Posted on 04/01/2020 11:51:27 AM PDT by TheConservator
Has your business or non-profit been adversely impacted by the COVID-19 shut-down or slow-down? Will you be able to pay your employees? Or the rent? Will you be able to pay yourself? Congress is trying to help by giving away quite a bit of free money, and that should get your attention.
There are still details to be worked out about how these new plans will be implemented, but here’s some initial info:
The first and quickest option for relief is an Economic Injury Disaster Loan (EIDL) from the Small Business Administration. You can borrow funds necessary to meet expenses and obligations that could have been met had the Coronavirus not occurred.
You can apply online, and should receive an answer if you are approved in 2-3 weeks. You don’t have to accept the loan, so there’s no harm in applying.
But here’s the sweetener: You can request up to $10,000 as an Emergency Economic Injury Grant. That does not have to be repaid if used for payroll or rent. The grant is often approved even if you don’t meet the loan qualifications, and it can come to you in 3 days. Many small businesses will qualify and should apply for this.
Additionally, up to $2M can be obtained as a loan. There are other limitations with this loan plan, so not everyone qualifies. There is a limited pool of funds available, so this application needs to be done ASAP before the funds are all claimed.
Click here for more SBA info: https://www.sba.gov/funding-programs/disaster-assistance Here’s the on-line application: https://covid19relief.sba.gov/#/
Congress also created the Paycheck Protection Program (PPP), which has a larger pool of funds available to loan, $349B. Now don’t dismiss this because you don’t want to have a loan, keep reading.
Personal guarantees or collateral are not required, and there are no loan application fees. You can get a loan for 2.5 months of your historical average payroll and benefits costs. This includes the owner’s compensation if you are self-employed. (Maximum compensation rate allowed is $100K annually per employee.)
If the loans are indeed used for eligible payroll costs (up to 25% of the loan may also be used for other business expenses including rent, utilities, mortgage interest, and interest on certain equipment loans), then you can apply for the entire loan to be forgiven after 8 weeks. This effectively turns the loan into a grant.
The amount that can be forgiven in this program is reduced proportionately by any staff reductions you have from Feb 29 levels. So if your FTE count goes from 4 to 3, the amount of the loan that can be forgiven is reduced by 25%. If you re-hire employees before April 26, they won’t count against you. If your pay rates decrease, that too can reduce your forgiveness %. There is strong incentive to return to and maintain earlier staffing levels. The government would rather pay you to keep people on payroll than have them go on unemployment.
The Dept of the Treasury released application forms for the PPP today, and you may be able to apply as soon as April 3. Here’s a link to the SBA’s website: https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp
Be sure to talk to your local bank or credit union right away. They’ll be the one processing these loans, and they can give you additional guidance about the loan application as it becomes available to them.
The PPP loan and forgiveness program is contingent upon, can you honestly make this declaration in the loan application? “Current economic uncertainty makes the loan necessary to support your ongoing operations.” Do you need working capital now? Are you concerned that your revenue source over the next 2-3 months is at risk, putting you in a situation where you would take out a loan? If you can affirm that need, then help is available.
On the other hand, your circumstances may not be that tight. Some businesses are holding their own so far. So Congress came up with an alternative benefit, in the form of an Employee Retention Credit. They are again trying to support employers who continue to pay their staff, rather than sending them to collect unemployment.
In some circumstances this credit may work better than the PPP loan forgiveness plan. Generally they’ll give you back 50% of the wages you pay after March 12 up until December 31, 2020, up to $5,000 max credit per employee, if the wages are paid during a quarter in which your business operations are at least partially suspended due to government orders. You’re also eligible if your revenues for a quarter are at least 50% below the comparable prior year figures, and remain so until such time as quarterly receipts exceed 80% of the prior year amounts. This program covers employee wages; self-employeds will not get the credit for their own draws. Finally, you have to choose - if you get a PPP loan, you can’t take this credit.
This is a very early analysis, and more details will emerge in the days to come.
Too busy playing gotcha with Trump to actually spread helpful information.
if this is the message, it is not getting out to the country, imo
“I’m from the government, and I’m here to help your business get a government survival loan. It really quick and easy!”
Big toothy smile...Sham-WOW!!!
“Free money”
LOL! I feel so bad for our nation and especially small business that employs the majority of Americans.
Considering how much money they are going to give away, the application process is surprising simple and straightforward.
I received a flyer today from a law firm. It offered to “prosecute claims” against our commercial insurer for any “business interruption insurance” we may have. It even included a contract for 33 1/3 of anything they collect.
1) Sign the agreement. 2) Take a picture of the agreement. 3) Text the picture to a phone number.
I’ve been predicting this kind of stuff. There will be all sorts of litigation coming out of this.
MSM is blind to anything that is not their Trump hating agenda....
Anyone listen to Mark Levin last night?
A $10K grant? Pffft for a small business.
So I wonder. I have rental properties and some of my renters will not be able to pay rent for a while, but I still have to pay the mortgages, would I be eligible?
Since I am an attorney that handles claims against insurance companies, I know something about this issue.
Generally speaking, your typical comprehensive business liability policy covers claims for loss arising when there is an “occurrence” caused by “bodily injury” or “property damage”. And, such policies provide business interruption coverage on the same basis.
What insurers are going to argue is that loss caused by a lockdown is the result of government action, and not caused by bodily injury or property damage.
Claimants are going to argue that Coronavirus does cause physical damage to people and property, and that when the government imposes a lockdown to forestall such bodily injury and property damage, that triggers coverage under the policy.
I know of a couple cases that have already been filed in Louisiana and California raising these issues.
If I had to guess, I would guess courts are generally going to agree with the insurers’ position. Simply because holding otherwise is likely to bankrupt the entire insurance industry.
But that’s just a guess. We won’t really begin to know for sure until there is a final appellate court decision, which won’t happen for at least a year, and maybe two or more.
True enough, but small business owners have to file asap as the pool of money allotted for this purpose is not open-ended. If they file too late, the pot of money may be gone.
Congress ain’t going to pay shit. Any paying done, it will be the taxpayer that does the paying. Congress does not have a penny except what it steals.
That’s a good question. I don’t think the PPP program would cover more than your salary (if you have been paying yourself one), the salary you pay employees (if you have any), and, subject to the caps explained at the website, the rent/utilities for the location out of which you do business. I haven’t really focused on understanding the other programs well enough to even guess. But you would need to check with the SBA to be sure.
“I’m from the government, and I’m here to help your business get a government survival loan. It really quick and easy!”
Big toothy smile...Sham-WOW!!!
All you have to do is pass an OSHA exam first, if you don’t pass you will be closed down until you comply.
Look before you sign up....
Don’t get too excited quite yet. I am a small business owner and done quite a bit of research on the CARES Act. There are still more questions than there are answers.
The announcement is good, but the devil is in the details. Don’t spend the money just yet.
That needse chiseled onto the lintel of every entrance to the Capitol Building.
Yep
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