SBA $10K grant for small business

SBA ^ | 04/03/2020 | eastforker

[eastforker]

This is what my Banker sent me today. I urge any of you who are self employed or contractor to apply for this.

[PGR88]

I believe we are looking at 2 different programs

SBA has always had Disaster Loan Applications, for things like Hurricanes, etc… the rate of the loan is 3.5%. For Covid-19 it seems they added a “Economic Injury Disaster Loan Advance” - which is a disaster loan, for which the first $10K is forgivable. This is the one done on-line, which is very quick.

There is a new loan program under the recently passed CARES Act, called the Payroll Protection Plan. This offers up to $10 million for small business, and is administered through banks who currently are already making SBA Loans. It is very low interest (It started at 0.5%, but I believe banks complained and it is now 1%). This allows much large forgivable amounts, up to 2.5 months of payroll and rent expenses. Can you borrow $10 million, if your company 2.5 month payroll is only $100K? NO - and that’s why SBA is having your local bank get in the middle, to handle approval and administration.

My bank, which is the largest SBA lender in this part of our state, says they are not ready to offer these lines yet - maybe Monday…..

[conservative98]

It’s a loan that doesn’t have to be repaid.

[conservative98]

Economic Injury Disaster Loans and Loan Advance
To apply for a COVID-19 Economic Injury Disaster Loan, click here.
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. This loan advance will not have to be repaid.

[eastforker]

This is disaster relief, so if your state has been declared disaster because of covid, you are small business eligible.

[tennmountainman]

I too am self employed. I am the only “employee”.
Do u know if there is any help such as a grant, not a loan?

[eastforker]

That is what this is.

[Lakewood]

Here is what my banker sent to me as to required documentation:

1. Paycheck Protection Program (“PPP”) – the PPP is a sub-unit to the Small Business Association (“SBA”) 7a Loan Program that is intended to provide short term, forgivable debt to small businesses, nonprofits and veteran organizations for which the lender, as required by the legislation, determines the following qualifications are met:

· whether a business was operational on February 15, 2020;

· whether the business had employees for whom it paid salaries and payroll taxes, or paid independent contractors;

· whether the business has been substantially impacted by COVID-19; and

· whether the organization has under 500 employees.

At this time, the SBA has not issued final guidance on the PPP, therefore ServisFirst cannot accept or process applications. The Bank will provide final instructions once official guidance is available. Businesses will apply for this loan through their bank.

Getting a Head Start

The loan amount your business qualifies for will generally be 2.5x the monthly average of your trailing 12 months of payroll (to include wages of up to $100,000 per employee, group health benefit payments, retirement benefits, paid vacation, and paid medical / sick leave). We recommend you start gathering company

· Payroll reports for 2019 and 2020 year to date showing the following information by employee (your CPA or payroll provider might be able to assist with this):

§ Gross Wages

§ Paid Time Off

§ Paid Vacation

§ Pay for Family Medical Leave

§ State and Local Taxes (Form 940, 941, or 944)

· Completed 2019 business Tax Return or a detailed 2019 Balance Sheet and Income Statement

· Documentation Showing:

§ Payments for Group Health Care Benefits including premiums paid in 2019 through YTD 2020

§ Payment of any company Retirement Benefits paid in 2019 through YTD 2020

§ If applicable, any funds your business received from an Economic Injury loan since 1/30/20.

This is not meant to be a comprehensive list of what will be needed to apply. When final guidance allows, we will have a detailed Application which will specify what additional documentation / information will be required.

Loan Forgiveness

Eligible expenditures for loan forgiveness will be equal to the amount spent by the borrower during an eight-week period after the origination date of the loan on the following items:

· Payroll costs equal to the sum of:

§ Payments of any compensation to employees (salary, wages, commission or similar compensation not to exceed $100,000 on an annualized basis)

§ Payment of cash tips or equivalent

§ Payment for vacation, parental, family, medical or sick leave

§ Allowance for dismissal or separation

§ Payment required for group health benefits (including insurance premiums)

§ Payment of retirement benefit OR Payment of State or Local tax assessed on the compensation of employees

· Interest on any other debt obligation incurred before the covered period, February 15, 2020, and the refinancing of Disaster Relief program loans made between 1/1/20 and the date on which the covered loans are made available to be refinanced.

· Costs related to continuation of group health care benefits during periods of paid sick, medical or family leave, and insurance premiums.

· Employee salaries, commissions or compensations.

· Rent

· Utilities

Collateral – No collateral will be required

Personal Guarantee – No personal guarantee will be required BUT the Government will have recourse to shareholders, members, partners, etc. of a Borrower if loan proceeds are used for an unauthorized purpose.

[Raycpa]

Do u know if there is any help such as a grant, not a loan?

The PPP loan starts as a loan at 1% then turns into a grant if used "properly". Independent contractors should be eligible for 2.5 months of net income based on 2019 return.

Also, the 10k the poster mentions is a separate 10k that gets paid while they process your request. That amount gets sent quickly and is forgiven if they deny the loan.

There is supposed to be some sort of mechanism that ensures you don't get more granted then the amount of the PPP loan.

[conservative98]

So it’s not an easy $10k.

[AppyPappy]

My wife does them. You need a year of 941’s.

[Trump Girl Kit Cat]

My God I had a small business for decades 75 employees my payroll was MORE that 100,000 a year how the hell is this going to help anyone!!

[eastforker]

Yes it is, do not confuse the 10K grant with the PPP.

[eastforker]

Don’t confuse the 2 different programs.

[Lakewood]

Two different programs. The one in the original post was for the quick $10k. The one in my post was the PPP for up to $10 million.

[Lakewood]

Up to $100,000 PER employee.

[MV=PY]

It’s per employee.

[Louis Foxwell]

ping

[texas booster]

There are (at least) three board types of federal assistance available to small businesses:

1: Immediate $10,000 (Emergency Grant via SBA.GOV)
2: The SBA EIDL (Economic Injury Disaster Loan) – via SBA.GOV
3: The PPP (Payroll Protection Program) Loan

Go to the link and fill out the EIDL loan. On page 5 you will see a line “Apply for $10,000 grant ...”. Be sure and check that box.

Per the Virginia Society of Enrolled Agents:

• Congress expanded access to the EIDL program and created an Emergency Grant to allow a small business to apply for
an IMMEDIATE ADVANCE of up to $10,000.
• This ADVANCE is for paying your any and all operating expenses (including payroll)
• And better still,
• YOU DO NOT HAVE TO REPAY THE $10,000 EVEN IF YOUR REQUEST FOR AN EIDL LOAN IS DENIED!

There is a lot of confusion out there, but the EIDL loan is available to ALL small businesses that file taxes, whether Schedule C, 1120S or 1120. For many the $10k loan advance will be treated as a grant and forgiven.

The PPP loans are for payroll, so you can keep your employees paid while the downturn rolls on.

[COUNTrecount]

CARES act question...

You are required to rehire employees who were laid off and go to full payroll for those who are working a shorter day, so if you are in a state that has closed all businesses and you get no business,but have taken the loan to keep your employees working, what happens after you have used all the funds and your state is still on lock-down?

I have not seen an answer to this question.

[taxcontrol]

I am confused. You indicate a grant but the URL says loan.

If a grant, I know someone who could start a business. Heck, I could start a side business myself.