COVID-19 Emergency Loan Programs
We are getting bombarded with phone calls and emails regarding the stimulus package passed by Congress and signed into law last week. There are several moving parts to it and we will be helping our clients with all aspects of the new law to make sure they are taking full advantage of the benefits to the taxpayer.
This is our favorite summary of the law we have seen so far:
https://taxfoundation.org/cares-act-senate-coronavirus-bill-economic-relief-plan/
The most specific pain point for small businesses in today’s climate is cash flow, so there is a quick summary of several ways to get access to funds:
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SBA Express Loan: This loan needs to be repaid back within 7 years, the maximum amount is $25,000 and should have the fastest underwriting/funding process compared to any other SBA-backed loan. You will need to contact your bank directly to request this loan. Here is the full information from the SBA website dated 03/25/2020:
https://www.sba.gov/sites/default/files/2020-03/Express-Bridge-Loan-Pilot-Program-Guide-FINAL-3.25.20.pdf -
SBA Economic Injury Disaster Loan: these loans will have payment terms up to 30 years and an Interest rate of up to 4%; these loans are meant to be paid back and will not be forgiven. Loan amounts vary and can be up to $2mm. The application process is done directly through the SBA’s website: https://covid19relief.sba.gov/#/
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Payment Protection Loan (PPP): these loans are designed to be forgiven (essentially a grant with no strings attached) and are meant to be used for businesses that have employees and will maintain all their employees on payroll (even if you laid them off recently, you can bring them back to work). The loan amount is capped at 2.5x your monthly payroll costs + health insurance for the rolling 12 months ending Feb 15th, 2020. – In other words, your total payroll cost from Feb 16th, 2019 to Feb 15th, 2020 divided by 12 (avg. monthly payroll) is then multiplied by 2.5. Then, after June 30th, you will need to prove that funds were used to pay payroll, rent, utilities, and essential payables owed by 2/15/2020; if those conditions are met and the total amount is the same or above the loan amount, the principal will be forgiven… essentially turning into a tax-free grant.
You will need to work with your banker directly to apply for the PPP loan. We suspect that banks/lenders will be overwhelmed with applications these coming weeks, so stay ahead of everyone else and start gathering your documents ASAP!
In this link: https://bit.ly/loanpackage032620, you can download file that contains all the forms we know to exist for any of these loans, keep in mind that if you are applying for the SBA Express, Regular SBA 7(a), or the Payment Protection Loan, you lender will give you the checklist of requested documents that might not be in our checklist.
Please note that we are not allowed to fill loan applications on behalf of our clients, but we can provide the professional services around accounting, bookkeeping, tax returns, and/or consulting required to help you expedite the data collection process. We are happy to discuss your specific needs and pricing for these services based on what you are seeking.
Our goal is to assist as best and as fast as we can to help you in these extraordinary times. Please continue to stay safe and let us know how we can help.