$60B of the Additional $310B PPP Loan Set-Aside for Rural & Minority Groups. Here is a Breakdown of Documents Needed to be Prepared to File

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On Friday, March 27th, 2020, the CARES Act, which contained $376 billion in relief for American workers and small businesses, was signed into law. Of those funds, $349 billion was allocated towards the popular Paycheck Protection Program (PPP) loans for small-business owners. In response to the COVID-19 pandemic, the Economic Injury Disaster Loan was implemented as well and provided an advance of funds up to $10,000.


For many small business owners, being approved for the PPP loan would provide some form of relief as an opportunity to pay their employees and keep the doors of their businesses open. As small business owners began to seek guidance, especially minorities, they were faced with not only the stipulations set by the government, but additional bank-specific restrictions.


Some business owners got through the maze and received funding, while others were left behind. (Some of the businesses awarded the PPP loan included multiple-million dollar restaurants Ruth's Chris, Potbelly, and Shake Shack.) The program began accepting loans on April 3rd but exhausted all funds by April 16th. Many minority-owned companies that bank with smaller banks or do not have a lot of employees that would make them more "attractive" were left on the sidelines as larger banks favored businesses with whom they had preexisting relationships.


The Paycheck Protection Program (PPP) is making a comeback with $310 billion in additional funding. On Tuesday, April 21st, the Senate approved additional funding for the PPP loans, and the House is expected to approve the measure by the end of this week. Sixty ($60) billion has been set aside for Community Banks and Smaller Credit Unions with the goal of funneling more money to small, rural, and minority-owned businesses.




Here are a few key things to look out for in this round of funding, along with guidance on how to get your share.


$60 Billion for Rural & Minority Groups


The story of minority-owned businesses struggling to access capital is not new information. Already facing the disproportionate health impact the coronavirus has had on communities of color, minority-owned businesses are now being hit-hard with the economic impact, many of whom were already presented with challenges with their businesses before the pandemic began.


The new PPP loan initiative will set aside $60 billion for smaller lending institutions to help steer resources to businesses that typically have trouble getting loans. The additional round of funding will also include $60 billion for the Small Business Administration's (SBA) disaster relief funds — divided into $50 billion in loans and $10 billion in grants. The PPP loan will include assistance for farms and other agricultural enterprises.


So, for the companies who found themselves excluded from the first round of relief, we hope this effort will extend a helping hand.


Stay Ready So You Don't Have to Get Ready


The first round of funding was exhausted after only 14 days. The same or less timing is expected for this round. As a business owner, it is always wise to have your financial documents updated and ready to present at any time. These are the financial documents that your banking institution may request when applying for the loan and where to find them.


· Payroll Process Records


The Fair Labor Standards Act (FLSA) payroll records requirements vary based on whether you have a non-exempt employee, such as an hourly worker, or an exempt employee, such as a salaried employee. If you have outsourced your payroll management to a company such as Gusto, Paychex or ADP, then retrieving these documents should be a breeze. Access your documents online or call your company support center for assistance.


· Payroll Tax Filings


As an employer, it is required that you pay federal payroll tax payments to the government, as well as filing the proper reporting and informational returns. This may also be true on the state level, depending on what state the business is registered. Also, you must provide employees and contractors with W-2 and 1099 reports explaining the compensation paid and tax withholding amounts. If you don't have this information stored, you will need to contact your Certified Public Accountant (CPA) or tax preparer to request a copy.

· Form 941 (Payroll Taxes)


Form 941 is used by employers to report quarterly tax withholding amounts for estimated income tax payments and employer payments. Form 941 includes Federal Insurance Contributions Act (FICA) taxes for the withholding of social security and medicare wages, adjustments for sick pay or tips, and any underpayments or overpayments. You may also request a copy of this form from your CPA or tax preparer if you do not have it filed.


· Form 1099-MISC


If you are self-employed or considered a contract worker, chances are you received a Form 1099-MISC this year. The 1099-MISC form shows the amount you were paid during a specific calendar year, the Tax ID of the company you worked for, and the income tax that was held during this time (this is not usual). The form is used to file your annual income taxes and is given to you by the company you worked for during the year. The deadline for receiving this form was January 31st, so if you haven't received it, you should contact the employer immediately to inquire about it.


· Income and Expense from a Sole Proprietorship


If you are a sole proprietor, you may need to provide your 2019 Form 1040 Schedule C, even if you have not filed a 2019 return. The Form 1040 Schedule C is the most common business income tax form for small business owners. The form is used as part of your personal tax return. You can find the form by going to the IRS website, which also includes instructions on how to complete it correctly.



How Do I Get My Share?


Now, the race is on. All signs indicate that the second round of PPP loan funding is coming soon. The demand for funds shows how important the initiative is and how badly small-business owners are being affected. If you haven't done so already, contact your bank to see what their requirements are for you to apply. Make sure that your application is submitted, and all requested documentation is attached before the SBA opens again for funding.

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