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The Road to a (Potentially) Forgivable PPP Loan

by Haydn Adams, BFA, A Designer Who Codes

The deadline for applications for PPP loans has been extended to May 31st, 2021. Changes to the loan program have made it possible for sole proprietors to qualify for higher loan amounts. 

On January 26th, I applied for a PPP loan. My business did pretty well during the first half of 2020, and so I held back on applying back then. Of course, the deadline to apply for a PPP loan passed after my business slowed in the 2nd half of 2020, and I thought I missed my chance. Thankfully, at the end of the year, Congress allowed the re-opening of applications for a second chance to apply for a loan, or a first if you’re like me and didn’t apply in 2020.

Haydn Adams Headshot

I knew from talking with a colleague back home that I should work with a local bank or credit union. I have an account with a local bank with a grand total of 3 branches; I can’t get much smaller than that. (They are part of a more prominent family of banks, but still, they aren’t Wells Fargo or BofA).

My bank is connected to a larger bank family’s website, and that’s where I started my journey. Their PPP loan application essentially requested the same information required by the SBA. On the first page, they asked for my name, business info, years in business, and various addresses. Then on the next page came the good stuff—how much to request.

Joel Osteen got $4.4 million. Surely, I can get something equivalent. It turns out that the SBA has a handy and easy formula for calculating the loan amount. You’ll need to get your schedule C or schedule K (if your business is an S-Corp) and look for your net revenue for the year.

My journey to getting a loan took about a month, but it did bear fruit in the end.

Let’s say I made $50,000. Divide that by 12. That’s $4,166. Multiply that by 2.5 (two and a half months’ worth of salary, assuming it’s only you as a self-employed individual). That gives me $10,415. That’s the amount that I’m allowed to request through the PPP program.

After that, it was off to fill out a few affidavits, and I was finished with the application. Since I applied for the loan on a Sunday, I contacted my branch the next day when they were open. They said to check back in a week or so.

After about two weeks, I received a confirmation that the bank had approved the loan. Sweet! Now the loan was off to the SBA, where it would be confirmed within days if not hours, the loan officer told me. But that’s where things took a turn.

The SBA held my paperwork up because, officially, my business here in Georgia is a 1st-year business. (I just moved here.) I explained that while technically correct, my business flourished in years past in the Golden State of California. Oh, and the other hiccup was I was a separate, new LLC.

Was it hard? No. Was it frustrating at times? Yes. The good part about working with a local bank, and big kudos to them, is that I could easily email or pick up the phone and pull a Jerry Maguire regarding the money.

Thankfully an audit of my tax records (which you’re required to submit) showed that I did file my business taxes in 2019, and I was a legitimate business applying for a legitimate loan. That is why I suggest going with a local bank. The personalized attention was crucial here.

After another two weeks (why it took so long is anyone’s guess), my regional loan officer requested my articles of organization and my EIN to finalize the loan process. Whichever class you’re in – sole proprietor, LLC, LLP, S-Corp, or C-Corp – be ready with your business documentation.

My journey to getting a loan took about a month, but it did bear fruit in the end. The bank did suggest that I not buy any first-class tickets to Barcelona (as if Americans can even get into Spain currently). If you take a PPP loan and get a random audit (unlikely, but still…), you don’t want it to show that you lavishly spent the funds but rather used them for regular expenses. Then again, if first-class trips to Europe is your regular thing, you’re golden.

Note that if you did receive an EIDL loan, that amount would be subtracted from the requested amount of your PPP loan. I didn’t take an EIDL loan, but there is a line in the documentation to make a note of it. If you have any doubts about filling out your loan application, call your branch, and they can help you.

Was it hard? No. Was it frustrating at times? Yes. The good part about working with a local bank, and big kudos to them, is that I could easily email or pick up the phone and pull a Jerry Maguire regarding the money.

Good luck,

Haydn

Haydn Adams holds a Bachelor of Fine Arts degree from the Academy of Art University. Along with being an alumnus, he is also faculty in the department from which he graduated—the School of Web Design + New Media. Haydn is also a professional wine critic and author.


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