Small Business Insights

Applying for the latest business loans funded by congress

The Federal government just approved an additional $310 billion in funds for Paycheck Protection Program loans, with $60 billion of that funding being allocated for distribution by small community banks. In addition, another $60 billion of funding has been approved for Economic Injury Disaster Loans (EIDL).

Headshot of Bob Patience.

Bob Patience
VP, Business Solutions

Because there is such a great demand for aid, and loans are given on a first come, first served basis, here are some tips on how to put yourself in a good position to be able to apply for these and other future programs effectively and quickly.

1. Get Organized.
Work with your staff and your Certified Public Accountant (CPA) to assemble an organized set of documents to submit with your loan application. Here’s a list of some documents and information you'll need:

• If you have employees, Form 940 will show your unemployment tax contributions and Form 941 will show the amount of Social Security and Medicare taxes that have been withheld.

• Banks will ask for evidence of benefits payments such as employer health insurance contribution and retirement plan funding. Reach out to your payroll company for documentation.

• You will need your six-digit North American Industry Classification System Code.

• To prove your business was in existence on February 15, 2020, you'll need to provide the exact start date of your business.

• Your business and personal tax returns will be required.

• If you are self-employed and can do so, file your 2019 Return. You must include schedule C from your 2019 return and form 1099 MISC with your loan application.

2. Get to know your local banker.
By developing a stronger relationship with your bank prior to needing a loan, you'll have a better chance of the bank giving your loan priority and helping you with the application process.

3. Make sure the right people sign the loan application.
If you own less than 20% of your business, be prepared to have a co-owner complete and sign the application with you.

Background. The U.S. government has been engaged in ongoing funding of a massive, unprecedented rescue package for small business owners and individuals.  Two key components for small business owners are the paycheck protection loan program (PPP) and economic injury disaster loans.  EIDL’s are now also available to sole proprietors and independent contractors and can provide an advance of $10,000 while you are waiting for approval. The PPP loans come with a provision that allows you to apply for forgiveness of the loan principal if it is used to pay for eight weeks’ worth of payroll, rent, mortgage interest and utilities of the business.  With high demand remaining constant, additional funding seems likely.

With legislation and loan requirements regularly changing as a result of COVID-19, be sure to stay informed of legislative updates so you can move quickly.

About the author

Bob Patience

Bob Patience is Vice President of Business Solutions at New York Life.  Bob oversees our employee benefits business, including our payroll deducted individual life products and our group life and disability offerings.  In Bob’s four years with New York Life, we launched our group offerings, re-priced and redesigned our individual products and re-positioned the business to support our agents by focusing on the financial needs of small businesses, their owners and their employees.  In addition to his oversight of Business Solutions, Bob is also leading a number of work streams related to NYL’s pending acquisition of Cigna Group Insurance.  Before coming to New York Life, Bob spent 30 years with Prudential, where he held a variety of product, underwriting, segment head, and technology leadership positions.  Immediately before coming to NY Life, he was the P&L owner of Prudential’s $3 billion block of group life and voluntary benefits business.  Bob has a BA from Colby College in Maine and a Masters in Business Administration from New Jersey’s Montclair State University.

This writing is provided for informational purposes only. New York Life Insurance Company, its agents, and employees may not provide tax, legal or accounting advice, and none is intended nor should be inferred from the foregoing comments and observations. Clients should consult their own tax, accounting and legal advisors who must form their own independent opinions on these matters based upon independent knowledge and research.  © 2020 New York Life Insurance Company. All rights reserved.