How Do You Apply?
The SBA is guaranteeing these loans, and businesses will need to apply through banks and credit unions. Approximately 1,800 lenders are already approved to issue 7(a) loans. The bank at which you’ve set up your business banking account will be a great place to start.
Since the maximum loan amount will equal 2.5 x your average monthly payroll costs during the 12-month period preceding the loan, you will need to submit an application that includes a sizeable amount of documentation, including:
- Employee wages for the last 12 months, including you, your family and associates – contact your payroll provider for the report.
- This report must also show paid time off, vacation, sick pay, family medical pay, etc. All of this is eligible to be included. The more you can show the better, as this will increase the loan amount.
- Withholding for state and local taxes on employee compensation (D) 1099s paid to independent contractors.
- Documentation showing how much you, the employer, paid in employee group health insurance premiums for the past 12 months. Your insurance company should be able to provide this.
- Documentation showing the amount of retirement plan funding the employer made for employees over the past 12 months (profit sharing 401(k) plans, cash balance plans, SIMPLE and SEP IRAs).
If your 2019 plan administration has been completed, you should use this as the basis for these figures. (Employees’ own 401(k) salary deferrals won’t count for these purposes.)
Be prepared to apply for and get the loan as soon as they are available. Borrowers will also need to make a “good faith certification” that the uncertainty of the current environment makes the loan request necessary, that you intend to use the funds to retain workers and maintain payroll OR make mortgage payments, lease payments and utility payments, and that you haven’t applied for another Section 7(a) loan.