c_land
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If you are a business owner and trying to decide what to do if you see an impact from the Corona Virus, there is a loan program available as of today. The Paycheck Protection Program of the CARES act is a loan that the federal government is offering to help employers avoid layoffs. We are eligible for 2.5X 1 month payroll+utilities+rent, not to exceed $10 million and aims to cover payroll for an 8 week period. If we adhere to the rules that the program establishes, this will turn into a grant and is forgiven at tax time.
Senator McSally just held a call to inform business owners and answer questions about the program. Here are my notes:
Coronavirus Aid, Relief, and Economic Security (CARES) Act introduces the Paycheck Protection Program
Questions
Senator McSally just held a call to inform business owners and answer questions about the program. Here are my notes:
Coronavirus Aid, Relief, and Economic Security (CARES) Act introduces the Paycheck Protection Program
- Cares (?) Act signed into law just today 3/27
- Anyone making $99k or less, a check is on the way for stimulus.
- Boosting unemployment insurance
- Expanded eligibility
- Loans to small businesses
- Recognize small businesses don’t want to take on debt.
- NOT a SBA emergency disaster loan
- This is deigned so we can go into any financial institution and apply
- Intends to QUICKLY get cash to businesses to pay employees and overhead
- Using existing avenues that some banks are already using; 7A lenders
- This is going to be expanded to every institution
- The banks will need to quickly get up to speed
- This is going to come quickly
- If we already laid off employees, incentivizes to bring some back and we get credit for it.
- The portion of the loan that we use for pay roll and overhead is forgiven
- Applies to payroll of employees that make up to 100k/year
Questions
- Will loans be available to apply first and get money in order to bring team back?
- These loans are intended to be distributed within 36-48hours of approval for use.
- Looks back to 2/15 to get an idea of payroll costs at 2/15 and that will be the number used to derive a number
- You qualify for money based on the payroll at that period.
- Our business is okay, with increase to FMLA and sick time, can we use this money for the benefit of additional PTO burden?
- No portion of the paycheck protection program will be forgiven if this is used for covering the additional FLMA requirements.
- This can be used for the purpose, but will convert to a loan
- This will be expanded through the year, so don’t feel like you missed the opportunity if you don’t apply now and then experience hardship and need the money later.
- How soon to expect this program implemented?
- ANY financial institution will be able to do this.
- Banks with SBA 7A programs will have less time to implement
- You can find this list on-line.
- Executed and ramping up by the end of next week
- The best thing we can do is reach out to our choice of bank and tell them we just got off this call and to get them ready. Be patient, but make the connection. Make sure when they are ready to execute that we know what to provide to get this going.
- Loan amount based on 2019 payroll?
- Will be based on previous 12 month average payroll.
- Will business be able to rehire employees laid off?
- Yes that is the intent
- Any rent/landlord protections?
- Provisions to provide relief to landlord, loosened requirements so financial institutions to make mortgage protections
- Other forgiveness is based on the state/local level governments.
- 120-180 day moratorium on evictions
- When applying, would this be personal or commercial credit?
- Not going to be a typical underwritten loan
- They will look back to payroll/expenses
- Make sure no applications are pending
- You will use the load to maintain workers.
- Your business has been impacted
- No paperwork available, but no under writing process.
- No fees, no personal guarantees, no collateral, no credit worthiness requirements
- Banks are waiting on guidance from SBA before they can proceed, be patient.
- Is there any portion of the application on-line as many banks are closed, are these first come first served?
- Money will be added if they run out? (I would not count on anything a senator Says)
- Applications will be administered by the institution.
- Purpose is to make this as easy as possible.
- If this close down extends beyond 8 weeks, what is the plan?
- Additional guidance would be issued.
- Plan for 8 weeks for forgiveness, remainder can be loan extended to 10 years.
- We are listed as essential, are we eligible?
- Yes all businesses under 500 employees who have been impacted qualify.