The reports I’ve seen suggest that Round II has rolled out much more smoothly than Round 1. Has that been true for you? Would you recommend the bank you’re using? Have you learned anything important that you would share with other business owners? Do you have a question that you would like to have answered? Also: If you technically qualify for the loan but your business is actually doing pretty well now, are you applying anyway? Why or why not?
Our First Draw PPP loan went incredibly easy...we qualified...we applied in April...and we were issued a loan number on the same day we uploaded our loan paperwork. We used the money to retain all of our employees PLUS hire additional employees to expand our business in what we thought would be pent up demand...in September we applied for loan forgiveness...90 days later our First Draw loan was officially forgiven (although this now created a small tax problem as now we needed to pay income tax on the money received / spent)
When the Second Draw program was approved by Congress, we determined that we actually qualified for a 2nd loan as well (our Q2 2020 sales were down significantly from Q2 2019). We pretty much resubmitted our First Draw application with a few small changes a week ago. Our application was accepted, but unlike the First Draw, we have not received an approval from SBA yet. So we are still waiting for a SBA approval number that allows our bank to proceed.
The new CARES Act also waived the taxability of the First Draw loan, so this saved us 21% in taxes on our first loan (we still have 8.9% of CA taxes to pay) so we can use some of the money that we were saving to hire additional workers.
Our bank, Endeavor Bank (a small community bank based in San Diego), has been absolutely fantastic!! They have communicated to me, almost every day, as to what the application process would be, as well as following up with any status from the SBA. Their personalized service made all the difference. We haven't received any Second Draw funding as of today, but I'm not worried as I feel good about already having my spot in the queue.
Although our company made a good rebound and indeed has profited in Q3 & Q4 from the pent-up demand like we thought would happen (when we added staff), we still applied for the loan because there are still plenty of good people who are still unemployed and we believe that we can still hire additional staff with new available loan program. I believe that this is one of the primary reasons for the new program...to hire (or keep) people who otherwise can't find work so I'm not feeling guilty in the least bit...we are doing exactly what the program was created to do.
Pay attention to the automatic reports generate by your payroll company. They may not include heath care along with some of the allowable taxes. Ours did not and we had to send separate documentation.
Round II application was much easier to complete, just be sure to have your PPP Forgiveness Application submitted beforehand as proof that the first round of funds was fully and appropriately spent is a pre-requisite to receiving additional funds.
Hi Loren! The PPP has been the first time in my career that the government has made funds available to combat a situation out of a business owner's control. In the 2008-10 Recession, I had to take a big cut in pay, lay people off, and use my own assets and credit to weather that storm. I appreciate that our government reacted so quickly, and though it was not perfect, it put funds in the hands of the true stewards of our economy: mid-market business leaders.
Our first PPP Loan was a nightmare. We had just lost our largest account due to the shutdown, and working with an international bank was like moving a giant boulder uphill. I was told they were moving slowly because "they" were concerned about their liability. While not verifiable, I understand that they helped some businesses but focused on those in a higher revenue band than mine first.
Luckily I have several CEO friends who supported each other during this time. I was connected to a small bank, Bank of Kaukauna in Wisconsin, whose president "called me" late on a Thursday night and hand-held us through the application process. He was so supportive and responsive.
We did have to lay off a few staff in April, but it was an acceleration of something that would have happened regardless of the pandemic. The funds helped us through Q2. We invested in our Go-to-Market Plan, marketing, operational software and started hiring upskilled talent by Q3. The second half of the year went well.
While we ended the year in a good spot, we worked our asses off to do so! We do qualify for the second round, and we are in the application process now. Hell Yeah, I am going for the capital!
My lessons learned:
Have a strong banking relationship - When my contact retired at my large bank, I should have focused on finding a new relationship.
Access to "Dry Powder" - I had always raised my line of credit when times were good. As Jay found out, no one wants to lend when times are bad. The PPP funds kept our cash flow positive in 2020, and our LOC was another safety net.
Your Network is Everything: My fellow business leaders are a treasure chest of info. I am not alone!
I have two "lessons learned" from the first round of PPP and speaking with other small businesses in my circle of colleagues:
1. Work with a small, local/community bank. The experiences that my colleagues have had working with the Big 3 or Big 4 have universally been sucky. I have the cell number of my business banker at the bank at which I do most of my work.
2. Get your forgiveness paperwork in with some kind of proof that you've already spent the first round if you participated in it.
3. Remember it's the Gov't money and they can change the rules after you take it. For example, I also received SBA EIDL Emergency funds and initially my PPP "forgiveness" was reduced by the EIDL Emergency Fund disbursement. That was fixed in a recent round of legislation in December, but always remember, if you take the king's shilling, you play by the king's rules, no matter how mercurial the king may be.
With respect to applying for a second round if we're doing pretty well - yes, I am. In effect, it is a grant, with the exception of the state taxes that I will have to pay on it. (My state will be taxing the PPP as income, some do not and it is not federally taxable for now).
Bank of Ann Arbor got our round 2 application approved within 3 days. I have a 22 year relationship with this small, local bank.
Our First Draw PPP loan went incredibly easy...we qualified...we applied in April...and we were issued a loan number on the same day we uploaded our loan paperwork. We used the money to retain all of our employees PLUS hire additional employees to expand our business in what we thought would be pent up demand...in September we applied for loan forgiveness...90 days later our First Draw loan was officially forgiven (although this now created a small tax problem as now we needed to pay income tax on the money received / spent)
When the Second Draw program was approved by Congress, we determined that we actually qualified for a 2nd loan as well (our Q2 2020 sales were down significantly from Q2 2019). We pretty much resubmitted our First Draw application with a few small changes a week ago. Our application was accepted, but unlike the First Draw, we have not received an approval from SBA yet. So we are still waiting for a SBA approval number that allows our bank to proceed.
The new CARES Act also waived the taxability of the First Draw loan, so this saved us 21% in taxes on our first loan (we still have 8.9% of CA taxes to pay) so we can use some of the money that we were saving to hire additional workers.
Our bank, Endeavor Bank (a small community bank based in San Diego), has been absolutely fantastic!! They have communicated to me, almost every day, as to what the application process would be, as well as following up with any status from the SBA. Their personalized service made all the difference. We haven't received any Second Draw funding as of today, but I'm not worried as I feel good about already having my spot in the queue.
Although our company made a good rebound and indeed has profited in Q3 & Q4 from the pent-up demand like we thought would happen (when we added staff), we still applied for the loan because there are still plenty of good people who are still unemployed and we believe that we can still hire additional staff with new available loan program. I believe that this is one of the primary reasons for the new program...to hire (or keep) people who otherwise can't find work so I'm not feeling guilty in the least bit...we are doing exactly what the program was created to do.
Pay attention to the automatic reports generate by your payroll company. They may not include heath care along with some of the allowable taxes. Ours did not and we had to send separate documentation.
Round II application was much easier to complete, just be sure to have your PPP Forgiveness Application submitted beforehand as proof that the first round of funds was fully and appropriately spent is a pre-requisite to receiving additional funds.
Hi Loren! The PPP has been the first time in my career that the government has made funds available to combat a situation out of a business owner's control. In the 2008-10 Recession, I had to take a big cut in pay, lay people off, and use my own assets and credit to weather that storm. I appreciate that our government reacted so quickly, and though it was not perfect, it put funds in the hands of the true stewards of our economy: mid-market business leaders.
Our first PPP Loan was a nightmare. We had just lost our largest account due to the shutdown, and working with an international bank was like moving a giant boulder uphill. I was told they were moving slowly because "they" were concerned about their liability. While not verifiable, I understand that they helped some businesses but focused on those in a higher revenue band than mine first.
Luckily I have several CEO friends who supported each other during this time. I was connected to a small bank, Bank of Kaukauna in Wisconsin, whose president "called me" late on a Thursday night and hand-held us through the application process. He was so supportive and responsive.
We did have to lay off a few staff in April, but it was an acceleration of something that would have happened regardless of the pandemic. The funds helped us through Q2. We invested in our Go-to-Market Plan, marketing, operational software and started hiring upskilled talent by Q3. The second half of the year went well.
While we ended the year in a good spot, we worked our asses off to do so! We do qualify for the second round, and we are in the application process now. Hell Yeah, I am going for the capital!
My lessons learned:
Have a strong banking relationship - When my contact retired at my large bank, I should have focused on finding a new relationship.
Access to "Dry Powder" - I had always raised my line of credit when times were good. As Jay found out, no one wants to lend when times are bad. The PPP funds kept our cash flow positive in 2020, and our LOC was another safety net.
Your Network is Everything: My fellow business leaders are a treasure chest of info. I am not alone!
I am appreciative of all the tips here!
I have two "lessons learned" from the first round of PPP and speaking with other small businesses in my circle of colleagues:
1. Work with a small, local/community bank. The experiences that my colleagues have had working with the Big 3 or Big 4 have universally been sucky. I have the cell number of my business banker at the bank at which I do most of my work.
2. Get your forgiveness paperwork in with some kind of proof that you've already spent the first round if you participated in it.
3. Remember it's the Gov't money and they can change the rules after you take it. For example, I also received SBA EIDL Emergency funds and initially my PPP "forgiveness" was reduced by the EIDL Emergency Fund disbursement. That was fixed in a recent round of legislation in December, but always remember, if you take the king's shilling, you play by the king's rules, no matter how mercurial the king may be.
With respect to applying for a second round if we're doing pretty well - yes, I am. In effect, it is a grant, with the exception of the state taxes that I will have to pay on it. (My state will be taxing the PPP as income, some do not and it is not federally taxable for now).