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Question: Recently the PPP has released a bunch of FAQ items which seem to have expanded the initial qualification of the loan. Specifically, the implied requirement that a company does not have the ability to raise funds elsewhere and has exhausted all other means of funding. This qualification was not part of the original application. What are other contractors doing in regards to this new requirement?

Gary Elekes; EGIA faculty member and Founder of iMarket Solutions:

That’s a great question and an accurate statement. I suspect that it’s probably not the end of the additional requirements that seem to be filtering out from the SBA and the banking system.

The direct answer to that question is, I don’t know. I think that’s one of those conversations you have with your CPA and look at the consequences of that condition. You also probably want to talk to a local attorney.

So, it’s probably not something that EGIA has from an advice point of view that we could say, Do this because… I know that’s an answer that kind of dances around the question but it’s an accurate answer because you’re going to have local conditions – my bank and your bank are two different animals.

I have two different funding banks from two different businesses and both of those requirements are completely different. so even within the framework of my own world, I’m dealing with two different banks with two different sets of conditions and we’re dealing with the state in one of those banks and it’s a mess. There’s just no two ways about it.

The one thing, the money was 75% meant for payroll, so you definitely want to drive the money towards payroll. They were looking to create a way to keep people on payroll instead of unemployment and drive money through the payroll system. That is going to benefit you no matter what.

Secondarily, the asset test was never out there. In other words, if I had money and I was Harvard University they still got funded. Even though they gave the money back, they were able to pass through, like Stanford and Ruth Chris and a number of other organizations. They met the criteria. Later, as the criteria began to adjust, they decided they’d give the money back.

Even if they didn’t give the money back, it’s cheap money – it’s a 1% loan. It would be difficult to find other money that would account for that 1% interest rate. I suspect at one of my companies, we won’t need the money, so we’ll have a decision to make.

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