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Business as Usual: SBA District Director Kelly Hunt

Business as Usual

Since the very beginning of the COVID-19 Pandemic, Small Business Administration District Director Kelly Hunt has been our go-to resource for the latest information on resources available to small businesses.

Kelly will join us once again to overview the latest round of the Paycheck Protection Program. Gain insight on who is eligible, terms and application deadlines. Plus, Kelly will answer your questions to help you navigate the process.



So good afternoon, everyone. It is I you know what, I'm never gonna say what day it is anymore. I'm just gonna say welcome. I'm Audrey Russo. And I know it's 2021. And we are doing our daily business as usual. And I am thrilled to be here. I can't wait to introduce our guests today. She's almost on as much as Jonathan and I are on the show. So we're pretty excited. I think this is our fourth time with us. And Kelly Hunt will formally introduce her in a moment, the she's making her first appearance with this year and talking about the new PPP. So before we get started, I want to give a shout out to Huntington bank, they certainly are going to be busy through this process. They're always busy, but they're certainly partners who you should seek as you start to unravel. And we start to plot this next iteration of the the payroll protection loan process, which Kelly is here to talk about, and also 40 by 80. That's the longitude and latitude of Pittsburgh, and a wholly owned subsidiary of the Pittsburgh tech Council, where we work on tech, entrepreneurship, as well as workforce development. So we've muted your microphones. And we've allowed an opportunity for chat, we're going to pack a lot in the session. So just wear your seat belts and be patient with us as we start to work with and have a conversation with Kelly hunt. So Kelly hunt, thank you so much for being here. I mean, you have been in a tremendous partner to this region through the you know, even before the pandemic, but during the pandemic, I cannot even imagine how you have kept up and are even keeping up right now. So you are leading western Pennsylvania, in all things related to the SBA. And hopefully, we have talked about some of the new things that you're offering that we're going to talk about, but I think what most people want to understand is so what's new, what's new, this PPP? What's new, what are some of the major components? What are some of the changes, what are some of the things that we need to be thinking about, and, and, and also, I hope that you have been safe, and taking some time for yourself, because I know, this has been just a zany time for everyone. So thank you again.

Thank you, Audrey, I have been safe, I've been COVID free. And believe me, I do move about the cabin quite a bit. So that's been a real blessing. And the the SBA, you know, it has been a year, I'll tell you, we went from a very small, almost unknown or agency federal agency to really thrust into the limelight. And we do have a lot of amazing things that are going on that are outside of the, the PPP and the idle programs. And, you know, this economic aid act was very long incoming, you know, we, along with, you know, you guys and, and most of our businesses that we work with, were really desperate back in August to see some relief calm, we really thought that would happen. I, I I probably said too many times. You know, it's it's gonna becoming You know, this is a bipartisan effort. Everybody loves small business, you know, and, but it didn't happen. And so, you know, we waited quite a long time. And finally got to the point where we do have the economic aid act that is relaunching the paycheck protection program, it also did make some changes to idle, which I will just briefly touch on later on, just so that you guys understand what that is, especially the idle advance what what is changing there, so the PPP relaunch does look a lot different this round. You know, it's it's different than what we had in the past. We have some new terminology. So we're still calling it the PPP, but we're doing a new spin on some words. And so we're going to have the PPP first draw, it's going to be called the first draw is going to be for for people that have never applied for PPP never received a PPP in the past, they are going to be eligible to apply for a first time PPP called the first draw. It's going to be very similar, same terms on that loan, same forgiveness, as in the past, but it will reopen for those and then we have what was very long awaited and that is the second draw PPP. The second draw PPP is for people or businesses that have already had a PPP, they have spent it on eligible expenses, okay, spent it on eligible expenses is what the what the Act says and that doesn't have to have been forgiven yet, but they do have to have used it all before the second, PPP, the second draw PPP is dispersed from a bank. So that is going to be really exciting. There are some changes in that we will get into right now the PPP loan portal is open. It is open only though for a very small number of lenders. We call those community financial institutions which are made up of a couple of different types of community lenders are CDF, eyes, RM D eyes and some others. In the Pittsburgh area, we don't have a lot of C. cf eyes that were interested in doing PPP loans this round, we do have some that are nationally recognized that that can lend money here in western Pennsylvania. We do have one that is a western Pennsylvania lender, it's headquartered in New York, but we have some really good loan officers here in Pennsylvania. And that's pursuit. So pursuit is open and accepting loans. No, those loans can only be from underserved communities at this point. So these are going to be women owned businesses, minority owned businesses, veteran owned businesses. So these areas can apply through pursuit. But they can also wait and apply. You know, as soon as the portal opens with their the lender who they normally bank with, we don't foresee any problem with maintaining enough money in the fund to fund everyone who needs the PPP first draw or second draw. So, you know, for you know, we tell people, it's really good to go with a bank where you have your deposits, where everything you're already doing so. So you could do that. So that's going on now, tomorrow, on Wednesday, tomorrow that that portal for the CF eyes will open for second row applicants as well. And then the all we have all we know is that shortly after that time, it will open for everyone. So we're anticipating that to happen relatively quickly. So that's kind of an overview. Right? So So let's

talk about Rudy, you want to start like just to feel bad, because you have people here, like someone asked about 501 c sixes. You know, they might be new, but where do you want to start for people who actually have had the opportunity? The first round? Do you want to start with that? Yeah, let's

let's talk about, you know, what are the updates? What, what does it look like? What's different this time. And so you know, I've told you there's two draws this time, there's a first draw for people that haven't received it a second draw for people that have. So eligibility for a second draw PPP is different than it was for first draw. So in order to be able to get it, I had alluded to one of the points there being the fact that you had to have used all of your first draw money, and you had to use that on eligible expenses. No, it doesn't go into talk really what that exactly means. It's kind of a gray area we're trying to get some clarification on. But at first glance, that tells me that if you took out a PPP in the initial PPP, and you did not spend it on all eligible expenses, and you have to repay a portion of that it was not forgiven, not because of the idol advanced, but because maybe you made some payments on some bills that weren't eligible, that you may have trouble getting a second round PPP, because the Act does say that it has to have been used for eligible expenses before the second draw can be dispersed. So that is one of the things also different in this second draw PPP is that in the first draw a business had to have less than 500 employees. For a second draw, would they have lowered that down to 300. So a business can only have 300 employees, and that is all of your affiliates included. So if you own a say you own a company that has, you know, many different locations, but you're all owned under that one company, you would have to include all of the employees at all of those locations. Maybe you own a string of McDonald's and you would have to Oh, you would have to count up all of those employees. So it has to be under 300. And then you also have to demonstrate a 25% reduction in gross receipts.


looking at a comparable quarter from 2019 and 2020. Yeah. 2019 So you can pick what quarter that is because this is kind of one of those areas where we have some businesses that actually, were able to make a profit in, in 2020. But we want to show so this is going to give you the flexibility to pick a quarter where you actually are below your gross revenues in 2020, from where you were in 2019. So you're going to have to show some loss in one quarter during the year to be able to get the PPP on that second

quarter. Is that correct? Yep, quarter.

Okay, and you're encouraged to pick the quarter that works best for you. So you know, it's not like you're scamming the system or anything. You just have to have one quarter of loss to qualify. Okay. Okay. Great.

You have a couple of questions just real quick. Jonathan, you want to grab? We already said 501. c six says,

Yes, can apply. Right? They just have to be careful with the amount of money they used in lobbying, you know, remove that expense, and then they can they can qualify just like everyone else.

Right? You're pumped about

that? That's for sure.

Yeah, I know.

Richard brigman wants to know, what will be employee retention requirements again, for the second draw on that PPP?

Yes, there will always be those requirements in that PPP, because, as I always mentioned, it's called the paycheck Protection Program is designed to maintain paychecks for America's employees, of small businesses. So there will always be that requirement. If you want your loan to be forgiven, if you're going to use your loan for eligible expenses and request a forgiveness, then yes, you will have to maintain the requirements for employment. And there, there are some leeway in there. And I won't get into all there's a lot of different aspects of that, but it does allow for some reductions, you know, and there, you know, I think the SBA is looking at it as a realist and saying, look, we understand, you know, you can't maintain everybody at that top level, especially, you know, afford maxing out loan amounts at 2 million. But, but you do have to maintain that maintained Yes,

gotcha. And what little wants to know for the second draw if employee count is between 305 100? Will SBA small business size standard apply to quote? No,

no, it does have to be lower than 300. Okay, that is all that I read in the act.

Gotcha. Bomb Snapple. The questions are rolling in here wants to know, what type of documentation are they looking for regarding loss of revenue? Can you provide them records from your accounting system comparing the same quarter from 2019? And 2020?

Yeah, absolutely. That's what you're gonna do. If you you know, if you're a smaller business and you're running QuickBooks, you're just going to do a quarter by quarter comparison, if you have an accountant, you're going to call your accountant say, look at all my four quarters, tell me where I had the biggest difference and print me off the records. And that's what you're going to do and, and keep in mind with the PPP, first draw, second draw doesn't matter. You're going to be providing those to your local bank, whoever you're applying for that PPP loan, the SBA will not look at those initially, you're going to apply to your your local bank, your bank is going to recommend approval on that. And they'll, they'll send it into the SBA, and then the SBA will have eyes on that. But we do take the recommendation from your local lender very, very seriously.

Very cool, and Ricketts. Larry wants to know, um, it seems as though if your loan is under $150,000, you can still apply without defining a quarter where you experienced a loss, however, may just not be forgiven. Can you expand more on that,


I'm there, they still have to meet the required walk regardless of the size. I think that there's a confusion between what you need to do for forgiveness. And what you're gonna need to do for a second draw. for forgiveness, a part of the Act did make some changes are in the process of making some big changes to loan forgiveness. So if you had a PPP loan that was less than $150,000, the the forgiveness process will be simplified greatly. There's some new applications out I don't know exactly. We just got an email late last night on applications. I'm not positive that that new forgiveness application is out yet. I don't think it is, but it will make it much easier. But as far as applying for a loan, you still have the same requirements in applying for a second draw loan. You do have to show the reduction you have to show that you had a quarter of losses that you have to have the loan Then you still have to meet those those requirements.

So it's good information here. And one last question here from Courtney Williamson wants to know, on any documentation about forgiveness for the second draw, um,

we don't have it yet, like I said, the new Act did make a lot of changes to forgiveness. So let me just spend a couple of seconds talking about that. Now, just to give you an idea, so it has, as I mentioned earlier, if you have a loan under $150,000, it has made that requirement for forgiveness, the process to be to have that loan forgiven much easier. And so the SBA is working diligently to get those loan forms updated. And to get that done. Now, with the second, the second row, it'll, I'm sure it'll be the same way where they will make that a lot easier to do that forgiveness. Now, a big problem in the first round of PPP was that idle advance. And so the idle advance was the part of the idle program. That was a grant, we call it in advance, but it was technically a grant. And that was up to $10,000. So businesses, when you applied for an idol, you applied for the idol advanced as well, because it was free money, everybody applied for that. And you got between one and $10,000, depending on the number of employees you had, if you had one employee, you got 1005 employees 5010, or 500, you got the maximum 10,000. What had happened was in the in the interim final rules that were published, it required the bank to take out any idle advance that a business had received, and take that out of the amount of loan, PPP loan that was forgiven, because what would happen is they were looking at it as a business was double dipping at the federal government, right, you got a grant here, and then you're getting this loan amount forgiven. And so they were saying No, that's too much. If you've got that, that idle advance, and you say, you got $150,000, PPP, you applied for forgiveness for 150,000, you spent every penny, accurately and on eligible expenses, and you get your forgiveness back and it says you have 140,000 forgiven you owe the government $10,000. So that was a huge issue. Very big issue, especially for the very small businesses, you know, because if you had a 500 employees, and you got free 10,000 I mean, that's nothing. But if you had nine employees, and you got 9000, that was a big difference. And so what happened in the second round in this relaunch in the economic aid act, they have said, No, we're not doing that. We're taking that out. So what has happened, though, we have a lot of loans that have been forgiven already, and a lot of loans in this process, and people are either paid off the debt that they owe the government or making payments. So the SBA has to go back and make all of those right. So if you had an idle advance, it was deducted from your PPP loan forgiveness amount, you will be refunded that amount of money, the firt what will happen is the SBA is working on the process now of how this is going to occur, but they will refund that money back to your lender. If you have a balance there. Like in the scenario I mentioned where you had $150,000 loan but only 140 was forgiven, BSBA is going to give 10,000 back to the lender, the lender will first take that money and apply it to the loan. Okay, so if you have a balance that will be applied, if you've already made that right and paid off that loan, then your lender will eventually get that money refunded back to you. So that was a big issue. So we don't have that and then there were some other issues with taxes on what if money was spent with the with the Idaho advance with the PPP you and you use that free money, you know that you've gotten forgiven? You know, states wanted to be able to tax that they didn't want you to be able to claim expenses. So your your business, you write off your business expenses, you use the money for your, for your lease payment, like you were supposed to, and now they go IRS and a lot of state governments came in and said, Oh, no, now we want to tax that money because you can't claim that as an expense because that wasn't really your business's money. That was government money. And so that was an issue and that was cleared up as well and in this in this legislation.

Okay, so there you go. You got a thank you want to say? Thank you, Courtney.

You're wonderful.

Yeah, that you're a rock star. Okay, so did we cover both dimensions of it now? Are we feel like we got to all the points.

There are no there's probably some more things that I could probably tell you. A couple more updates like on the, on the new second draw PPP. So we have talked about a couple we had talked about, you know, some of the more negative sides, like, you know, the business can only be 300 employees, you have to give us the money, those kinds of things. But there's a lot of great changes that we saw in that as well. One is, of course, it did open up the eligible pool of applicants, which, of course, his Burg technical Council is a beneficiary of because now 501, c sixes can apply. So they did open that up, there's a couple other changes, but not as significant in that, but it did open up for other businesses to be able and nonprofits to be able to apply for that, for that money. The business does have to have been in existence before February 15 2020. To apply for the money because you had to, you know, be there when before COVID started the PPP expenses as eligible expenses it used to be, you can only use it on rent, mortgage interest, and utilities. Remember, those were the three it had to fit into that, or salaries and payroll, right had to fit into those, they have now expanded that three, those still are our three of the eligible expenses. But now you can also include certain property damage costs. So if you're located in Kenosha, or Portland, and you've had significant damage to your building, because of rioting and different things, that is an eligible expense for ppb funds, supplier, some supplier costs now are eligible, especially some worker protection costs. So if you've had to install new things, maybe had to buy equipment, to allow your team to work remotely, you had to make a lot of changes to your networks and security and different things, these are going to be eligible expenses now for a PPP, that that, you know, really are going to benefit. And remember, we're now at 60% 40%. So it used to be at 20, when it first came out 60% of the funds have to go to salary, payroll expenses, okay. But that other 40% now can be used well beyond just leases and mortgage interest and utilities. And, you know, some of the other things or changes to like ventilation systems that needed to be done, like I said, a lot of PP, those types of things, those are all going to be eligible. It also the the PPP also provides a greater flexibility for seasonal seasonal employees. So we had a lot of problems before when we were calculating payroll costs for seasonal employees. There are some changes if you have seasonal employees. I'm not an expert on that one yet. But make sure you take a look at that. The idle advance no longer being deducted is a big one, the taxes with the IRS huge one, some of the states, we're still waiting to see what the states are going to do. Because a lot of people that are filing taxes are going to see that the state is going to come after them for some of this money that they've used to write off on their business expenses. So we want to make sure that we're hoping that states follow that as well. The deadline for the PPP is March 31. And so that is March 31 2020 2021. And that is for both the first draw and second draw. So regardless of which draw you're looking at the deadline is

March 21. So you want to make sure that you know on this, on the new legislation, you can choose the amount of time you use to spend the money. So when we first came out, all money had to be spent in eight weeks, then when the second round came out, it could be eight weeks or 24 weeks. And that was when we came out with that second pot of funding for pee pee pee pee pee last summer. Now we're saying that you can choose the borrower has the choice to choose how much what timeframe they want to spend the funds in. And it can be anywhere between eight weeks and 24 weeks. And so you're going to get to choose what works best for your business. Now, I was talking to Audrey a little bit before we came on air. And one of the one of the issues with that is if you are if you've not received a PPP and you're applying for a first draw PPP, we believe and I'm gonna say believe because we don't have confirmation on this yet but for how everything is written, we believe that those businesses will still be able to apply for a second girl so it doesn't We can't find anywhere that says you can't. So but it does say you have to have spent the money on eligible expenses in its entirety before the second draw is dispersed. And so if we know the program's closing on on March 31, we want to make sure that people who are getting a first draw, get it pretty quickly, and then use the money in that eight week period on eligible expenses, so they can still apply for that second draw. So that's gonna work out.

Let me just ask you something. We have a few minutes here. And there's still a lot of questions. Okay. But for minority owned businesses, are there any, any changes? Is there new allocation or any set aside?

Yeah, there there is, they are holding back some money for just minority owned businesses. They also have where the SBA staff that is processing these, they have special staff that are allotted their time and attendance to work just on minority applications on I want to, I don't want to say minority on underserved application. So from underserved which would be women minority and better known. Okay, so we and not in even on top of those things, there is a concentrated effort of the SBA, along with our lenders, to actually promote this in ways, we've been doing a lot of stakeholder calls with minority groups to make sure that the minority businesses have access to the funds. And we want to make sure that they know that this is out there that you know, and so we've been working very closely on a national level with a lot of these groups that can help us to get that word out there. But yes, we are really working hard to make sure that happens. So we you know, I want to be sensitive to time. There's lots and lots of questions that are on, and even the one that just got popped up about

the farmers, yeah, about the farmers, and was there any aid for farmers and then

you can be an agricultural business and apply for the PPP. I believe that there, I believe that the writer was correct that there are other funding pools. And especially I would check with the Department of Agriculture, especially the Rural Development wing of the Department of Agriculture, I would check with them USDA Rural Development to see what they have, but you agricultural businesses are allowed. One other issue, I just remember that is a really a big one. And that is, you know, the loan is based on a two month salary, you know, cycle, a two month payroll cycle, I should say, I 2.5 times that two month period is going to be the loan amount. There is a new exception, a new change to that, though, with some types of businesses. And those are going to be the businesses are the hardest hit. And so businesses that have a NAICS code that start with 72, these are going to be a lot of your accommodation and food service businesses. They get to multiply their two month payroll expense by 3.5. And so their loan amount is going to be higher than other businesses because they have been hit so hard.

So we obviously there are more questions. So two things. One is if people have questions, can they reach out to your office? Yes, there that you can just Yes, are in there. Two things. I

will tell you. If you have questions. WPA stands for West western Pennsylvania info WPA I have a team that is dedicated to that email account. They check it constantly have it up on their computer, and any question that comes, you're given an answer, or we or we send it out if it's a question that has to be answered by my management team, it goes out and we will get back to you very quickly. That is definitely the best way for information and a copy of everything that I've talked about. You can get to a lot of one pagers that have a lot of great information, go to slash P P P. So the SBA has done a much better job this time at putting all of their information in one location. So slash PPP.

So I want to ask you though, so the second thing, and I know we packed so much in here and thank you so much your year and sharing it with us, but here, what about all the other services? All right, other services that your organization provides.

I know it's hard for people to believe that the SBA has existed before PPP and we will continue to exist but we do have a Great things. One is that we have just named 20 new Women's Business Centers across America. We had, you know, so we have a lot of services, we're really dedicated a lot of effort to helping women business owners. And we will continue that in the next year, hopefully. And we did get one of those. So it's located in the Erie area, it does come down as far as Lawrence County and Butler County. So we have that that's a was a great win for us. We also are doing some some other trainings, we have a new program, it's called a sent a sc, n t. So going along with that women, woman, business owner, woman entrepreneur component. We've been working on this last year of this President's administration, a lot of women's initiatives. And they have developed this program called ascent. It's an online platform for women entrepreneurs, women, small business owners, and it's an educational component. And you can go in and you take journeys, which are like we would consider a module. And you can go through all kinds of different training, and it is designed for women entrepreneurs and women business owners. It launched just on Monday, Monday was the launch, it's been developed for a while. But with PPP, we kept putting off the launch of that, but it was launched on Monday, it's called ascent, you can look you can find that on the SBA website. It's a great tool completely free designed for women entrepreneurs and small business owners. We're doing a lot with other groups as well. We have a lot of other things, we have an emerging leaders class that we're working on starting to feel, that is a 100% free program, it is about eight months in length, we typically would meet twice a month face to face, but we think this time, it's probably going to be virtual, if you know of anybody that these are, this is not that emerging leaders is not for, for startups, it's for people that have, you know, a couple million dollars in revenue already. And they're looking to get to the next level, especially if you're interested in government contracting, exporting products outside the United States. This is a great program where we come alongside you work with you, we actually hire, hire somebody from the outside that that teaches that. And we work with you to get your business to that next level, to get you in government contracting, to get your export and to get that business up above that 5 million sales mark. So those are some of the things you can always check us out on And go to local resources, find our district office with a calendar on there of all the stuff that we have going on. But definitely if you have any questions WPA always happy to help to talk to do whatever whatever we can do to help. Listen, she means that

they are they are responsive. They are definitely people, your your team has just been incredible. And really, really appreciate that. I think, Megan, if you want some answers to that she was talking about the 3% that has to do with those hardest hit industries that have specific na ICS codes. So really, Kelly, we are gonna stay close to you because I matter, you matter in terms of the work that all of us are doing. Thank you for taking the time. We packed a lot in here. And there's lots of resources that are out there. I want to thank everyone for joining us today. Thank you, Kelly. We're gonna stay tightly connected to you. And I know that you're working on all our behalf. So thank you so much. Thank you. Thanks. Thanks for having me. Thanks, everyone. See you again tomorrow.

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