The Coronavirus economic stimulus bill (CARES Act) is here. GET READY TO BE HELPED!
Apr 3, 2020
By Eva Reinoso Tejada
The federal government has approved the $2 trillion coronavirus economic stimulus bill, or CARES Act on March 27th, 2020. We business owners are still stumbling around with bills and hard decisions to make, or maybe we are at home, discouraged. This is the time when we must gather all our strengths and push to get our act together and be able to get a piece of the help ‘pie’ that is out there.
There is a ton of information, and sources to visit, but I will focus only on TWO items of great importance for small businesses. One is the SBA Covid-19 Economic Injury Disaster Loan, and the second one is the SBA Paycheck Protection Program, also known as PPP. It is important that we understand what they are, and if we qualify to get them.
1. SBA Covid-19 Economic Injury Disaster Loan: It is a loan administered by the Small Business Administration (SBA). The process to apply is relatively simple, and you can do it online, following this LINK. Once your application is submitted, you will get an application number that you must use as reference for follow up. As to the beginning of April, the SBA had a period of 2-3 weeks to get back to you and maybe request more information. You can follow up with your application on this PAGE. It is possible that they request tax returns at least for 2018 for the company and the owners, among other things. Use that waiting time wisely to get all your documentation ready. The Colorado SBDC has put together and excellent page that answers many of the questions we all have: Do I qualify? How much will I get? How soon can I get it? And many other questions. You can access that page by clicking HERE.
2. The SBA Paycheck Protection Program: This program consists of a forgivable loan that is intended to be used for payroll, rent, and utilities for a period of 8 weeks from the time when the loan is received. There are some specific rules about keeping your employees on the payroll. This program is managed by the SBA, but you need to apply directly with a bank that is affiliated with the SBA. I believe it is easier to reach out to a bank where you already have your accounts. Click HERE to find a list of the banks that are participating in this program in Colorado, to see if your bank is there. It is important to understand that you are getting a loan. It will be forgiven after you document what you used the money for, with evidence that it was used for the purpose for which it was created. In other words: Business must keep organized records of how the money is being spent, so they can document and get the loan forgiven later.
To apply for the loan, each bank will have a set of requisites and information that is needed, but you should be getting ready and organized to provide the following information:
· Date you started the business
· Business owner information
· Number of employees
· Gross annual sales for 2019
· 2019 quarterly payroll tax reports
· Monthly payroll costs for the last 12 months
· Average monthly business expenses (funds used for utilities, rent, or mortgage interest)
· Total health insurance premiums paid under a group health plan
· Retirement plan funding paid by the company owners
The U.S. Chamber of Commerce published an easy guide that can help you figure out how much money you might get, based on your circumstances. You can read it HERE.
This is a really good time to make a virtual appointment with your accountant and get all your records in good shape. Keep in mind that most likely banks will not take applications by phone or in person and everything will be done digitally.
I came across an entity that was offering me a “bridge” loan, or a loan while I get one of these approved. BE CAREFUL! These might be predatory lenders or even fraudsters that are trying to get your financial information, that could cause real harm to your business and your financial health. This all probably sounds overwhelming, but putting in the work with patience, now that all businesses are slow, will pay off. We will all get through this!