PPP/CARES update: April 14

(Don’t know what the PPP is? Read this first.)

Today’s updates:

• $248b of the $355b allocated to the PPP has now been claimed. The Treasury Secretary has indicated that he’s asking for another $250b for the program, but it’s encountering some delays in Congress.
  
• One of our partners, Carta, announced that they’re accepting PPP loan applications (including for non-customers). They’ve told me that, at the moment, they’re seeing an approximately 48-hour turnaround time between “all materials received by Carta” to “case approved” by the SBA. You can apply here: https://pilot.com/carta-ppp

• First Republic, Mercury, and others are currently accepting applications for existing customers. In general, we recommend applying via your bank if you believe they have the ability to process your application promptly.

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One common question we’re getting: “Aaah! I haven’t heard from my existing lender and I’m freaking out about all this news that the funds will run out. Should I apply somewhere else in parallel?”

First, a note about the process itself. Generally, it looks something like:

1. You submit an application to a lender
2. Lender comes back to you with additional information they require
3. Lender’s team is satisfied with the application and declares it complete
4. Lender submits the application to the SBA Online Portal
5. The SBA (hopefully) responds with an approval and a “Guarantee Notice”
6. The loan is approved and your lender is working on loan documents
7. You sign and actually get money

Worth noting: step 5 is the only step where the funds are actually committed. The concern here, of course, is: if your application is stuck in Step 3 and the initial PPP tranche runs out of money, you’re out of luck—even if you diligently applied last week.

So how should you think about mitigating this risk? With the strong caveat that, as usual, I’m not a lawyer/accountant/tax preparer, that this isn’t legal/financial/tax/accounting advice, etc. etc., here’s our understanding of the world:

• You definitely cannot get the loan more than once
  
• Some providers require you to represent that you haven’t applied elsewhere—in which case, no, you shouldn’t also apply there. However, many providers we’ve seen haven’t had that restriction.
  
• Our understanding is that “getting in line” at a few places is OK, but the thing you’ll need to manage—and the circumstance you’ll want to avoid—is multiple lenders submitting your application to the SBA (i.e. getting to step 4)
  
• Most lenders are limited in their ability to provide you status updates, so it’s hard to know where you are in their process (or even if your application has already been submitted!)
  

Ultimately it’s a judgment call: Will you feel better waiting, with the risk that you don’t get the loan approved before the initial funds run out (and hope that the next tranche is approved soon?) Or will you feel better getting in line in multiple places (with the risk that you have to scramble to unwind any other applications once one is submitted?)

If you haven’t claimed the R&D tax credit for your startup, you should take a serious look at it, since companies can get back up to $250k in payroll tax credits. Pilot has produced a guide on the topic, and a service to help claim the credit. And of course, if you need help with bookkeeping, tax prep, or CFO services, please get in touch.