the time to get very clear on how you will use those loan proceeds. The PPP generally requires you to use 75% of the funds for payroll costs, but note that you may also use loan funds to pay for your mortgage or rent, utilities, and interest on loans that were incurred before Feb 15, 2020. You want a clear plan to make sure you are accounting for the uses of funds. Besides, though, a large portion (or sometimes even all) of the loan may be completely forgiven meaning you will not need to pay it back!
If you have received PPP monies, we highly recommend that you calculate what the estimated forgivable amount will be. This will be an invaluable help in managing your cash. Fortunately, there are no loan payments required on PPP loans for a minimum of 6 months. The interest rate is also very favorable as well. But even if you do not need to make payments soon, you should know what portion of the loan received you will ultimately need to pay back.
If you are a ZümiFi client and would like assistance estimating the forgivable portion of the loan contact your account manager and we will be happy to assist. If you applied for a PPP loan but they ran out of money before you received the approval of your loan, hang in there! There appears to be bi-partisan support to authorize significantly more funding for this program, so we are cautiously optimistic that there will be funds available soon.
ZümiFi strongly advises that you understand how your lender will handle applications that were submitted, but not yet approved. Many lenders are continuing to maintain their queue, but others expect you to follow up with them once they can process loans again. So you want to be sure where you stand, and what their process will be assuming additional funds is authorized. Some clients chose to apply through more than one lender, and this may be something that you want to consider at this time as well.
Of course, you can only accept ONE PPP loan, but given the current “pause” in loan processing, you may want to think about whether you want to prepare to submit to other lenders. The first best resource should always be your bank – they have a relationship with you and should be able to shepherd your application through the process. We’re finding though that not every client has a great banking relationship. Below is a partial, but by no means complete, a listing of lending options if your bank isn’t getting it done:
- Intuit – that’s right, QuickBooks is now in the game! You can “learn more” directly from QuickBooks Online when you are logged in Kabbage – a small business lender based online, they are still accepting applications in anticipation that more monies will be authorized
- Veem – another online resource also currently accepting applications in anticipation that more monies will be authorized
- SmartBiz Loans – you can use this link to start the application process
- American Express
- Funding Circle
- Lendio Fundera
If you haven’t applied yet at all, my first question is, are you sure that a PPP loan is not a good fit for you? It isn’t a great option for all businesses. If your business is not a good fit, that’s fine. But given the current pause in funding PPP loans, you want to be 100% sure that you do not wish to apply.
ZümiFi anticipates that if additional funds are authorized, there will be again significant competition to receive an approved loan. So if you need to get into the game, prepare now!
ZümiFi – We Got Your Back!