Category Archives: Finance

PPP Loan Forgiveness

Borrowers may be eligible for Paycheck Protection Program (PPP) loan forgiveness

If you received the Payroll Protection Loan (PPP) make sure you are taking the necessary steps to apply for loan forgiveness. 

A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.

You can find more information on the SBA Website.

News Flash: New PPP Forgiveness Formula for Sole Proprietors & LLC s Deadline Approaching

Were you a sole proprietor, LLC or independent contractor that was not able to participate in the Paycheck Protection Program because you did not have a significant profit from your business?   If so, you might have the opportunity to access up to around $20,000 in PPP grant (forgiveness) money (up to about $30,000 if you run a restaurant).  But you may only have days to apply for these funds.

The SBA has just released a new PPP forgiveness formula that uses revenue reported on your 2019 or 2020 Schedule C (line 7) rather than net profit (line 31).  In a nutshell, you can now count your revenue as the basis for forgiveness just like employee wages (to a maximum of $100,000/yr).  Engage your accountant in the details.

Please review the scenarios in the attached PDF “Revenue-Based PPP Formula”  to see how this works in practice.

The new PPP application form and SBA FAQ document is also attached for your review.  There are other program requirements of PPP that still apply such as:

  • having been in operation on February 15, 2020
  • documentation of income using tax statements
  • if you use revenue of more than $150,000 as your loan basis you will need to certify to the SBA that Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”.

Businesses that are taxed by the IRS as C-Corporations, S-Corporations and Partnerships are not eligible to use the gross income calculation method for calculation the PPP loan amount.  Only businesses that use Schedule C to report their income and expenses to the IRS are eligible.

It appears that these new rules are not retroactive – if you have already received a 2nd round PPP loan you cannot resubmit under these rules.  These rules should be available for anyone who has not gotten a PPP loan, or has only gotten a 1st round loan.

If you are interested, you should apply as soon as possible.  The special small business-only application period expires next Tuesday (March 9th) and the overall deadline for applications is March 31, 2021.  The new stimulus bill going through congress does not significantly increase PPP funding, except for a new program for restaurants.

Since this form was only published on March 3 the banks – where you apply – may not have updated their systems.  Applying could be a chaotic experience and you will want to research multiple options.  You may want to try and reach a customer service representative on the bank’s PPP program.  It is possible that some of the “FinTech” funders like Biz2Credit and Bluevine might be faster off the mark than local banks.

To move forward, download these PDF files… 

  1. PPP Application
  2. Revenue-Based PPP Foregiveness Examples
  3. SBA Changes to PPP Rules


 

SBA Prioritizes Smallest of Small Businesses in the Paycheck Protection Program

Steps to Promote Equitable Relief for Mom-and-Pop Businesses

Building on a month of strong results, the Biden-Harris Administration and the U.S. Small Business Administration are taking steps with the Paycheck Protection Program to further promote equitable relief for America’s mom-and-pop businesses. 

The latest round of Paycheck Protection Program funding opened one month ago and already the Biden Administration has succeeded in making major improvements to the program’s implementation:

  • For businesses with fewer than ten employees, the share of funding is up nearly 60%
  • For businesses in rural communities, the share of funding is up nearly 30%
  • The share of funding distributed through Community Development Financial Institutions and Minority Depository Institutions is up more than 40%

Continue reading

Bainbridge Approves Business Recovery Grants

City of Bainbridge Island Council Plans Grants to BusinessesIt’s official! The much-rumored, oft-mentioned COBI small business grants are now coming soon.

Get ready – applications for business assistance grants will become available in association with KEDA (the Kitsap Economic Development Alliance) starting on Friday, March 12.

Businesses may receive between $5,000 and $10,000 based upon their COVID-19 financial impacts and the number of total applications received by the City.

The unanimously-approved Business Recovery grant program will provide $210,000 to support Bainbridge Island businesses recovering from the COVID-19 pandemic. Continue reading

Introducing edg3 FUND 2020.

Edg3 Fund 2020.jpg

Kitsap Bank’s edg3 FUND is back and better than ever with more prizes and additional benefits!
This small business competition is for entrepreneurs dedicated to growing their community
economically, socially and environmentally. And in 2020, the competition will also recognize small
businesses that have demonstrated innovation and resiliency during the COVID-19 pandemic.

Prizes –

  • $25,000 edg3 FUND Grand Prize Winner
  • $10,000 Innovation Award
  • $5,000 #causegood Community edg3 Award
  • $5,000 Public Favorite Award

2020 edg3 FUND Timeline –

  • Nomination Period: August 3 – 31
  • Application Period: August 15 – September 15
  • Finalists Announced: October 1
  • Finalist Pitches/Interviews: October 2 – 23
  • Public Vote: October 26 – November 6
  • Winners Announced: November 20

Please note, this is not a needs-based competition; recipients are selected based upon how well they meet the competition criteria. Must be a for-profit business based in Western Washington. All businesses must comply with federal and state laws. Entities that are tax-exempt organizations, non-profits, or charitable trusts are not eligible to participate. Businesses may self-nominate.

Nominate ( Yourself? ) Today

Things You Should Know About the Paycheck Protection Program (PPP)

SBA and Treasury Announce New EZ & Revised Full Forgiveness Applications for the Paycheck Protection Program

Today, the U.S. Small Business Administration, in consultation with the Department of the Treasury, posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness applicationimplementing the PPP Flexibility Act of 2020, signed into law by President Trump on June 5, 2020. In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application that applies to borrowers that:

  • Are self-employed and have no employees; OR
  • Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
  • Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.

The EZ application requires fewer calculations and less documentation for eligible borrowers. Details regarding the applicability of these provisions are available in the instructions to the new EZ application form. 

Also see SBA Finally Clarifies PPP Loan Forgiveness Rules: Full Forgiveness For Self-Employed Borrowers

New information about PPP forgiveness — and EIDL reopens.

Keep an eye on the Kitsap Economic Development Alliance blog for breaking news about changes in COVID recovery programs. 

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Risk and Reward in Business Valuations

by Kelly Deis of SoundPoint Consulting

In its simplest form, the value of a business can be boiled down to just two components: risk and reward.
Although a significant amount of thought and rigor is required to determine the value of a specific business, the underlying concept remains the same: the value of a business is equal to the economic benefit (earnings or cash flow) that it generates divided by the risk it takes to generate those benefits.
Value = Earnings (or Cash Flow)
 Risk
Think of it this way. If two companies generate the same amount of cash, which one is more attractive (valuable) to investors?
  1. a Fortune 500 company in business for 35 years with revenues locked in for the next 5 years
  2. a start-up with an untested management team, dubious business plan and volatile revenue stream
Of course, the right answer is 1).
So, while earnings are important, don’t forget to focus on risk as well. They both play an important part in the value equation.

Continue reading

Is an SBA loan right for you?

SBA loan

If you’re starting or growing your small business, you should learn about loans guaranteed by the U.S. Small Business Administration (SBA) as a funding option.

If you apply for an SBA loan, your loan won’t be from the SBA, and you won’t make your payments to the agency. Instead, the SBA approves lenders to provide loans to small businesses under their loan programs. Continue reading