On March 27th, the CARES Act was officially passed, which includes $376 billion in relief available for U.S.-based small businesses impacted by COVID-19.

As we have looked at the CARES Act, we realized that one of the main reasons many small businesses haven’t applied yet is because it’s complicated. There are multiple programs for which a given small business might qualify for, different timelines for each one, and, in many cases, it’s confusing to understand whether your small business is even eligible in the first place. In addition, some lenders have already begun processing loan paperwork, adding a time crunch to an already-stressful process.

With all of that said — we’re here to help. We’ve created some simple recaps for each program, for those small businesses that are needing assistance. And, after speaking with advisors, listening to countless conference calls with banks and accounting firms, and conducting plenty of our own research, we are taking everything we have collected and learned and placing it on this page.

AGAIN WE ARE HERE TO HELP! Feel free to set up a time to speak with someone, getting your books healthy and actionable in order to get assistance, or if you have questions about what route is best for your small business.

ASK A QUESTION

Paycheck Protection Plan (PPP):

KEY POINTS:

 

  • Loan to help with 8 weeks of expenses.
  •  Must be used for Payroll expenses, rent, mortgage payments and/or utilities
  • Excludes payroll over $100,000
  • Based on Payroll, rent, mortgage, utility expense between Feb 15, 2020 and March 15, 2020
  • Can hire back employees if let go after Feb 15, 2020 relate to COVID
  • Debt can be forgiven if money used according to the regulations and not used for expenses other than approved payroll, mortgage, rent and utilities
  • Records of payroll, mortgage, rent and utility expenses will need to be presented when applying for forgiveness
  • Up to $10 million can be received by a company of 500 or less employees to help
  • If at 1 year you have not met the guidelines and applied for forgiveness payment will need to be made on the loan

Details:

 

  • Provide cash-flow assistance to employers who maintain their payroll during this emergency
  • If payroll maintained, then debt forgiven
  • Forgiveness of up to 8 weeks of payroll based on employee retention and salary levels
  • No SBA fees
  • Apply between Feb 15, 2020 and Jun 30, 2020
  • Retroactive to Feb 15 to allow for brining employees back on who may have already been on payroll

Who is eligible for PPP:

  • Business with 500 or less employees
  • Filing status of 50( c )(19),  501( c )(3)
  • Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals

Loan Size

  • Up to $10 million
  •  If business open between Feb 15, 2019 and June 30, 2019 then max loan is equal to 250 percent of your avg monthly payroll costs during that time period
  •  if not open during that time the eligible for up to 250 percent of avg monthly payroll between Jan 1,2020 and Feb 29, 2020

Eligible cost:

  • Salary, wages, commission, or similar compensation, payment of cash tip or equivalent
  • Payment for vacation, parental, family, medical or sick leave
  • Allowance for dismissal or separation
  • Payment required for the provisions of group health care benefits, including insurance premiums
  • Payment of any retirement benefits
  • Payment of state or local tax assessed on the compensation of employees

Uses for PPP Money

  • Payroll cost
  • Cost associated with continuation of healthcare
  • Salaries, commissions or similar compensation
  • Interest payments on mortgage obligations
  • Rent, utilities
  • Interest on loans incurred before the period

Loan Terms:

  • Any amount not forgiven is 10 years
  • Max interest rate 4%

Forgiveness Calculation:

  • Sum of the following payroll cost incurred during the covered 8-week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over 100,000)
  • Payroll cost + payments of interest on any coverage mortgage obligation + payment on any covered rent obligation + any covered utility payments

MUST APPLY TO BE FORGIVEN

  • Verify # of employees on payroll and pay rate
  • Document verifying mortgage payment, lease payments or utilities
  • Certification from rep of business or organization that is authorized to certify that the documentation provided is true that the amount that is being forgiven was used in accordance with guidelines for use

Small Business Debt Relief Program

Provide immediate relief to small businesses with non-disaster SBA loans

SBA will cover all loan payments on these SBA loans, including principal, interest, fees, for six months

Available to new borrowers who take out loans within six months of the President signing the bill into law

 

Eligible Loans:

  • Loans not under PPP
  • 7(a) loans
  • Up to $5 million in funding for borrowers who lack credit
  • Cover need for versatile financing, short- or long-term capital, purchase a business, refinance current business debt or purchase furniture, fixtures and supplies
  • 504 loans
  • Provide up to $5.5 million
  • Approved small business with fixed rate financing used to acquire fixed assets for expansion or modernization.
  • Good option for purchasing assets like real estate or machinery

Microloans

  • Provided up to $50,000 to help small business and certain not-for-profits childcare centers to start up and expand
  • Provided by mission leaders able to provide business counseling
  • Usually about $13000
  • Disaster loans NOT eligible

Eligibility:

  • Small businesses
  • To ensure you meet the small business criteria you will submit 6-digit North American Industry Classification System code
  • Submit 3-year average annual revenue
  • Each program has different requirements
  • Apply through Small Business Development Centers or Women’s Business center

Economic Injury Disaster Loans and Emergency Economic Injury Grants

Economic Injury Disaster Loans and Emergency Economic Injury Grants

 

Emergency advances of up to $10,000 to small businesses and private non-profits harmed by COVID 19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL)

  • First apply for EIDL then request the advance
  • THE ADVANCE DOES NOT NEED TO REPAID UNDER ANY CIRCUMSTANCES and must be used to keep employees on payroll, to pay for sick leave, meet increased production cost due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments
  • What is EIDL loan
  • Help cover expense that you cannot meet because of disaster

EIDL Eligibility:

  • 500 or fewer employees
  • Sole proprietorship with or without employees
  • Independent contractors
  • Cooperatives and employee owned businesses
  • Tribal Small businesses
  • Small business concerns and small agricultural cooperatives that meet the applicable size standard for SBA loans
  • Most private non-profits or any size
  • Eligibility for Emergency Economic Grant:
  • Those eligible for EIDL and who have been in operation since Jan 31, 2020 when public health crisis was announced
  • Application and Eligibility Dates Jan 31, 2020 – De 31, 2020
  • If you receive a PPP loan or refinance an EIDL into a PP loan any advance amount received under the emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP

Contractors:

  • If Government Contractor, Agencies will be able to modify terms and conditions of contract and to reimburse contractors at a billing rate of up to 40 hours per week of any paid leave, including sick leave

Eligibility:

  • Contractors whose employees are subcontractors cannot perform work on site and cannot telework due to federal facilities closing because of COVID 19

Small Business Tax Provisions

  • Employee retention credit for Employers subject to closure or experiencing economic hardship
  • Provide refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during COVID crisis
  • Available to employers suspended as a result of government regulation or employers who have experienced a greater than 50 percent reduction in quarterly receipts
  • If 100 or less full-time employees, then all wages eligible
  • Credit is provided for wages and compensation, including health benefits and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee
  • NOT AVAILABLE TO BUSINESS RECEIVING ASSISTANCE THROUGH PPP
  • Credit provided through Dec 31, 2020
  • Delay of Payment of Employer Payroll Taxes
  • Allows taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020
  • Deferred amounts due in two equal installments at end of 2121 and end of 2022
  • What can be deferred:
  • Employer portion of FICA
  • Employer and employee representative portion of Railroad Retirement Tax
  • Half of SECA tax
  • NOT PROVIDED IF RECEVING ASSISTANCE THROUGH PPP
  • Counseling and Training Available:
  • Small Business Development Center (SBCA)
  • Women’s Business Center (WBC)
  • SCORE mentorship chapter
  • Minority Business Development Agency Business Center (MBDC’s)
PPP and EIDL