APPLY HERE FOR PPP2.0

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Overview

PPP 2.0 is now in effect. You may apply for this round with HUB even if your forgiveness is pending, or you applied with another bank in the last round. HUB is here to connect you with our network of lenders to fully educate, support, and fulfill your funding needs.

SBA guidelines can change periodically, and we will work to update those changes on our website as soon as they become available.

Overview Contents

To better serve our national client base, we are working with a firm dedicated to processing, funding, and forgiving PPP’s. You can register to begin the process HERE . Please use the best contact person and email that will handle the processing and document side of the PPP process.

Determining Eligibility

There are 3 steps to determine your eligibility and how much you qualify for:

  1. Determine if you are an eligible business
  2. Determine if you meet the 25%(or more) loss threshold
  3. Determine the amount you qualify for based on payroll

If you qualify – click the link to register and apply: PPP 2.0 Registration

*If you use contract labor and report that labor through a 1099 misc., instead of W2, that worker is considered an independent contractor, and must apply for themselves HERE. They will follow the guidelines for self-employed persons. Only W-2 workers are considered as employees.

Eligible Borrowers – Quick Info

  • US Based Entity, Independent Contractor, or sole proprietorships with no employees
  • 1 – 300 employees (or self employed)
  • In business prior to February 15, 2020 and still in business (not permanently closed)
  • Must have had a decrease of gross receipts (revenue) by at least 25% for any quarter in 2020
  • Applicants must submit documentation sufficient to establish eligibility and to demonstrate the qualifying payroll amount, which may include payroll records, payroll tax filings, Form 1099-MISC, Schedule C or Schedule F, or bank records.
  • See below for more details

Specifically, during the covered period, in addition to “small business concerns” meeting revenue-based size standards under current SBA regulations, any of the following types of entities are eligible to receive a First Draw loan if they employ 300 or fewer employees and they meet other eligibility requirements:

    • A corporation, LLC, or partnership
    • An independent contractor, eligible self-employed individual, or sole proprietor,
    • Business concern,
    • IRC § 501(c)(3) nonprofit,
    • Tax exempt veterans’ organization under IRC § 501(c)(19), or
    • Tribal business concern under 31(b)(2)(C) of the Small Business Act

Additionally, the Economic Aid Act makes the following organizations eligible for PPP loans:

    • A housing cooperative, an eligible section 501(c)(6) organization, or an eligible destination marketing organization, that employs no more than 300 employees;
    • A news organization that is majority owned or controlled by a NAICS code 511110 or 5151 business or a nonprofit public broadcasting entity with a trade or business under NAICS 511110 or 5151, that employs no more than 500 employees (or, if applicable, the size standard in number of employees established by SBA in 13 C.F.R. 121.201 for the industry) per location; or
    • Another type of entity specifically provided for by PPP rules[ii]


Other Eligibility Requirements

To be eligible, the above businesses must also have (a) been in operation on February 15, 2020, and (b) either (1) had employees[iii] for whom salaries and payroll taxes were paid or (2) paid independent contractors, as reported on a Form 1099-MISC, or (3) be eligible self-employed individuals, independent contractors, or sole proprietorships with no employees. Applicants must submit documentation sufficient to establish eligibility and to demonstrate the qualifying payroll amount, which may include payroll records, payroll tax filings, Form 1099-MISC, Schedule C or Schedule F, or bank records.

Self-Employed Individuals

Self-employed individuals[iv] are eligible for a PPP loan if they:

  • Were in operation on February 15, 2020
  • Have self-employment income (such as an independent contractor or sole proprietor)
  • Have a principal place of residence in the United States, and
  • Filed or will file a Schedule C or Schedule F for 2019 or meet additional requirements (detailed below)

Partner Limitations

Partners in partnerships may not submit a separate PPP loan application as a self-employed individual. Partnerships are eligible for PPP loans, but the partnership and its partners are eligible for only one loan. The SBA reasons that allowing partners to apply as self-employed individuals would create unnecessary confusion regarding which entity applied and would generate coordination and allocation issues.

Seasonal Businesses

Under the Economic Aid Act, a seasonal business is a borrower that does not operate for more than seven months in any calendar year and had gross receipts for any six months of a year that were not more than 33.33 percent of the other six months of that year. Seasonal businesses will be considered to have been in operation as of February 15, 2020, if the business was in operation for any 12-week period between February 15, 2019, and February 15, 2020.

Who is Ineligible?

The following potential borrowers are ineligible for PPP loans (the specific requirements in italics were added by the Economic Aid Act):

  • Engaged in any activity that is illegal under federal, state, or local law
  • Household employer (individuals who employ household employees such as nannies or housekeepers)
  • 20 percent or more owner of employer is incarcerated, on parole, subject to criminal indictment or convicted of a felony within the last five years (one-year for non-financial felonies)
  • Any business owned or controlled by them has ever obtained a direct or guaranteed loan from SBA or any other federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government
  • Not in operation on February 15, 2020
  • Received or will receive a grant under the new Shuttered Venue Operator Grant Program
  • A direct or indirect controlling interest in the business is held by the President, Vice President, head of an Executive Department, Member of Congress or the spouse of any of these
  • Publicly held company
  • Business has permanently closed

Additionally, 13 CFR §120.110 exclusions generally apply to prevent passive landlords, financial businesses, and life insurance companies from receiving PPP loans. The restrictions on legal gaming businesses, nonprofits, and religious organization, however, do not apply. Businesses that are debtors in a bankruptcy proceeding at the time the application is submitted or at any time before proceeds are disbursed are not eligible to apply for a PPP loan.

Documents Needed

  • Payroll Register – ex: 940, 941, Payroll company report for 2019 and 2020
  • Revenue Report – 2019 Tax return, and 2020 tax return or interim financial statement (if available) – Self employed (Sch C) Farmers and Ranchers (Sch F and K1)
  • Bank Statements – beginning with February 2020
  • Owner’s Driver’s License(s)
  • Cancelled check – business account where PPP funds will be deposited
  • PPP Round #1 – SBA loan number and loan amount (if applicable)
  • Organizational Documents – ex: DBA certificate, Bylaws, Articles of Incorporation, etc. Each organization is different. This must be current with the secretary of state or county where you are registered, in order to fund .

Determine your 25% (or more) loss comparison

Documents to Use

2019 Tax Return, 2020 Tax Return (if possible), Interim Financial Statements

Annual Basis

Compare your 2019 annual P&L to your 2020 annual P&L – is there at least a 25% difference in the overall gross receipts of the business?

Quarterly Basis

If you utilize accounting software, such as Quickbooks, you can run a P&L by quarter for 2019, and one for 2020. Then place the two side by side and compare the gross revenue (gross sales) quarter by quarter. So you would compare Q1 2019 to Q1 2020 and see if you had a loss, and then Q2 v Q2, Q3 v Q3, Q4 v Q4 respectively. Most people are seeing their loss comparison is either Q2 or Q3, it all depends on your business.

No Financial Reports Available

If you do not have a tax return or financial reports available for 2020, it is suggested to use your 2019 tax return and your 2020 bank statements to calculate your applicable loss.

Not in business part of 2019

Please note – a business must have been in operation by Feb. 15, 2020 to be eligible.

  • If you were not in business during the first or second quarter of 2019, but you were in business in the third and fourth quarter of 2019, then you may compare any quarter in 2020 with the third or fourth quarter of 2019 to determine whether gross receipts were reduced by at least 25%.
    • Q3 ‘19 vs Q3 ‘20 or Q4 ‘19 vs Q4 ‘20
  • If you were not in business during the first, second, or third quarter of 2019, but you were in business in the fourth quarter of 2019, then you may compare any quarter in 2020 with the fourth quarter of 2019 to determine whether gross receipts were reduced by at least 25%.
    • Q4 ‘19 vs Q1, Q2, Q3, Q4 ‘20
  • An entity that wasn’t in business in 2019 but was in business before February 15, 2020 will compare gross receipts from the second, third or fourth quarter of 2020 to that first quarter of 2020 to determine whether gross receipts were reduced by at least 25%.
    • Q1 ‘20 vs Q2, Q3, Q4 ‘20

Note – according to the legislation, for loans of up to $150,000 you can simply certify your revenue loss when you apply, but on or before you apply for forgiveness you will have to produce documentation of that revenue loss. Guidance is still pending.

Not Sure if You Qualify?

After you have used the steps above, and still have questions about eligibility, it is strongly recommended that you contact your accountant or tax professional.

Determine the amount you qualify for based on payroll

Employers

As before, a business may qualify for up to 2.5 times average monthly payroll costs. You can arrive at this figure either by one of two methods – Your choice:

Multiply average gross monthly payroll cost for the 1-year period before the date the loan is made by 2.5 (Avg monthly payroll x 2.5)

or

Multiply average gross monthly payroll cost for 2019 or 2020 (borrower’s choice) by 2.5. (Annual payroll / 12 x 2.5)

Self Employed

  • Step 1 : Calculate payroll costs by adding the following:
    • For self-employed (non-farmers and ranchers) : 2019 or 2020 Form 1040 Schedule C line 31 net profit amount, up to $100,000 annualized (not eligible for a loan if this amount is zero or less). [vii]
    • For partnerships : 2019 or 2020 Schedule K-1 net earnings from self-employment of U.S. based general partners subject to self-employment tax, computed from box 14a (reduced by Section 179 expenses, unreimbursed partnership expenses, and oil and gas depletion) multiplied by .9235, in an amount up to $100,000 per partner.
    • Aggregate payroll costs from 2019 or 2020 for employees whose principal place of residence is in the United States (subtract compensation paid to an employee in excess of $100,000 each, annualized) (if self-employed or a partnership and have no employees, there will be no additional payroll costs to aggregate) [ix]
  • Step 2 : Divide the total amount from Step 1 by 12.
  • Step 3 : Multiply the amount from Step 2 by 2.5

Farm and Ranch

  • Step 1 : Calculate payroll costs by adding the following:
    • For self – employed (farmers and ranchers): 2019 or 2020 Form 1040 Schedule F line 9 gross income, up to $100,000 annualized (not eligible for a loan if this amount is zero or less). [viii]
    • For partnerships : 2019 or 2020 Schedule K-1 net earnings from self-employment of U.S. based general partners subject to self-employment tax, computed from box 14a (reduced by Section 179 expenses, unreimbursed partnership expenses, and oil and gas depletion) multiplied by .9235, in an amount up to $100,000 per partner.
    • Aggregate payroll costs from 2019 or 2020 for employees whose principal place of residence is in the United States (subtract compensation paid to an employee in excess of $100,000 each, annualized) (if self-employed or a partnership and have no employees, there will be no additional payroll costs to aggregate) [ix]
  • Step 2 : Divide the total amount from Step 1 by 12.
  • Step 3 : Multiply the amount from Step 2 by 2.5.

Definitions and FAQ

“All revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. Generally, receipts are considered “total income” (or in the case of a sole proprietorship, independent contractor, or self-employed individual “gross income”) plus “cost of goods sold,” and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms.

Gross receipts do not include the following: taxes collected for and remitted to a taxing authority if included in gross or total income (such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees); proceeds from transactions between a concern and its domestic or foreign affiliates; and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker. All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer’s request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts.”

The amount of any forgiven first draw PPP Loan is not included in a borrower’s gross receipts.

Standard calendar quarters are as follows:

  • Q1 – January, February, March

  • Q2 – April, May, June

  • Q3 – July, August, September

  • Q4 – October, November, December

  • No credit check is required.

  • No personal guarantee.

  • No collateral requirement per SBA guidelines

A Seasonal Employer is defined as one that does not operate for more than 7 months in any calendar year; or during the preceding calendar year, had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts of the employer for the other 6 months of that year.

  • Salary, wages, commissions or similar compensation,

  • Payment of cash tips or equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips),

  • Payment for vacation, parental, family, medical, or sick leave;

  • Allowance for dismissal or separation;

  • Payment required for the provisions of employee benefits including insurance premiums (employer cost);

  • Payment of any retirement benefit (employer cost);

  • Payment of State or local tax assessed on the compensation of employees.

  • New: group benefits are defined to include group life, disability, vision, or dental insurance

  • The compensation paid to an employee in excess of $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred.

  • Any compensation of an employee whose principal place of residence is outside the United States;

  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act

  • Do not include amounts paid to 1099 contractors; they may apply on their own.

The “covered period” is the specific period of time in which you must spend the funds. It starts when the PPP loan is originated. (That’s the date the funds are deposited to your bank account.) You can choose a covered period of 8 or 24 weeks to spend the funds.

To obtain full forgiveness, borrowers will need to spend at least 60% of loan proceeds funding on qualified payroll expenses. Borrowers may spend up to 40% on other qualified non-payroll expenses, during the covered period. This list of eligible non-payroll expenses has been expanded to include:

  • Rent
  • Mortgage interest
  • Utilities
  • Covered operations expenditure
  • Covered property damage cost
  • Covered supplier cost
  • Covered worker protection expenditure

Covered operations expenditures means “payment for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses”.

Covered property damage cost means “a cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation;”Covered supplier cost means “an expenditure made by an entity to a supplier of goods for the supply of goods that:

Are essential to the operations of the entity at the time at which the expenditure is made; and is made pursuant to a contract, order, or purchase order— ‘‘(i) in effect at any time before the covered period with respect to the applicable covered loan; or ‘(ii) with respect to perishable goods, in effect before or at any time during the covered period”

Covered worker protection expenditure means “an operating or a capital expenditure to facilitate the adaptation of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government, during the period beginning on March 1, 2020 and ending the date on which the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et 8 seq.) with respect to the Coronavirus Disease 2019 (COVID–19) expires related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19; may include the purchase, maintenance, or renovation of assets that create or expand.

  • A drive-through window facility;
  • An indoor, outdoor, or combined air or air pressure ventilation or filtration system;
  • A physical barrier such as a sneeze guard;
  • An expansion of additional indoor, outdoor, or combined business space;
  • An onsite or offsite health screening capability; or
  • Other assets relating to the compliance with the requirements or guidance described in subparagraph (A) as determined by the (SBA) Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; the purchase of—
  • Covered materials described in section 328.103(a) of title 44, Code 16 of Federal Regulations, or any successor regulation;
  • Particulate filtering face piece respirators approved by the National Institute for Occupational Safety and Health, including those approved only for emergency use authorization; or
  • Other kinds of personal protective equipment, as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of 4 Labor; and does not include residential real property or intangible property;’’

Note: These approved expenditures apply to any PPP loan except those already forgiven.

No. The legislation repealed the requirement that an EIDL grant (advance) be deducted for purposes of PPP forgiveness for both rounds of PPP.

Got More Questions? Contact Us.

5001 West Loop 289, Lubbock, TX 79414

Call us at: (806) 777-2902 Main Office | (806) 370-0059 Javier

Email us at: info@hubfundingsolutions.com

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