Hello Members,
You probably already heard that the CARES Act (the mammoth 880+ page disaster relief bill) was signed over the weekend, and help IS indeed on the way.
But there are so many Rumors flying around out there that I wanted to reach out to clear up some confusion.
First things first (and before I give you any more details):
The SBA EIDL online application is BACK up and running.
https://covid19relief.sba.gov/#/
This Economic Injury Disaster Loan website is working smoothly as of right now, and there is a check box option to request the $10,000 immediate business stimulus grant. Remember, Congress only allocated $10 billion of that $2.2 trillion stimulus package to these small business grants, and they're first come, first served, so get on this ASAP if you want immediate help.
Now to some details about the
Paycheck Protection Program (PPP) Loans.
The goal with these small business funding loans is to keep people employed and prevent a massive spike in unemployment.
You should know that businesses cannot get both EIDL and PPP loans at the same time. You can apply for the EIDL loan now and the PPP loan when it becomes available.
If you qualify and accept the EIDL loan, and you subsequently qualify for the PPP loan, you can refinance the EIDL loan with the PPP loan. OR you can apply for both loans and decide which one to take if you qualify for both. Loans are limited to one per Taxpayer Identification Number.
For the PPP loans, you can have your bank help you through this, or go directly through the SBA. Banks are getting ready to make these loans in as short as one day from application to approval to distribution.
Some bullet points on these loans...
Eligibility: The guidelines are very confusing, but essentially, here are the basic tests.
- Employ less than 500 employees
- Demonstrate you have been impacted by the virus disaster
*You will sign an affidavit stating this is the case, which may be used later to
charge you with fraud if you're unable to prove you're affected.
- Have to have been in business since at least February 15, 2020
- No credit score requirement
- 501c3 is eligible (nonprofit)
*If you only take distribution as an owner and don't have payroll distribution, or you
are a contractor and take only Schedule C payments, you likely DON'T qualify.
But double check with your bank or the other places you can apply.
Uses: You can utilize these funds for the following uses.
- Payroll
- Rent
- Utilities
- Health Insurance
- Interest Expense / Debt Obligations
Loan Amount:
2.5x monthly payroll (W2 + 1099 wages) based on the average from February 15, 2019 to February 15, 2020
- Employer payroll taxes are not counted (7.6% on average)
- If your employees or contractors get paid more than $100,000 they don't count within the total
- Cap is lesser of 2.5x annual payroll or $10M, whichever is less
- International payroll doesn't qualify
Terms:
- First 8 weeks: Whatever you use for the approved uses above, it may be forgiven, if you maintain the same level of employees / contractors as before the crisis.
- If you refill any position by June 30 that you let go since February 15, 2020, it counts toward the forgiveness clause above.
- If you reduce a person's pay by more than 25%, they are not counted toward your "retention" criteria for possible forgiveness.
- 10-year term with a rate not to exceed 4%.
- No personal guarantee required.
- No collateral required.
- Interest and principle is deferred the first six months and can be deferred up to a year.
- Forgiveness is not counted as taxable income.
- No prepayment penalty.
Miscellaneous:
You'll have to provide receipts / payroll statements to get any amount forgiven by the bank at a later date.
Thank you and say healthy!
Mike Byrd, PBT President
