The Pinnacle bank experts tackled topics that ensure sustainability for the business and its owners with unique expertise on SBA Loans providing specifics on questions like:
When will forgiveness application portals be live?
Lane Rhodes, senior vice president, Pinnacle SBA Lending, advised that unless the business has an upcoming ownership change, there is really no rush to apply for the forgiveness. “It’s best to let the SBA work out the kinks with the forgiveness system and then apply once the process has improved,” said Rhodes.
How do I qualify for Main Street Lending Program (MSLP) loans?
Kathleen Nelson, senior vice president, Pinnacle Financial Partners, noted that MSLP loans are a bridge to get cash flow, leverage and collateral coverage back in line. “Banks will have to use customary underwriting standards based on 2019 EBITDA and will want to see the company has the ability to fit within traditional lending parameters well in advance of the note maturity,” she said.
The legal team from Waller brought insight on safe harbors, certification and legal considerations, including:
How do I document certification?
Clients continue to have anxiety about their businesses having not completely felt the impact of the Covid crisis while sitting with PPP proceeds. They are looking for input on how to prepare financial analysis to support their need certification and the appropriate factors to consider. Leigh Griffith, a partner at Waller, provided legal expertise around the issue. “Assuming you’ve tried to do the right thing and have decent records, it’s going to come down to your reasonable need application at the beginning. Look at the time it was made, where the stock market was, the world panic; look back at the intent. What did you do, what can you prove you did, and what can you document? What objective things can you give to show how you viewed the world?”
Dustin Timblin, counsel at Waller, added advice for business owners: “Always consult with your advisers before making any substantial decisions, and be flexible. Some questions just aren’t going to be answered, so be comfortable as a business leader to use informed good faith in making decisions for your organization.”
And as a tax accountant, I was able to shed light on the key tax implications of choices as well as opportunities:
Absent new legislation, forgiveness is proving to be a taxable event. When that forgiveness occurs appears to dictate when that taxable event occurs. Businesses should consider which taxable period they want to pick up taxable income and manage the timing of the forgiveness application to that period as best as possible. Whether forgiveness will be taxable in reality — we don’t know. At this point, a new law seems to be the best path forward to make forgiveness nontaxable.
If there is one thing this year has taught us, it’s that we can’t really know what’s next. But collaborating with the right experts who are informed on the changing laws and understand key differentiators for your unique circumstances will allow you to make the best decisions over the short and long term. Working together and helping our neighbors is how we have gotten through tough times, and that is true in today’s environment. By building the right team of advisors, you will set yourself up for success.
Originally posted on Nashville Business Journal.