PPP Loan Guide & Resources for Childcare Providers

Haga clic aquí para leer este página en español. (Click here to read this page in Spanish).

UPDATE: MAY 5TH! 

The Bad News: It was announced today that the Paycheck Protection Program (PPP) has run out of funding. It's possible that our government will add more funds to the PPP, but for now many lenders have stopped accepting applications.

The Good News: $6 billion is set available for "Community Development Financial Institutions" (CDFIs). Most childcare providers can still qualify as a Community Development Financial Institution (CDFI). According to the SBA, “CDFIs work to expand economic opportunity in low-income communities by providing access to financial products and services for local residents and businesses.”

For this reason, we are now mentioning that Lendistry is a lender that is still accepting applications and servicing CDFI’s—the businesses which are still eligible for the small amount of remaining funds. 

Tips for applying with Lendistry:

Answers to tricky questions from Lendistry Initial Application:

  • Who Is Your Customer Base? (answer: B2C) (stands for Business to Consumer instead of Business to business)

  • What Does Your Business Do? (answer: Service Business)

  • What Type of Business is it? (answer: Professional)

  • Tell us more? (Educational)

  • NAICS CODE: (answer = 624410)

IF you are visiting the page without having attended a workshop with us, we recommend you begin by watching out 33 minute webinar recording and then reviewing the full page below.

A full step-by-step guide is available below for both first and second time PPP applications, including how to make your loan forgivable, how to find a lender and answers to common questions!

Introduction

The PPP (Paycheck Protection Program) application deadline has been extended to May 31st, 2021.

Friend of the Union and Family Home Child Care Tax Expert, Tom Copeland, strongly encourages all childcare providers to apply for this program! (Including both licensed and exempt providers--also known as ‘Family, Friend and Neighbor” providers). 

Almost all (95%) PPP loans in our country are being completely forgiven (meaning you do not need to pay them back) as long as you are sure to spend the money correctly and apply for forgiveness. 

Your union’s training fund (SEIU Education & Support Fund) has created this resource sheet to direct you to the best information we are able to provide. We unfortunately do not have the capacity to respond to every question you may have. (continue reading for more resources!) 

We offered several zoom sessions to walk childcare providers through the application process.

What is the PPP?

The PPP is a loan program established by our Federal Government and the Small Business Administration (SBA) in response to the COVID-19 Pandemic.  You apply for the PPP by filling out an application form from your local bank or an online lender (such as Paypal). After you are approved, the SBA will deposit money directly into your bank account. You then have eight to twenty-four weeks to spend the money. You should then apply for forgiveness through your lender so that you don’t have to pay the money back. The deadline to apply is May 31st.

Why the PPP is such a great deal for Providers:

*It’s not taxable income! 

*It’s very easily forgivable! (meaning you don’t have to pay it back)

*You can spend 60%-100% on payroll for yourself (Childcare Tax expert, Tom Copeland, recommends you spend 100% on paying yourself)

Eligibility

Small business owners, independent contractors, sole proprietors, and self-employed individuals are eligible! You do not need to have any employees to qualify. You must have been in business by February 15, 2020.  

Important Tax Document!

Tom Copeland, childcare tax expert, advises that childcare providers file taxes using a Schedule C (Form 1040). This form will be necessary for completing the PPP for most providers and will be requested by most lenders. If you’ve already filed your 2020 taxes, you may amend your taxes to include a Schedule C! 

Steps for your FIRST TIME PPP LOAN

For Providers Making Their First Draw (have not previously been awarded the PPP Loan) 

  1. Check out Tom Copeland’s blog post for first-time PPP applicants here! 

    • Excellent line by line instructions.

    • As well as a video tutorial on filing for your first PPP loan. 

  2. Here is the form: First Draw PPP application form.

  3. Feel welcome to COPY THIS EXAMPLE: SAMPLE FIRST DRAW PPP APPLICATION FORM with answers filled in

  4. Select a lender. You can go with your local bank or find an online lender. (Lenders listed below). 

    • You don’t need a business bank account to apply for the PPP. If your bank requires this, apply online because online lenders don’t require this.

  5. CRITICAL LAST STEP: GET YOUR LOAN FORGIVEN!

Steps for a SECOND TIME PPP LOAN

For Providers Making Their Second Draw (have already received an earlier PPP Loan) 

  1. Check out Tom Copeland’s blog post on the SECOND DRAW PPP applicants here! 

    • Read about your eligibility. (must be able to show at least a 25% reduction in your gross income in 2020 as compared to 2019.) 

    • Excellent line by line instructions 

    • As well as a video tutorial on filing for your second PPP loan. 

  2. Here is the form: Second Draw PPP application form.

  3. CRITICAL LAST STEP: GET YOUR LOAN FORGIVEN!

CHOOSE A LENDER

Where do I apply?

  • You can apply for the PPP through your local bank or credit union. 

  • If you do not have a separate bank account for your childcare business, it is recommended that you apply through an online lender--most online lenders do not require a separate business bank account. 

  • Online lenders recommended by fellow childcare providers include: 

  • ***Womply*** is a third party that providers have used. They support small businesses finding a good lender match. Most providers are eligible to apply using their PPP Fast Lane (see video explainer). 

    • Have heard good things about Womply from other providers!

COMMON QUESTIONS

You’ll be empowered to answer many of your own questions after reviewing the shared articles and example forms. We advise that you begin by reading the full article(s) above that pertain to your situation (are you a first time PPP applicant? Second time? etc). You will find line-by-line instructions on how to fill out the application as well as a video tutorial for either situation. 

  • Great article about eligibility and other common questions here! 

  • What forms/documentation will I need to do this?

    • You’ll use either your 2019 or 2020 Schedule C, whichever line 7 is larger.

    • Gross Receipts from 2019 and/or 2020 (all of your childcare business income).

    • Bank Statements can be helpful.

    • If you have accounting reports, that can be helpful as well.

  • How do I pay myself?

    • You can use up to 100% of the money to pay yourself. To do so, transfer money from one bank account to another or write yourself a check. Write “payroll” in the memo line.

      • Once you get the money deposited into your account, you can divide it by 8 weeks. Then pay yourself that amount each week for 8 weeks.

      • If the money is coming from your personal account: write yourself a check and cash it OR write yourself a check and deposit it right back into your personal account. The point is that you are creating a paper trail and evidence that you spent the money on payroll if the lender needed to ask for proof.

  • Could this affect my unemployment?

    • YES! Receiving PPP could affect your ability to collect unemployment. 

  • I work a second job as an employee, can I still apply for the PPP?

    • YES! You qualify as the sole proprietor of your childcare business--even if you are a license-exempt provider.

  • Recommendations for spending the money once it has been deposited into your account: 

    • You must spend at least 60% on payroll. Tom Copeland’s recommendation is that you spend 100% of the money to pay yourself.

    • Once you get the money deposited into your account, you can divide it by 8 weeks. Then pay yourself that amount each week for 8 weeks.

    • Contact your lender for forgiveness at least 8 weeks after receiving the money.

  • You must have been in business before February 15, 2020 to qualify for the first PPP loan.

  • Do I need a business bank account to apply for the PPP?

    • You don’t need a business bank account to apply for the PPP. If your bank requires this, apply online because online lenders don’t require this.

  • Will my citizenship status affect my ability to qualify for the PPP?

    • Yes. Currently, you need to be a US citizen or a legal permanent citizen (a “green card” holder) or have a working visa.

ADDITIONAL RESOURCES:

Elizabeth Sheehan Castro