While we should be focusing on tax season, the world has changed in a blink of an eye. As accountants and tax professionals, our jobs have quickly gone from preparing tax returns to figuring out how to help your eligible business and organization clients with the Paycheck Protection Program (PPP), part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Many of you may be scratching your head trying to figure out the PPP loan guidelines and helping your clients navigate the PPP loan application process.
In this difficult time when our clients need this critical support, you may be able to help your clients with the loan application process, while also submitting accurate and complete applications to lenders, which may reduce processing time. This is a key part of the PPP loan application process, and I believe many tax pros can take an active role in enabling successful submission of the loan application for their clients.
Step 1: Help expedite underwriting
Generally, accurate and complete loan applications allow lenders to process an application efficiently. While most people may think the underwriter should expeditiously process each business’ loan, they can’t unless the underwriter has received a complete and well prepared packaged. In addition to ensuring that the loan application package contains all of the required documents – such as payroll information, certain tax forms, and more – it’s important to anticipate and prepare answers to questions that relate to the information from those documents.
The key is communications with the lender. In my experience, when the banks started to process PPP loans, an underwriter called to provide me with a list of additional information required for all loans, so I was able to get those documents compiled for all the loans that were submitted. When the banks reach out, I am ready to provide them the additional information that will keep the process flowing smoothly and quickly to enable closing the loans, and as applicable, can apply the same approach across all of my clients’ applications.
Step 2: Provide detailed documentation
Another vital step in maintaining an efficient process without delay is making sure you document your client’s loan application file with anything that needs an explanation. For example, if group health insurance benefits are paid by the employer and you are including the cost into the gross payroll computation, the underwriter won’t know by looking at a IRS Form 941 tax return or W-2 how much of the group insurance is paid by the employee or the employer.
By documenting how you derived the figures and what is included in your final payroll computation, the underwriter may likely spend less time trying to decipher the figures and potentially reduce email communications. Every time an underwriter touches the loan file, it adds more time and gets pushed back on the working list versus landing on the clear-to-close list. Just think about how much you hate clients providing you tax documents piece by piece with a lot of back and forth churn! Lending and underwriting work similarly.
Put on your advisory hat
During this difficult time, the number one goal is to keep ourselves and our families safe and sound. And, it’s also a great time to consider the services your practice offers and help your clients’ businesses survive. You are the trusted financial resource for your clients beyond bookkeeping, payroll, tax preparation, and tax planning. The COVID-19 pandemic necessitates that you adapt your services and put your skills to use in new ways.
When the dust settles, consider pursuing new business relationships with bankers and lenders so you can be on the forefront the next time your clients need your help.