How can SBA loans and the CARES Act help fund your construction business? Find out today and explore your financing options here:
-What is the SBA?
The Small Business Administration is a government program that guarantees loans up to $5M to encourage lenders to loan to businesses that may not be otherwise able to access capital from lenders/banks.
-What is the CARES Act?
It stands for Coronavirus Aid, Relief, and Economic Security Act. It includes:
1. Paycheck Protection Program
2. Economic Injury Disaster Loan (EIDL) and Grant
3. Express Bridge Loans
4. Employee Retention Tax Credit
5. SBA Debt Relief
-What are the key things to know about the Paycheck Protection Program (PPP)?
1. 12-month average “fully loaded” monthly payroll capped at $100k annually per employee
2. $10M maximum loan size, which corresponds to maximum $4M monthly payroll cost
3. Term: 2 year
4. 6 months with no principal or interest payment required, but interest still accrues
5. 1% annual interest rate
6. 1 loan maximum per business
-What should I know about PPP loans?
1. No credit checks
2. No personal guarantee
3. No minimum credit score
4. No borrower fees
5. No collateral required
6. Non recourse (no liens against assets)
-What can PPP loan proceeds be used for?
1. Payroll costs including benefits
2. Payment of interest on any mortgage obligation
3. Rent under lease agreements in force before February 15, 2020
4. Utilities for which service began before February 15, 2020
5. Interest on any debt obligations incurred before February 15, 2020
6. Refinancing an EIDL made between January 31, 2020 and April 3, 2020
-Who qualifies for SBA loans?
1. Businesses with no more than 500 employees
2. 501(c)(3) with no more than 500 employees
3. Sole proprietor, independent contractor, or self-employed
4. 501(c)(19) Veterans Organization that meets the SBA size standard
5. Defined as “small” by SBA Size Standard that allows for higher employee threshold or is revenue based; or SMB with maximum tangible net worth no more than $15M and average net income for full 2 fiscal years prior to application no more than $5M
-Where to apply for SBA loans
1. Your bank
2. Technology focused banks
-What documents do you need for the application process?
1. Business owner information: first name, last name, address, SSN, and government ID
2. Business details: business name, business owners and affiliations, EIN (if available), beneficial ownership
3. Payroll Calc & Doc Upload: 941, 940, 1095-B, 1094-B, 1095-C, 1094-C, W2, W3, Bank statements, tip register
4. Attestations: promises you must make under penalty of perjury, or even imprisonment
-Which documents could I be required to submit to my lender?
For most employer business, the documents include: Form 940, Form 941, state and local payroll tax forms, W2s for employees, payroll processor statements, health insurance invoices or receipts, and employer paid retirement benefits.
For other business, required documents can include schedule C for sole props from your 2019 tax return, 1099-Misc for Independent Contractors, and Form 1065 and all associated K-1’s for Partnerships
-How long should I expect the SBA loan application process to take?
1. Borrower completes application: 15 minutes
2. KYC/AML verifications: as short as 30 mins or as long as a few days
3. Payroll Doc Good Faith Review: highly depends on SBA backlog of submissions/back office processing
4. Submission to the SBA & disbursement: once approved, will take several days to disburse
-Why aren’t SBA funds getting out quickly?
1. Every business in the U.S. is apply at once
2. Brand new processes
3. ETRAN bottleneck
4. Must lend off balance sheet
-What are the details of loan forgiveness?
1. Loans could be forgiven if you spend 100% of your loan on payroll
2. Loan forgiveness will be reduced if there is a reduction in the number of employees, or there’s a reduction of greater than 25% in wages paid to employees
3. Can only spend 25% of the forgiven amount for costs other than payroll
Levelset’s mission is to empower contractors to always get what they earn. Levelset’s products help millions in the construction industry each year to make payment paperwork and compliance easier, get cash faster, monitor the risk on jobs and contractors, and better understand payment processes and rules. The results are faster payments, access to capital, and fewer surprises. Backed by investors like Horizons Ventures, S3 Ventures, Altos Ventures, Operating Venture Capital, and Brick & Mortar Ventures, Levelset is headquartered in New Orleans, Louisiana, with offices in Austin, Texas, and Cairo, Egypt, and is over 200 employees strong. Learn more at www.levelset.com.