Standing Stone Accounting

Covid-19 Recap: Small Business Economic Injury Disaster Assistance

As instructed by Linda Baker – Standing Stone Accounting, LLC    standingstoneunltd@gmail.com 

4/4/2020

Now that the dust has settled on the new programs available & the CARES Act put into effect, let me recap some things for you.

 Link to SBA overall assistance information - https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses 

 Two Loans are available:

  1. EIDL – Economic Injury Disaster Loan
  2. Paycheck Protection Program (PPP Loan) – Available at certain institutions starting April 6, 2020. Apply right away, as the funds will likely be depleted in a short time.

 SBA (Small Business Administration) has helpful links with funding options here: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options 


#1. EIDL – Economic Injury Disaster Loan Advance:

Overview
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 of up to $2 million (payable back to the SBA over up to 30 years at the SBAs discretion at a fixed interest rate of 3.75%) and a Loan Advance of up to $10,000.  This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. According to the SBA. this loan advance does not have to be repaid.
 
Eligibility

  • Small employers with 500 employees or fewer
  • Other business concerns that meet the current Small Business Administration (SBA) size standards
  • Sole proprietors, self-employed individuals and contractors
  • Certain nonprofits, including 501(c)(3) organizations and 501(c)(19) veteran organizations, and tribal businesses with under 500 employees.
  • Businesses in the accommodation and food service industries can apply on a per location basis if they have 500 employees or fewer per location. 

The Economic Injury Disaster Loan advance funds will be made available within days of a successful application, and this loan advance will not have to be repaid.  

Business owners with multiple businesses may apply for an EIDL Loan and Loan advance separately for each business as long as they meet the qualifications for eligibility above.


#2. Paycheck Protection Program (PPP Loan)

Overview:
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll and the SBA  will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.  Lenders may begin processing loan applications as soon as April 3, 2020. The Paycheck Protection Program will be available through June 30, 2020.

 

Who Can Apply?

  • Small employers with 500 employees or fewer
  • Other business concerns that meet the current Small Business Administration (SBA) size standards
  • Sole proprietors, self-employed individuals and contractors
  • Certain nonprofits, including 501(c)(3) organizations and 501(c)(19) veteran organizations, and tribal businesses with under 500 employees.
  • Businesses in the accommodation and food service industries can apply on a per location basis if they have 500 employees or fewer per location. 

 According to the latest guidance from the SBA: "No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation."

Here is the link to the new form, just updated - https://www.sba.gov/sites/default/files/2020-04/PPP%20Borrower%20Application%20Form.pdf   Some banks may have you fill out their version of the form online.


Who is making these loans? 
The SBA is guaranteeing the loans, but the loans will be made by SBA-approved lenders who participate in SBA’s 7(a) program. You can find local SBA-approved lenders here. You should also contact your current financial institution; many banks and credit unions are approved SBA lenders. 

 

How can I qualify?
Lenders will ask you to certify that: 

  • You will use the loan to retain workers and maintain payroll or make mortgage, lease, and utility payments
  • You do not have a pending loan application that would be used for the same purposes, or that you don’t receive a duplicative loan from Feb. 15, 2020 through Dec. 31, 2020
  • The current economic uncertainty makes the loan necessary to sustain operations and pay employees

SBA is waiving some requirements typical for 7(a) loans:

  • No personal guarantee or collateral will be required.
  • You will not need to certify that you tried and failed to obtain capital elsewhere.

 Most applications are asking for copies of the 2019 Form 941 reports for each quarter of 2019, the 2019 Form 940, a 2019 & 2020 YTD Wage & Deduction payroll report listing each employee with their respective taxes & 401(K) and health deductions shown. You may also need to provide proof of payment of the health insurance and 401(K) payments made. Have these ready for when you file your application.


Loan Details and Forgiveness
The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

 You may go DIRECTLY to the Official SBA Government Website and file the application yourself through an approved SBA approved lender. Banks are already overwhelmed with the applications and documents being sent, so you may experience issues with them.

 You can also use CorpNet, a provider that I am partnered with, as a provider to have them file for you. For more information, feel free to reach out to a CorpNet dedicated account manager or call us toll free at 1-888-449-2638.  Our office are open Monday through Friday 7-5 PM PST and Saturday and Sundays 7-1 PM PST. 

https://www.corpnet.com/sba-loans/?utm_source=CPAAcademy-Mass+List&utm_campaign=30ddc33ce9-EMAIL_CAMPAIGN_2017_11_08_COPY_08&utm_medium=email&utm_term=0_c034033da6-30ddc33ce9-70267765/ 

 

#3. Other Options:

SBA Express Bridge Loans enable small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.

Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.

Terms
Up to $25,000
Fast turnaround
Will be repaid in full or in part by proceeds from the EIDL loan

SBA Debt Relief information found at this link:
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-debt-relief 


#4. Most importantly

, be aware that there are already a lot of scams out there for these loans, tax information for returns, and more. This is the easiest time for hackers to get your information. Be very selective as to where you go for your information. I have provided true & trusted sources for you as I have them. Most of this information has been directly compiled through the SBA site.

  I hope this helps everyone. I know there is so much information flying around, so this gives you just what you need to know now.

 As always, please let me know if I can assist you in any way. We’re all in this together!

 On the other side of this, start taking this time to analyze your policies & procedures in the workplace. See what needs to be updated in technology, or just people process, so that information and work can flow more easily. As you’re probably finding out, the more procedures that are in place and followed by all, the more you can quickly and easily obtain the information that is needed, especially in the case of a disaster. Having a disaster plan in place is another item that has often been put on the back burner. Start developing yours today. Also make sure your company has good security software in place. Think about how you can make your product/service better so that when this is all back to normal, you can provide a better experience for your customers. Expect sudden growth in your workload. Get people in place to be able to handle that growth when it comes.

 Having good cash flow reports in place, reviewing auto charges and regular monthly charges, at least every quarter, is a good habit to put in place. I can help you with cash flow reports, so you know what your expected cash on hand is.  Get ready for doing business differently in this new decade.


 Respectfully,

Linda Baker
Standing Stone Accounting, LLC