Payroll Protection Program – Lender Page

EDF is working with a limited number of lending partners to deliver the Payroll Protection Program (PPP) to small business owners in the State of Michigan.  Our entire staff will be helping in this endeavor, and we will process applications to our fullest capacity on a first come first serve basis.  Below are more details regarding the process.

Process:

  • The lender works with the borrower to collect and validate all application documentation (requested loan amount must be in increments of $100)
    • Our loan calculator can help determine the maximum loan amount and the forgivable loan amount.  It can be accessed HERE
  • Lender underwrites project and determines eligibility
  • Lender uploads completed application forms and supporting documentation through our secure portal.
    • Please upload all documents in one zip file or in a combined pdf
    • Please label the file with the name of the Operating Company
    • Portal can be accessed HERE 
  • EDF staff will download information, review, and reach out to the lender if more information is needed
  • EDF will submit the application directly to SBA through our software program
  • EDF will send lender an email and a closing checklist guide once the loan number has been approved and a loan number has been assigned

Application Checklist

  • As we have started to process projects over the weekend and found there are things we are commonly missing.   To ensure we are not delayed in the processing of your application, please make sure we have the following:
    • Borrower Application Form (Form 2483) – Must be filled out by all owners that have 20% or more ownership – Can be digitally signed – accessed HERE
      • Make sure it is complete and signed (can be digitally signed)
      • Must be filled out by all owners that have 20% or more ownership
      • Make sure Addendum A is attached regarding affiliation, if applicable
      • NO P.O. Boxes, must have physical address
      • Please write in a NAICS code on the app, there is a not a spot for this and we need this information
    • Lender Application Form (Form 2484) accessed HERE
      • Please round requested loan amount to nearest 100.
  • Payroll Documentation: 

It is the bank’s responsibility to ensure proper payroll documentation is collected.  We do not need this, but please make sure you have a complete file before sending your applications to us.

Up to 8 weeks of payroll costs, including benefits can be requested

        • Payroll Documentation (for last 12 month) Including:
          • Payroll Tax Reports filed (Form 941)
          • Number of full-time equivalent employees
          • Dollar amount for payroll costs including benefits
          • Breakdown of monthly payroll per employee
          • We need a NAICS Code for every project
          • 100% of the ownership needs to be identified to be processed

Other Documentation Bank will want to Have in Their File:

Up to 25% of the Loan Can be used to pay Interest on mortgages, rent and utilities

        • Current Business Tax Return AND Entity Documentation
        • Borrower Application Form (Form 2483) Must be filled out by all owners that have 20% or more ownership – Can be digitally signed – accessed HERE
        • Lender Application Form (Form 2484) accessed HERE
        • List of Affiliate Businesses (Any businesses the applicant or owners have controlling interest in)
        • Documentation on SBA EIDL, if applicable (Only applies if a disaster loan was received between 01/31/2020 – 04/03/2020)

Loan Calculator:

To help you calculate the maximum loan amount, please find our loan calculator HERE

Lender Resources:

CARES ACT SECTION 1102 LENDER AGREEMENT (Form 3506)

Pricing:

EDF will charge a percentage of the loan amount once the loan number has been received.

    • Loans $350,000 and under: 1.00%
    • Loans greater than $350,000 to $2 million: 0.50%
    • Loans greater than $2 million: 0.25%

Invoicing:

    • EDF will invoice each lender on a weekly basis.  The invoice will list each loan name and loan number by date.

 

Frequently Asked Questions:

  • How do I calculate the maximum amount I can borrow?

Step 1: Aggregate payroll costs (defined in detail below) from the last 12 months for employees whose principal place of residence is the United States.

Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year.

Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12).

Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.

Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid).

The examples below illustrate this methodology.

Example 1 – No employees make more than $100,000

Annual payroll: $120,000
Average monthly payroll: $10,000
Multiply by 2.5 = $25,000
Maximum loan amount is $25,000

Example 2 – Some employees make more than $100,000

Annual payroll: $1,500,000
Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000
Average monthly qualifying payroll: $100,000
Multiply by 2.5 = $250,000
Maximum loan amount is $250,000

Example 3 – No employees make more than $100,000, outstanding EIDL loan of $10,000

Annual payroll: $120,000
Average monthly payroll: $10,000
Multiply by 2.5 = $25,000
Add EIDL loan of $10,000 = $35,000
Maximum loan amount is $35,000

Example 4 – Some employees make more than $100,000, outstanding EIDL loan of $10,000

Annual payroll: $1,500,000
Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000
Average monthly qualifying payroll: $100,000
Multiply by 2.5 = $250,000
Add EIDL loan of $10,000 = $260,000
Maximum loan amount is $260,000

  • What qualifies as payroll costs?

Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wage, commissions, income or net earnings from self-employment or similar compensation.

  • Is there anything that is expressly excluded from the definition of payroll costs?

Yes. The act expressly excludes the following:

    • Any compensation of an employee whose principal place of residence is outside of the United States;
    • The compensation of an individual employee in excess of an annual salary of $100,000, prorated as necessary;
    • Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act), Railroad Retirement Act taxes and income taxes required to be withheld from employees; and
    • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116–127).
  • Do independent contractors count as employees for purposes of PPP loan calculations?

No. Independent contractors have the ability to apply for a PPP loan on their own, so they do not count for purposes of a borrower’s PPP loan calculation.

  • What is the interest rate on a PPP loan?

The interest rate will be 100 basis points or one percent.

  • What will be the maturity date on a PPP loan?

The maturity is two years.

  • Can I apply for more than one PPP loan?

No.

  • Can I use e-signatures or e-consents if a borrower has multiple owners?

Yes. E-signature or e-consents can be used regardless of the number of owners.

  • Is the PPP first-come, first-served?

Yes.

  • When will I have to begin paying principal and interest on my PPP loan?

You will not have to make any payments for six months following the date of disbursement of the loan.

  • Can my PPP loan be forgiven in whole or in part?

Yes. The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020; rent payments on leases dated before February 15, 2020; and utility payments under service agreements dated before February 15, 2020 over the eight-week period following the date of the loan. However, not more than 25 percent of the loan forgiveness amount may be attributable to non-payroll costs.

  • Do independent contractors count as employees for purposes of PPP loan forgiveness?

No. Independent contractors have the ability to apply for a PPP loan on their own, so they do not count for purposes of a borrower’s PPP loan forgiveness.

  • How can PPP loans be used?

The proceeds of a PPP loan are to be used for:

    • payroll costs (as defined above);
    • costs related to the continuation of group health care benefits during periods of paid sick, medical or family leave, and insurance premiums;
    • mortgage interest payments (but not mortgage prepayments or principal payments);
    • rent payments;
    • utility payments;
    • interest payments on any other debt obligations that were incurred before February 15, 2020; and/or
    • refinancing a SBA EIDL loan made between January 31, 2020 and April 3, 2020. If you received a SBA EIDL loan from January 31, 2020 through April 3, 2020, you can apply for a PPP loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.
  • However, at least 75 percent of the PPP loan proceeds shall be used for payroll costs.

For purposes of determining the percentage of use of proceeds for payroll costs, the amount of any EIDL refinanced will be included. For purposes of loan forgiveness, however, the borrower will have to document the proceeds used for payroll costs in order to determine the amount of forgiveness.

  • What happens if PPP loan funds are misused?

If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability, such as charges for fraud. If one of your shareholders, members or partners uses PPP funds for unauthorized purposes, SBA will have recourse against the shareholder, member or partner for the unauthorized use.