TOPIC: Resources for Small Businesses to Survive the Outbreak

I would encourage anyone who runs a small business or is close to someone who is to read through this. If you have already taken these steps, great! If you haven't, you should consider them.

There are four Federal programs that you should consider:
1. Congress passed a law mandating emergency sick leave that started April 1st, 2020. Any employee who is potentially sick with Covid, has a partner or family member potentially sick with Covid, is unable to work due to Covid related closures (including stay at home orders), or has children requiring child-care that were displaced from school due to the school closures is eligible for 80 hours of paid leave regardless of their tenure or status. This helps you as an employer because you are paid that money back through reductions in your payroll taxes (you get off-set credits - if the amounts exceed your quarterly estimated payroll, you can get a rebate check from the Federal government to speed up recovering the monies). This lets employers keep people paid without layoffs through the 14th of April. You don't have to do anything to get set up for this other than talk to whomever handles your payroll to make sure payroll taxes are adjusted appropriately. This emergency time off is in addition to any other sick or vacation time they are eligible for (and, yes, you may require employees to take this before taking regular sick time).
-A sub-provision of this law also allows for people with child care issues to take 66% of their pay as FLMA benefits for up to 10 weeks (there is a compensation cap). Those monies are also repaid to the employer through the payroll tax benefits listed previously.
2. The paycheck protection program is unreal. It allows you to take an SBA loan out for up to 3 months of your average payroll (there are a couple different ways to calculate that amount). The maximum interest rate is 4% without payments required or interest accruing for a full year. That isn't the best part - the best part is if you keep 90% of your employees on payroll for 2 to 3 months starting April 1 (there is forgiveness that allows for you to rehire people already laid off), and 75% of the loan goes to that payroll (the remainder as rent/etc) - the Federal government will convert that loan to be a grant with zero dollars ever to be paid back by the employer. It doesn't even count as a forgiven loan (which has tax implications). Essentially, you get 2 to 3 months of free payroll for everyone. This program will run out of funding very fast and some banks have already reached their limits of what they can loan (due to loan capitalization requirements). The loan is not personally guaranteed and doesn't put a lien on your business.
3. There is a $10K grant available for any business impacted by the outbreak whether you get an SBA loan or not. Again, free capital with no repayment.
4. Lastly, because the outbreak has been declared as a disaster in all 50 states, traditional SBA loans apply. These loans are typically very low interest (sub 4%) with long payback periods (10+ years). You can ask for substantial amounts as long as you can make a case that the money will be used productively (generally it's hard to get more than $10M in those loans). The downside is the owner has to personally guarantee the loan (meaning if you fail to pay the loan back, the bank will come after your personal assets.)

My company already used the emergency sick leave provision successfully and secured a substantial payroll protection loan as well. We're still looking at the grant and don't need the traditional SBA loan since with all of this combined with capital already in the company, we're ok to the end of the year.

If anyone is struggling with this process, feel free to reach out to me - I can give you pointers that can help.

Your business doesn't have to just die because you had to lock the doors for a while. There are ways through this where you can actually end up much stronger.

Good luck everyone!

Fred

$310B more just got appropriated - people who missed out on the first wave (especially companies with 1099 workers) should definitely apply. If you are having trouble getting through to a lender - I can help direct you.

Fred K wrote: $310B more just got appropriated - people who missed out on the first wave (especially companies with 1099 workers) should definitely apply. If you are having trouble getting through to a lender - I can help direct you.

1099 workers too? Do you have a link you can send me that gives the details? Thanks in advance Fred.

Yes - the rules got revised April 10th to allow firms with 1099's (including the 1099's themselves) to be eligible for the loan.

bench.co/blog/operations/paycheck-protection-program-self-employed/

Anyone who is interested in applying, PM me - my company is working with Veem and Kabbage to help others get through the queues faster. Keep in mind, the SBA does not have a queue - all the wait is on the bank's side. The big banks like JP Morgan and Wells Fargo have tens of thousands of applicants in their queues they couldn't submit. The fin tech lenders got approved for the second round so they have much smaller queues of applicants waiting. The funding is first come, first served until it runs out.

Fred

thanks

this should be helpful to a lot of people

The American Institute of CPA professionals has a great page (updated frequently) on the PPP program. Their FAQ section is good - I've bookmarked it since they flagged a number of questions I had.

www.aicpa.org/interestareas/privatecompaniespracticesection/qualityservicesdelivery/sba-paycheck-protection-program-resources-for-cpas/sba-payroll-protection-program-faqs.html

Fred, thanks for sharing!

It’s good the number of questions is coming down. The big two still left:
1. Is the payroll calculated for forgiveness using cash or accrual? The document language seems to imply cash but that makes running payroll exceedingly difficult for more than a couple people. Hopefully, the SBA answers this before June.
2. A better definition of rent and utility expenses for the 25% portion of forgiveness still needs detail. Would a food truck lease count? Telephone is a utility expense but what about dedicated Internet or cell usage? How is rental of a booth calculated for the purpose of 1099 contractors for both sides of the formula?

We’re getting there.

I’m happy to report my firm has helped get several dozen applications funded (and raising money for the American Stroke Association in the process.) Hopefully, we can help a few dozen more before the funds run out!

Hopefully some people used it

We've put in just over 80 applications for various companies at around $3M in funding. There's still funds left in this round so it's going well. Importantly, we've been able to help companies we really like keep afloat for a while

Fred, thanks for doing that.