Question:
I hear the rollout of the Payroll Protection Program was rocky, and last-minute changes made the rules different. What are the biggest changes?
Answer:
The night before the rollout of the Payroll Protection Program, the Treasury Department changed the rules, putting banks front and center as the main bodies through which loans are processed. However the Fed gave the banks few rules about how to be an SBA PPP Lender. Some large banks took all of Friday to roll out their lending programs, some still have not created a lending program, and some large banks chose not to participate. The ones who are participating have imposed different rules and qualifications for borrowers.
There are three significant changes that were made in the new rules. The first of the changes is that originally the SBA would assign applicants a participating lender. However now applicants must submit their application through a participating lender directly.
Lubell Rosen is helping our clients by giving them options in lenders. When appropriate we apply through the client’s lender. We also advise our clients when another lender is a better choice. Certain lenders, like Bank of America, require a pre-existing lending relationship. For some clients we are helping them set up relationships with banks, who will lend them money, without the requirements that disqualified them from other lenders.
The second of the three biggest rule changes, is not allowing applicants to count independent contractors towards the loan amount and forgiveness. Most people who are paid 1099 are mislabeled as independent contractors, but by Federal Labor Law standards they count as employees. Paying someone by 1099 does not make them an independent contractor, alone. We are working to qualify people as employees, regardless of whether you paid them with a W2 or 1099. Lubell Rosen will advocate on behalf of our clients so they get the maximum loan and the maximum amount of forgiveness.
The third of the biggest differences is that it is no longer possible to use an emergency bridge loan to receive $10,000 while waiting for the PPP loan. We are working with various lenders to shorten the processing time of the PPP loan. We are also working to pair our clients with the right lenders, who are given the right documentation, to speed the processing as much as possible.
Despite significant changes to the law, Lubell Rosen aims to provide direct value to our clients by advising them on how to maximize their loan amounts, find the right lender, find additional options for funding, and, most importantly, pay as little back as possible. While we are charging a moderate deferred fee for our services, the potential increased benefits to the applicant, and certain decreased aggravation in the process, will more than justify our firm's fee.
