There’s no sugarcoating it; these are devastating times for small businesses. That’s quite clear. What remains unclear to many small business owners is a plausible path to recovery. Here’s a clear step in that direction.
The recently signed $2 trillion federal coronavirus relief package, officially known as the CARES Act, includes nearly $349 billion in a small business loan program called the Paycheck Protection Program (PPP). An additional $2 million under the Economic Injury Disaster Loan (EIDL) program is available to help small businesses weather the impact of this pandemic.
The application form is now available on the Treasury Department’s CARES Act webpage. Once the necessary information is supplied, small business owners can contact their bank or an approved lending institution to initiate the application process.
To become eligible, applicants applying to EIDL or PPP loans must provide the following paperwork:
A Completed SBA Form 5 (Loan Application)
This provides basic information about the business including the address and ownership structure. Ensure you include all appropriate information in this form.
Signed Tax Form Authorization IRS Form 4506T
This form allows SBA to obtain tax return transcripts from the IRS.
Personal Financial Statement (SBA Form 413) and Schedule of Liabilities (SBA Form 2202)
The business owners included on the SBA Form 5 must provide a personal financial statement that details the personal information regarding asset holdings and liabilities.
Federal Income Tax Returns
You will need to provide a copy of your most recent federal income tax return. If you do not have the latest income tax return available, you will have to explain your circumstances.
In addition, small business owners are required to organize their payroll records and accounting records, as well as demonstrate a healthy cash flow. Moreover, if you are an independent contractor, sole proprietor, or self-employed individual, lenders will require certain documents such as payroll tax filings, Form 1099-MISC, and income and expenses documentation.
Prior to considering any loan, grant, or government relief, your business must have a plan and your books must be in order. By providing accurate data and completing the applications correctly, you can increase the probability of receiving this assistance as well as determine long term repayment options.