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SBA Loans, Forgivable Loans & Grants

by Joan Kitterman March 30, 2020

This blog summarizes resources available to small businesses who have been adversely affected by COVID-19 and business closures, especially restaurants and bars. It will be updated as things change or become outdated. 

DISCLOSURE

I can’t provide financial, tax or legal advice.  I'm not a CFO, CPA or attorney. I'm an entrepreneur like you, with google search skills and a knack for reading and summarizing dense legal material and hoping to help an industry I care deeply about.  Please consult with your accountant, CFO, CPA or attorney for advice and before considering any actions mentioned in this document.

Wed. June 4 updates

Congress Passes Important Changes to the PPP Loan Program

Congress just passed an important bill making much needed changes to the forgiveness portion of the PPP Loan Program.  

1) PPP borrowers now have 24 weeks to spend the PPP funds (instead of 8 weeks)

2) PPP borrowers must spend 60% on payroll to reach the forgiveness threshold (40% on the other approved expenses). This 60% threshold must be hit in order to be eligible for any forgiveness.

3) PPP borrowers may defer payroll taxes

4) The unforgiven portion of the loan will become a 5 year loan (not a 2 year loan)

5) Additional FTE exemptions have been included in the new bill.  For instance, if you are unable to return to the same level of business activity from March 1, 2020 to Dec. 31, 2020, as is the case for all restaurants and bars, there are new exceptions to the FTE portion of the loan forgiveness requirements.

As can be expected, there are still some details that remain unaddressed in the bill. These answers are anticipated when the SBA updates the loan forgiveness application.

Here is a link to the new bill that was just passed.

Here is a document from the National Restaurant Association outlining these changes in a more visual format.  

Sat. May 16 updates

PPP Loan Forgiveness Worksheet released

The SBA has just released instructions for how to calculate forgiveness for the PPP loans. See worksheet here.  The SBA says it will issue more guidance and regulations to further assist borrowers as they complete the application shortly. Lenders will be given more guidance on their responsibilities too.

Seattle Restaurants Do Not Need To Gather Contact Information From Dine-In Customers.

Gov. Inslee has retracted the requirement that restaurants collect contact information from dine-in customers when restaurants re-open for business. Instead, customers can voluntarily provide contact information and for only one person per household. According to Gov. Inslee's news release "If we learn you may have been exposed to COVID-19 during your visit, the information will only be shared with public health officials. They will contact you to explain the risk, answer questions and provide resources. This information will not be used for any other purpose, including sales or marketing. If this list is not used within 30 days, it will be destroyed.”

Fri. May 15 Updates

PPP Loan Forgiveness Clarification - Not Yet

Still no news from the SBA clarifying the PPP loan forgiveness provisions. I'll keep checking and will update this blog as soon as they publish more FAQs.

Safe Harbor for PPP loans under $2 million

On Wednesday, the SBA and US Treasury issued a statement that any business that received less than $2 Million in PPP funding will automatically be given safe harbor and won't need to re-certify that the business needed the loan.  The SBA will automatically assume your business needed the PPP loan due to economic injury from Covid-19 and doesn't intend to conduct audits verifying certification for these loans.

Other Loans offered by the SBA (not EIDL or PPP)

The SBA provides a number of other loan resources for small businesses to utilize when operating their business. For more information on these loans or how to connect with a lender, visit: https://www.sba.gov/funding-programs/loans. The lender with whom you already have a business relationship is the best place to start for information about which loan may be best for you.

  • SBA Express Bridge LoanIf a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan (EIDL), they may qualify for an SBA Express Disaster Bridge Loan.
  • 7(a) program offers loan amounts up to $5,000,000 and is an all-inclusive loan program deployed by lending partners for eligible small businesses within the U.S. States and its territories. The uses of proceeds include: working capital; expansion/renovation; new construction; purchase of land or buildings; purchase of equipment, fixtures; lease-hold improvements; refinancing debt for compelling reasons; seasonal line of credit; inventory; or starting a business.
  • Express loan program provides loans up to $350,000 for no more than 7 years with an option to revolve. There is a turnaround time of 36 hours for approval or denial of a completed application. The uses of proceeds are the same as the standard 7(a) loan.
  • Microloans provide small, short-term loans with a low-interest rate, and are extended to self-employed individuals, new startups with very low capital requirements, or small businesses with only a few employees. Authorized use of loan proceeds includes working capital, supplies, machinery & equipment, and fixtures (does not include real estate). The maximum loan amount is $50,000 with the average loan size of $14,000.

For more information on these loans or how to connect with a lender, visit: https://www.sba.gov/funding-programs/loans.

Main Street Lending Program Announced by the Feds

The Federal Reserve Board unveiled the Main Street Lending Program last month.  While it has not yet been launched, the purpose of the Main Street Lending Program is to help credit flow to small and medium-sized businesses that were in sound financial health prior to the Covid-19 pandemic. The minimum loan size is $500,000 and the maximum loan size is 4 or 6 times 2019 adjusted EBITDA or $25 million (whichever is smaller) with a 4 year repayment term. An advantage of the Main Street Lending Program is that it is administered by the Feds and as such, doesn't need ongoing debates, bills, and Acts of Congress, or SBA involvement to implement it or administer it.  It should be a much faster mechanism for getting funds to businesses.  Read the text here and more information here.

Governor Inslee Announces Contact Tracing Initiative.

Yesterday, Gov. Inslee rolled out his plans for how WA state will conduct contact tracing. The success of this initiative depends on COVID-19 testing.  When someone tests positive for COVID-19, an interviewer will reach out by phone. They will ask who that person has been in close contact with, then reach out to those other people to let them know they have been exposed.

"The information collected is only used by public health professionals and is confidential. It will not be shared. Contacts will not be told the name of the person who may have exposed them to COVID-19. These professional interviewers will ask about symptoms, recent exposure and demographic questions such as age, address, gender and ethnicity."

During the governor’s press conference, he announced that the statewide contact tracing team will be trained and available as needed by the end of the week (today, May 15). The contact tracers will include members of the Washington State National Guard, though they are an interim part of the initiative. The state Department of Health plans to continue training more workers and volunteers to replace them over time." 

Read more here.

Tues. May 11 updates

Mnuchin suggests a technical fix for PPP loan problems 

Treasury Secretary Mnuchin addressed PPP loan forgiveness problems in a Wall Street Journal article yesterday by suggesting he was looking at a "technical fix".

In a CNBC interview Mnuchin said that "the government will look to make fixes to help restaurants and others participate in the $660 billion small-business aid program....One of the things we're particularly sympathetic to are the restaurants.  Many of the restaurants are just beginning to open up and have said that they'd really like to hold the money. They can't do that; that's not something we can do.  But we'll look at a technical fix." 

Given that loan forgiveness guidelines were supposed to be issued by the SBA and US Treasury 30 days after the enactment of the Cares Act enactment, the technical fix and any other forgiveness guidelines can't come fast enough.  

Gov. Inslee Issues Phase 2 Re-opening Guidelines 
Gov. Inslee's office has issued Phase 2 Re-Opening Guidelines for Restaurants and Taverns, which are defined as traditional dine-in restaurants, quick-serve food operations, fixed and mobile food trucks, and other prepared-food operations such as hotel kitchens and workplace cafeterias; cafes, juice bars, and other businesses specializing in non-alcoholic beverages; breweries, public houses, and other businesses serving open containers of alcohol. Please note that no bar style seating is allowed. Currently the earliest Phase 2 start date projected for King County is June 1st. 

The recently released Phase 2 guidelines outline the criteria for partially resuming the dine-in restaurant and tavern industry - including a requirement for restaurants to gather contact information from every person who eats in the restaurant in order to facilitate contact tracing.  This provision has already received a lot of push back from restaurants and their customers. I'll update you when/if this provision is modified by the Governor's office.


You can access the guidelines here:
Memo: Dine-In Restaurants
Phase 2 Dine-In Restaurant and Tavern Industry COVID-19 Requirements.

Please note that the guidelines stipulate that no restaurant or tavern may operate indoor or sit-down services until they can meet and maintain all requirements, including providing materials, schedules and equipment required to comply. No reopening inspections are required prior to a restaurant reopening provided they meet and maintain all requirements in these documents.

Lessons from Yesterday's Déconfinement in France
Yesterday marked the first day of re-opening (le déconfinement) in France after two months of strict lock down in which people had to stay inside except for one hour a day. Millions of people returned to work and retailers, department stores, hair salons, and many other businesses were allowed to re-open under strict guidelines for preventing the spread of COVID-19.  People can meet in groups of 10 or fewer and can travel within 100km of their homes without specific authorization. No bars or restaurants, however,  are allowed to open in this first phase of déconfinement. Yesterday's morning news showed lots of masks, hand sanitizer, plexi-glass, visors and 2 meter marks on the ground everywhere. Images from some metro and train stations showed commuters jammed into the cars and standing shoulder to shoulder on the platforms, some without masks on.  But today, the mood was very different, with metro personnel standing by to ensure social distancing, (le distanceation), handing out masks and managing the flow of people onto the subway and train cars.  Many people chose to avoid the Metro altogether after experiencing yesterday's crowds and are now commuting on their bikes - an approach made even more attractive because the government is offering free bike repairs!  The world is looking for any lessons to be learned as France and other European countries manage these first phases of re-opening.

Tues. May 5 updates

PPP Program, Forgiveness 

The uncertainty around the guidelines for PPP loan forgiveness continues.  The SBA and US Treasury are maintaining a joint FAQ to offer some clarification but there is still no clear direction for how businesses that are mandated closed can spend their PPP funds within the 8 week window and be eligible for maximum forgiveness.

The only thing that is clear? When you receive the funds, you need to work on rehiring back to your pre-COVID levels.  And you need to spend at least 75% on payroll and 25% on utilities and rent as the first step to be eligible for forgiveness. And the funds need to be spent within 8 weeks after you receive them. 

But what if your employees don't want to be rehired because they are getting a better deal on unemployment?

In the Sunday, May 3 joint FAQ, the SBA/Treasury answered this in Question 40:

What if a business owner offers to rehire an employee and the employee turns down the offer to be rehired?

Businesses that received Paycheck Protection Program (PPP) loans can exclude laid-off employees from loan forgiveness reduction calculations if the employees turn down a written offer to be rehired, according to new guidance from the U.S. Small Business Administration (SBA). The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.

There are many other questions that are being asked but for now the SBA and Treasury have been silent.  While waiting for clarification, many experts in the accounting industry are suggesting that you work closely with your accountant, communicate with your lender, use your best judgment, make sound business decisions and be prepared for the fact that some of your PPP loan may not qualify for forgiveness and instead will roll into a 2 year loan at 1% interest with at least 6 months of deferral before you start repaying the loan.

Also, please note that if you don't spend the entire PPP loan amount in the 8 week period, you have the option of returning the unused portion of the loan.

EIDL Application Link Re-Opened for Re-Applying

As noted below, if you submitted your EIDL application before March 30, 2020 and your submission confirmation number starts with a "2", the SBA sent you an email around April 14/15 asking you to reapply because these applications were lost in the rush of applications.  If you saw the SBA email and reapplied, you are back in the queue.  If you missed the SBA email, you must reapply to get back in the SBA queue. The SBA just re-opened the link to reapply here. Currently the only businesses that can apply at this link are businesses that need to re-apply due to a lost application or agricultural businesses.

WA State Schedule for Phased Re-Opening

The Seattle Times issued this schedule for a possible phased re-opening.  Gov. Inslee stated yesterday evening that Phase 1 officially starts today, May 5. The earliest Phase 2 could start would be June 1.  Although the realities of reopening will remain fluid, this schedule does offer some insight into what a re-opening might look like for your business. Here are the key dates of re-opening based on current data trends:

Phase 1 - May 5 

  • No restaurants or bars open for in-house dining

Phase 2 - June 1, earliest date based on current data trends 

  • Restaurants must operate at under 50% capacity, with table sizes capped at parties of five.
  • No bars 

Phase 3 - June 22, earliest date based on current data trends 

  • Restaurants can operate at up to 75% capacity, with table sizes capped at parties of 10
  • Bars at under 25% capacity

Phase 4 - July 13, earliest date based on current data trends 

  • Currently Phase 4 guidelines don't address restaurants and bars further
  • Public interactions will be allowed to resume, though physical distancing should still be observed.
  • Nightclubs
  • Concert Venues

How A Restaurant Reopened in Hong Kong

With the possible, limited re-opening of WA state next month, I thought it might be helpful to see how a restaurant in Hong Kong approached the process of re-opening their in-house dining. This "Reopening Playbook" was written by Black Sheep restaurants and is currently being used by many restaurants in Hong Kong.  While some of the guidelines are unique to the situation in Hong Kong, it offers a comprehensive look at what the new normal may look like for restaurants and bars everywhere. Other playbooks are currently being written here in the US. As they become available, I'll post links.

Tues. April 28 updates

PPP Program, Take two

The second round of financing, $320 billion, is now available through the PPP program.  If you already filled out an application in the first round and your bank submitted it, it should be in the SBA queue for funding this round. SBA will resume processing applications that are already in the queue on a first come, first-served basis.

Many people fear that the funds will run out as quickly as the first round, so if you are thinking about submitting a PPP loan application but haven't done it, now is the time.

While there has been no sweeping news yet clarifying the confusion around PPP loan forgiveness, the Treasury recently posted this:

FTEs vs Headcount:  On April 26th, Treasury added a paragraph to their Q&A suggesting that they will be using FTEs instead of headcount when calculating loan forgiveness.  They still have not given specifics but here is what they say:

“For purposes of loan eligibility, the CARES Act defines the term employee to include “individuals employed on a full-time, part-time, or other basis.” A borrower must therefore calculate the total number of employees, including part-time employees, when determining their employee headcount for purposes of the eligibility threshold. For example, if a borrower has 200 full-time employees and 50 part-time employees each working 10 hours per week, the borrower has a total of 250 employees. By contrast, for purposes of loan forgiveness, the CARES Act uses the standard of “fulltime equivalent employees” to determine the extent to which the loan forgiveness amount will be reduced in the event of workforce reductions.”

SBA EIDL Application Redo

Apparently a number of EIDL loan applications were lost when the SBA portal was overwhelmed with online applications in March.  

If you submitted your EIDL application before March 30, 2020 and your submission confirmation number starts with a "2", the SBA sent you an email around April 14/15 asking you to reapply.  If you saw this email and reapplied, you are back in the queue.  If you missed this email, you must reapply to get back in the SBA queue. 

However, at this time, the link to reapply has not been turned on again by the SBA.  They are working through applications currently in the queue and will turn on the link to reapply when they've made enough progress.

If you submitted your EIDL application after March 30 and your confirmation number starts with a "3", it means you completed the application using the streamlined portal and SBA is processing your loan application on a first come, first-served basis and will email you in regards to processing, disbursements and additional information. 

Other Loans offered by the SBA (not EIDL)

SBA provides a number of other loan resources for small businesses to utilize when operating their business. For more information on loans or how to connect with a lender, visit: https://www.sba.gov/funding-programs/loans.

  • 7(a) program offers loan amounts up to $5,000,000 and is an all-inclusive loan program deployed by lending partners for eligible small businesses within the U.S. States and its territories. The uses of proceeds include: working capital; expansion/renovation; new construction; purchase of land or buildings; purchase of equipment, fixtures; lease-hold improvements; refinancing debt for compelling reasons; seasonal line of credit; inventory; or starting a business.
  • Express loan program provides loans up to $350,000 for no more than 7 years with an option to revolve. There is a turnaround time of 36 hours for approval or denial of a completed application. The uses of proceeds are the same as the standard 7(a) loan.
  • Community Advantage loan pilot program allows mission-based lenders to assist small businesses in underserved markets with a maximum loan size of $250,000. The uses of proceeds are the same as the standard 7(a) loan.
  • 504 loan program is designed to foster economic development and job creation and/or retention. The eligible use of proceeds is limited to the acquisition or eligible refinance of fixed assets.
  • Microloan program involves making loans through nonprofit lending organizations to underserved markets. Authorized use of loan proceeds includes working capital, supplies, machinery & equipment, and fixtures (does not include real estate). The maximum loan amount is $50,000 with the average loan size of $14,000.

Thurs. April 23 Updates

PPP and EIDL Loan

The house is expected to pass today the second round of emergency funding allocating an additional $320 billion to the PPP program and an additional $60 billion to the EIDL program.

If your bank submitted your PPP loan application to the SBA and got it into the SBA queue before the first round of funding was closed last Thursday morning, the SBA is working through those applications now and those businesses should be receiving first round funds this week. 

If your application was completed by your bank and submitted but didn't make it into the SBA queue prior to the SBA closing the gate last Thursday, those applications will be first in line for the second round of funding, once the SBA opens the gate again.

If your bank wasn't able to complete or submit your application, make sure you work with them now to get it completed so it can be submitted for second round.

Once the SBA approves your PPP loan, they'll notify your bank to send you the loan documents. Make sure you are on the lookout for loan documents from your bank.  The email may come from a different email than your bank normally uses - it might come from Docusign or another secure email portal. If you don't see your documents after your bank has notified you, check your spam and junk folders or the "other" tab in outlook. Make sure you get the signed documents back to them quickly.

Online Financial Firms Can Submit PPP Loan Applications

The following online financial firms can take your PPP application and connect you with a lender. They are not SBA lenders themselves but they represent several lenders who can fund the PPP loans for your business.  These companies could be considered as an alternative to your bank, especially if you do not want to work through your bank. Remember, you can actually submit only one PPP application per entity to the SBA and you have to attest this on the PPP application.

Fundera - apply here

Lendio - apply here

Veem - apply here

Biz2credit - apply here 

Divvy - apply here 

Kabbage - apply here

Quickbooks - apply here 

Clopton Capital - apply here

Funding Circle - apply here

Liberty SBF - apply here

 

PPP Loan Forgiveness

There is a lot of noise coming from national and local groups and lawmakers about changing the "forgiveness" terms of the PPP. As it stands, the terms are unclear, confusing and aren't designed to help small businesses like restaurants and bars that are mandated to stay closed.  Most restaurants would like clarification around these forgiveness terms before they commit to a plan for spending their PPP funds.

The issues revolve around these realities:

  • The timing of the 8 week window during which loan recipients have to spend their PPP funds doesn't work for restaurants (the clock starts ticking when the funds are dispersed).
  • Restaurants can't approach full hiring within the 8 week window since restaurants are mandated closed 
  • Employees are getting decent unemployment benefits (especially here in WA state and with the additional $600 weekly from the Federal government) and aren't excited to give up those benefits
  • Even if restaurants can open again, it isn't likely that they can be at full capacity for many months. This means that if they hired all their employees back per the PPP Loan forgiveness guidelines, they'd be at a payroll level in 8 weeks that is unsustainable since the restaurant is either still closed or operating at less than full capacity.
  • The 75% to payroll /25% to utilities, rent requirement for spending the funds to ensure PPP loan forgiveness are being interpreted differently by banks, the SBA and the Treasury.  

I'll continue to update you on how the forgiveness portion of the PPP Loan terms is clarified. Hopefully this occurs very, very soon.

List of Private and Philanthropic Grants

The City of Seattle Mayor's Office has a list of the many local grants that either have been available and are waiting for a second round of funding, or are available now or in the near future.  

Here is a list of the current grants that are available or will be available soon.

Monday April 20

U.S. Chamber of Commerce Foundation: Funded by corporate and philanthropic partners, the Save Small Business Fund is a collective effort to provide $5,000 grants to as many small employers. More information here

Facebook: NOTE THIS FUND IS OPEN NOW.  Facebook will distribute $100 million in small business relief cash grants and ad credits to 30,000 eligible small businesses in more than 30 countries. Applications are open April 22 for small businesses in Seattle.  More information here.

Amazon's Neighborhood Small Business Relief Fund: Amazon has launched a fund to support neighborhood small businesses in Seattle (South Lake Union and Regrade neighborhoods) and Bellevue. Eligible small businesses will need to: 1) have fewer than 50 employees or less than $7 million in annual revenue; 2) be service or retail establishments open to the general public (dental establishments and corporate offices for instance, will not qualify). Eligible small businesses can apply here

digitaludivided: The digitaludivided is a social startup with 501 (c)3 status that merges data and heart to develop innovative programs and initatives that catalyzes economic growth in Black and Latinx communities. The digitaludivided created the Doonie Fund for small micro investments (less than $500) in Black women entrepreneurs. More information here  

GoFundMe Small Business Relief Initative and Fund: In partnership with Yelp, Intuit QuickBooks, GoDaddy, and Bill.com, GoFundMe are matching small businesses with a $500 matching grant. More information here

Seattle Founders FC Relief Fund: Created to support individuals, small businesses and nonprofits located in Centrury Link Field and in neighborhoods surrounding Centrury Link Field that have beena dversely impacted by the postponement of the 2020 MLS season due to COVID-19. These neighborhoods include SODO, Pioneer Square, and Chinatown-Interntional District. More information here 

Washington Federal: If you are a business that has seen a 10 percent or greater drop in revenues due to the impact of COVID-19, Washington Federal can provide emergency funding for your small business. They are offering five-year business lines of credit up to $200,000 with 90 days interest free. More information here

Yelp's Relief for Resturants and Bars: Yelp is supporting independent, local resturant and nightlife businesses, in the form of waived advertising fees and free advertising, products, and services. More information here 

Opening in the near future

Local Initiatives Support Corporation's Verizon Small Business Recovery Fund: Grants of up to $10,000 to businesses facing immediate financial pressure because of COVID-19 - especially entrepreneurs of color, women-owned businesses and other enterprises in historically underserved communities who don't have access to flexible, affordable capital. The application period for Round 1 is now closed, register here for another roundbeginning mid-April. 

The Red Backpack Fund: The Spanx by Sara Blakely Foundation donated $5 million to support female entrepreneurs in the wake of COVID-19 and teamed up with GlobalGiving to establish The Red Backpack Fund. The fund will be awarding 1,000 grants of $5,000 each to female entrepreneurs in the U.S. to help alleviate the immediate needs and support the long-term recovery of those impacted by the crisis. The application will open May 4, June 1, July 6, and August 3. More information here 

Salesforce: As part of Salesforce commitment to support small businesses, they are creating Salesforce Care Small Business Grants. Salesforce will be offering $10,000 grants to U.S. small busiensses to provide capital to help them weather the crisis. This grant has not been released yet, sign up here for notifications 

Sun. April 19 Updates

PPP and EIDL

While the tug of war continues in Congress over additional funding for the PPP program, there is positive news. Lawmakers met this weekend to finalize a deal and Nancy Pelosi said last night "We're close. We have common ground".  Lawmakers are waiting for the SBA to provide additional data showing how the loans have been distributed as "their skepticism grows about whether the money has been dispersed in an equitable way." (The Hill, 4/18/2020)

The PPP program funds were depleted by 7am ET on Thursday.  And the SBA has announced that the EIDL fund is now also depleted.  The SBA posted this on their site:

Lapse in Appropriations Notice: SBA is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.

EIDL applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

Millions of loan applications are in limbo until Congress passes additional funding, which could happen early this week. Many banks continue to process submitted PPP applications in the hopes that the additional funding will occur soon.  If you haven't yet submitted a PPP application, many banks are still accepting new PPP applications. Please check with your bank.  EIDL applications (submitted only through the SBA) are not being accepted.

$5000 Grant from US Chamber of Commerce Foundation & VistaPrint

The US Chamber of Commerce Foundation and VistaPrint have co-sponsored a new grant for businesses in distressed economic areas.  The one time $5000 grant is for businesses with 3 to 20 employees (including yourself but not independent contractors), in approved zip codes.  Grants will be awarded on a weekly rolling basis. Applications will be available here starting at 12pm PT  Monday, April 20.  You can check your zip code now here. While some Seattle zip codes are disqualified because they aren't in economically distressed areas, many are included. 

Send a letter to your Senators and Representatives on behalf of restaurants and bars


Small business and restaurant associations all over the country are working 24/7 on behalf of the restaurant and bar industry to influence lawmakers to make changes to the second round of PPP funding.  The US Chamber of Commerce, and National Restaurant Association are two organizations asking for simple changes to make the program work for restaurants.  These are 1) allowing restaurants to rehire employees aligned with the time frame when the government allows them to reopen their businesses and aligned with their need to rehire - instead of requiring the loans to be used in the 8 weeks following receipt of the funds,  2) easing restrictions that assume a restaurant will see full customer turnout within days of reopening,  3) dropping the requirement for collateral or a personal guarantee for EIDL, and 4) allowing restaurants to access a second EIDL.

Several letters are being circulated asking lawmakers to take these requests under advice immediately, including this letter from the National Restaurant Association.  Please consider sending it today while lawmakers are still debating the details (or please send any letter that you want to send).  It will auto-populate with the name of your representative, and Senators Cantwell and Murray.

A little entertainment
I hope to provide some small distraction from the crucial discussions about finances. People were asked on Twitter to write the first sentence of the best novel that will be written on the pandemic. The sentences are fabulous.  Read here

Wed. April 15, 2020 updates

Economic Stimulus Checks
A ray of sunshine. The Economic Stimulus Checks have started to arrive in people's checking accounts.  According to the US Treasury, if you got a direct deposit refund for your 2018 or 2019 federal taxes, the Treasury has your bank account number and will send funds directly to you.  In all other cases, please go to the IRS link here to update address information, direct deposit information or track your payment.

State of the PPP 
The SBA says they've approved 1.3 million loans and funded $289 billion as of today.  The bulk of the approved loans were for $240,000 or less. A few businesses in the area are reporting that they actually received funds in as little as a week - mainly working with Chase and Key Bank. However, most businesses are in limbo waiting for some word from their banks. And the latest communication from the SBA is that the $349 billion in funds will be completely allocated possibly by end of day today. This means this first round of PPP funds will be fully allocated to applications that have been received and accepted by the SBA as of today.

The process by which loans are being approved and funds dispersed works like this:  you send in your application, your bank accepts it, they send your application to the SBA for final approval, the SBA reviews and hopefully approves it, the SBA tells your bank to disperse the funds, loan documents are prepared, your bank disperses the funds to your business account.  At this point, there are no requirements for how quickly each step must be accomplished, except for the dispersal of funds, which is required to happen within 10 days of your bank receiving the SBA approval.  If you contact your bank to see where your application is, ask them if the SBA has approved it.  If so, that should mean that you are getting funded in the first round.

Second Round of PPP Funds
Congress is still trying to approve an additional $250 billion in funds to be added to the PPP. But it is unclear if they will be able to come to an agreement this week.  Congress has extended its recess through May 4.

The EIDL and $10,000 grant
The SBA is struggling to process millions of applications. And, of the millions of applications they've received, only 4% have been approved. There continues to be very little communication from the SBA concerning loan status.

Fri. April 10, 2020 updates

Lending banks updates below.  Online financial institutions offering PPP listed below the lending bank table.

Here's a good article from Forbes discussing the EIDL loan (Economic Injury Disaster loan) 

You can apply for a PPP loan and an EIDL loan. You just can't use the funds for the same purposes.

Bank

Submission Link

Notes

Washington Federal

Apply here

They are accepting non-client  applications.

 

Bank of America

Apply here

Bank of America is requiring PPP loan applicants to have a lending relationship and checking relationship with BOFA in order to apply. Check back often to see if they lift that requirement.

BECU

Apply here

We are accepting PPP applications from existing business members on Friday, April 10 from 7am – 6pm PST. All business types including independent contractors and the self-employed are eligible to apply.

 

Chase Bank

Apply here

 

People’s Bank

Download the PPP loan application and get more info here

Email your PPP Loan application here:

SBA.COVID19@peoplesbank-wa.com

As of Thurs. April 9, they have suspended taking new PPP applications until they work through their backlog.

 

Key Bank

The process for existing customers with an online account is very simple.  When you log in to your account, your dashboard will have a link for Covid-19 Small Business Loan Assistance. Click on that and you'll see the Payroll Protection program option.

If you are an existing customer but don't have an online account, you could open an online account and associate it with your business account. Perhaps this will give you faster access to the PPP program.

More general info here

They are accepting applications as of today, Sunday, April 5.

Umpqua Bank

Current Customers apply here

As of Tues. April 7, they are temporarily suspending accepting any more applications.

Prospective customers may be able to apply at a later date. If you want to become a customer, you can leave your contact info here.

US Bank

Upload your inquiry form here and then they will send you an invitation to apply.

888.287.7817

Their inquiry form is offline today, Thurs. April 9.

 

US Bank says “We received more detailed guidance from the SBA and are ready to accept digital applications. We are emailing invitations to apply to those who have completed the inquiry form, beginning with single-owner businesses."

Wells Fargo

More info 

As of Thurs. April 9, they appear to be accepting inquiries again.

Wells Fargo says "Go online and express interest. We'll get back to you with next steps in a few days".

Home Street Bank

More info and apply here

They are accepting applications from customers who have their primary deposit accounts with Home Street Bank

Banner Bank

Complete a CARES loan inquiry form here

Then email it to BannerSBACares@bannerbank.com

They accept current clients only. Once they have your INQUIRY form, their team will send you the application via a secure process.

 Kabbage

 Apply here

Kabbage is offering PPP loans on behalf of one or more SBA lenders.  You will find out which lender is providing your PPP loan at loan signing. 

 

 

Thurs. April 9 updates

The following online financial firms are now offering to take your PPP application and connect you with a lender. They are not SBA lenders themselves but they represent several lenders who can fund the PPP loans for your business.  These companies could be considered as an alternative to your bank, especially if your bank is not responding. Remember, you can actually submit only one PPP application per entity to the SBA and you have to attest this on the PPP application.

Fundera - apply here

Lendio - apply here

Veem - apply here

Biz2credit - apply here 

Divvy - apply here 

Kabbage - apply here

Quickbooks - apply here 

Clopton Capital - apply here

Funding Circle - apply here

Liberty SBF - apply here

 

Tues. April 7, 2020 updates

Banks continue to process PPP loans or take your information in an "inquiry".

Some have stated they are no longer accepting PPP loan applications because they've reached capacity: Wells Fargo, BECU, Umpqua

The US Treasury is expected to request $200 billion in additional funds for the program this week.  Sen. Mitch McConnell says he'll aim to get it approved this week.

Washington Federal Bank (WaFD) - is offering PPP applications for non-customers. Their link still says "Reserve My Place Now" but they seem to be responding quickly. Here is their number in case you want to call too: 1-800-324-9375 

Kabbage (A financial tech firm) - is processing PPP loan applications too.  They represent SBA approved lenders, so once they get your application, they will attempt to place your loan with a lender.  Loan agreements will identify the lender to small businesses at signing, and any loan made under the Program must also be submitted to and approved by the SBA. Program funds are limited. Kabbage does not guarantee that applications will be processed and submitted before SBA funding is no longer available. There is no cost to you to apply for a Program loan. Applying with Kabbage does not limit you from applying with other lenders and/or platforms. Apply here

Paypal - I inquired if they were processing PPP loan applications and I got this rather cryptic message from their message center: "We have paypal credit who offer this. PayPal Credit may be reached at 844-373-4961, Mon-Fri 8am-11pm ET, and Sat-Sun 9am-9pm ET".  

Mon. April 6, 2020 updates

See below for updates on all the banks now accepting PPP applications.

The Plate Fund - announced this morning

Restaurant workers who live in King County and have suffered financial hardship because of the COVID-19 crisis may be eligible for $500 in immediate assistance.

The Schulz Family Foundation, The Seattle Foundation, Seattle Restaurant Alliance, Seattle Restaurants United and dozens of local restaurant owners are funding The Plate Fund  which is providing immediate relief to help restaurant and food services workers, including dishwashers, cooks, servers, bartenders, food truck employees and cafe attendants, pay necessary expenses that they are unable to pay for either because federal assistance or unemployment insurance has not yet arrived, or they are not eligible for these benefits. Funds will be deposited directly into the employee's bank account as soon as 48 hours after applying.  If employees don't have a bank account, the fund is exploring other options to get the $500 into their hands, including gift cards and debit cards.

People already receiving government support should not apply so people more in need may access these emergency funds.

The Plate Fund is also providing electronic codes to restaurant owners to give to affected workers who are in the greatest need.  The employee will be asked to enter this code when they apply for the money.

Restaurant workers can apply here

Those wishing to donate, can donate here

Monday, April 6 updates.

As of 11:45am today here are the banks that are participating, with comments on their process. Please note:  Almost all of these banks require you to be an existing customer in order to process your application.  Some have noted they'll accommodate non-customers but it will be a longer process, as current customers get priority.  Please check your junk folder for any follow up communication from your bank after you've applied!!!

Bank

Submission Link

Notes

Washington Federal

Apply here

They are accepting non-client  applications.

 

Bank of America

Apply here

Bank of America is requiring PPP loan applicants to have a lending relationship and checking relationship with BOFA in order to apply. Check back often to see if they lift that requirement.

BECU

Apply here

As of Tues. April 7, they have suspended accepting new PPP applications until further notice.

You must call in your application. They acknowledge that phone wait times are really long and assure you they are assigning more resources to answer phones.

Chase Bank

Apply here

 

People’s Bank

Download the PPP loan application and get more info here

Email your PPP Loan application here:

SBA.COVID19@peoplesbank-wa.com

As of Thurs. April 9, they have suspended taking new PPP applications until they work through their backlog.

 

Key Bank

The process for existing customers with an online account is very simple.  When you log in to your account, your dashboard will have a link for Covid-19 Small Business Loan Assistance. Click on that and you'll see the Payroll Protection program option.

If you are an existing customer but don't have an online account, you could open an online account and associate it with your business account. Perhaps this will give you faster access to the PPP program.

More general info here

They are accepting applications as of today, Sunday, April 5.

Umpqua Bank

Current Customers apply here

As of Tues. April 7, they are temporarily suspending accepting any more applications.

Prospective customers may be able to apply at a later date. If you want to become a customer, you can leave your contact info here.

US Bank

Upload your inquiry form here and then they will send you an invitation to apply.

888.287.7817

Their inquiry form is offline today, Thurs. April 9.

 

US Bank says “We received more detailed guidance from the SBA and are ready to accept digital applications. We are emailing invitations to apply to those who have completed the inquiry form, beginning with single-owner businesses."

Wells Fargo

More info 

As of Thurs. April 9, they appear to be accepting inquiries again.

Wells Fargo says "Go online and express interest. We'll get back to you with next steps in a few days".

Home Street Bank

More info and apply here

They are accepting applications from customers who have their primary deposit accounts with Home Street Bank

Banner Bank

Complete a CARES loan inquiry form here

Then email it to BannerSBACares@bannerbank.com

They accept current clients only. Once they have your INQUIRY form, their team will send you the application via a secure process.

 Kabbage

 Apply here

Kabbage is offering PPP loans on behalf of one or more SBA lenders.  You will find out which lender is providing your PPP loan at loan signing. 

 

April 2, 2020 Updates

Additional update at 2pm.

Apparently the Treasury has issued guidelines stating that you can't include 1099 wages in your payroll calculation for the PPP loan. This is because independent contractors and sole proprietors are now eligible to apply for their own PPP loan later next week.

If employees make more than $100K, you can include their wages in the calculation UP TO $100K.  Anything over that is excluded.

Another source says to use Jan 1, 2019 through Dec. 31, 2019 as the 12 month time frame for calculating your payroll monthly average. 

*****************************************************************************************

For a good overview of the CARES Act put together by the Seattle Metro Chamber and Monument Advocacy, click here.

*****************************************************************************************

Application for the CARES Act Payroll Protection Program available now

The application is short and simple. It requires some standard business information, owner information and then you fill out your average monthly payroll (indicating the number of jobs represented) and multiply by 2.5 to calculate your eligible loan amount.

I've consulted  many sources for how to figure out the average monthly payroll.  All the sources says something slightly different. In general, payroll costs include salaries, certain employee benefits, state and local taxes – up to $100,000. PPP loans do not apply to payroll for those making $100,000 or more, or for foreign employees, FICA and income tax withholdings and certain COVID-19 paid leave. 

Some sources tell you to use the previous 10 months of payroll to calculate your monthly average. Other sources say use the twelve months prior ending with Jan. 31, 2020. Others say to use the twelve months prior to when you apply for the loan!  I can't find any consistency.

I did find a loan calculator that Valley Bank (they aren't local) just posted to help people calculate the loan amount. It also has a list of what to include in the payroll costs. They say it is provided for informational purposes only. I'm not vouching for its completeness or accuracy so please use at your own discretion!

Submit the completed form to your existing bank or financial institution. I am updating the table below to show how to submit forms to your bank. No application can be submitted or dated prior to Friday, April 3.  Apply quickly as the loans will be dispersed on a first-come, first-served basis according to a senior SBA official. You can download the form  here. 

Who is eligible
Small businesses with 500 or fewer employees—including nonprofits, self-employed individuals, sole proprietorships, independent contractors, veterans organizations, and tribal concerns, — are eligible. Businesses with more than 500 employees are eligible in certain industries. Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply.

Loan Benefits

The CARES Act’s Paycheck Protection Program can offer loans up to $10 million and with 100 percent loan forgiveness if a business sustains its pre-COVID-19 payroll levels through June 30, 2020. The loan's attractive terms include forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees, at least six months of deferral with maximum deferrals of up to a year and you don't have to seek credit elsewhere first. Small businesses can apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is retroactive to February 15, 2020 in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.

The PPP loan program expands eligibility to self-proprietors and contractors, (however, CNN reported this morning that the details for these two groups have not been worked out), waives many loan terms that are typical with SBA loans, and provides incentives for banks to make such loans, and to help speed up the process.

What does the Payroll Protection Program Loan do for small businesses?
On yesterday's call with Congresswoman Pramila Jayapal, the Regional Administrator of the US Small Business Administration, Jeremy Field, stated that the intended purpose of the PPP loan is to "Make small businesses the vehicle through which the Federal government pushes out a social safety net". In short, it is a forgivable loan that is designed to cover your payroll, so you can take care of your employees for 8 weeks.  I've consulted many sources and I can't find consistency concerning how you must use the funds or how to ensure the loan is forgivable.  This is such an important question so please have your lender clarify  this!!

April 1, 2020 Updates

Small Business Stabilization Fund - City of Seattle

If you applied for a Small Business Stabilization Grant through the City of Seattle expect to hear by this Friday, April 3 (Monday at the latest) if your business will receive funds. They are processing funds now.

The City is looking for private funds for a second round of grants. Private funds will most likely have fewer restrictions than the first round (which was federally funded), making more small businesses eligible. So, if you did not qualify first round, they will keep your application for an anticipated second round of funding and contact you. You won't need to reapply.

If you didn't apply for the first round due to ineligibility, you may be able to apply second round.  We'll update you with the application link as soon as it becomes available again. 

Streamlined Corona Virus Assistance application

The process for applying for the Economic Injury Disaster Loan (EIDL) through the SBA just got a lot easier.  The application takes about 10 minutes and the process of requesting an immediate $10,000 Grant is incorporated into the application.

SBA Economic Injury Disaster Application (EIDL) hereMake sure you click on the Corona Virus Related Assistance link.  It takes you to the very short, streamlined application. Make sure you check the box that you want the $10,000 Grant.

CARES Act Payroll Protection Program Loans

Contact your existing bank now and see if they plan to provide the PPP loans.  Any bank that already provides SBA loans will be able to provide the PPP loan.  Applications should be available on Friday, April 3. Apply quickly as the loans will be dispersed on a first-come, first-served basis according to a senior SBA official.

Online Town Hall Meeting with Congresswoman Pramila Jayapal
Congresswoman Pramila Jayapal is holding an online town hall to address what’s included in the most recent Coronavirus relief package and how it will help you and our state. 
The Congresswoman will be joined by special guests who will help answer your questions:

  • Suzi LeVine, Commissioner of the WA Employment Security Department
  • Jeremy Field, Regional Administrator of the U.S. Small Business Administration
  • Kerrie Hurd, District Director of the U.S. Small Business Administration

TONIGHT: April 1 at 5:00 pm PT
watch live at facebook.com/repjayapal
or dial in at 855-286-0292

 

March 31, 2020 updates

*Many updates to the SBA Economic Injury Disaster loan paragraphs below reflecting the streamlined application and the $10,000 advance offered in the streamlined application.

GRANTS AVAILABLE THROUGH THE CITY OF SEATTLE

Small Business Stabilization Fund

According to the Seattle.gov website, there will be additional rounds of funding offering grant money through the Small Business Stabilization Fund.  (first deadline was March 25, 2020). Businesses that are franchises, chains, or restricted to patrons above the age of 18 will not be eligible for awards (i.e. cannabis retailers and bars are not eligible.)
Eligibility FAQ here


AMAZON $5 MILLION NEIGHBORHOOD SMALL BUSINESS RELIEF FUND

You can still apply if your business is open to the general public and has a physical presence within a few blocks of Amazon's Regrade, South Lake Union, and Bellevue office buildings.   FAQ and application here.

I'm sure you agree it's time to open up the fund to businesses in other geographies.

In the above FAQ, it says, "At this time (italics, mine) the fund is intended to help support small businesses near our Amazon buildings in Seattle (South Lake Union and Regrade neighborhoods) and Bellevue."  

The vibrant city that we all love and want to preserve extends far beyond just a few blocks of Amazon. Perhaps it's time to expand the eligibility.

Please join me in sending your thoughts/questions to: 

small-business-grant@smallbusinessrelieffund.com

 

GRANT AND LOAN PROGRAMS AVAILABLE THROUGH SBA

  • The CARES ACT (for restaurants, bars and small business)
  • SBA Economic Injury Disaster Loan (EIDL) - Corona Virus Related Assistance streamlined application
  • SBA $10,000 advance in conjunction with the Corona Virus Related EIDL
  • SBA Express Bridge Loan

 

CARES ACT PROVISIONS (RELATED TO RESTAURANTS AND BARS)                                  For the full bill, click here

Checks to Individual Taxpayers

Individual taxpayers will receive a check or direct deposit from the US Treasury department.  The amount is based on your filing status and your income (adjusted gross income) from 2019 or 2018.  So, everyone’s check will be a little different.  The bill says up to $1,200 per individual or $2,400 for joint return filers, plus $500 per child. The rebates phase out for single individuals with incomes between $75,000 and $99,000, and joint return filers with incomes between $150,000 and $198,000 and are not available for single individuals and joint return filers (with no children) with incomes exceeding $99,000 and $198,000, respectively. The money could be in your account in as little as a few weeks but will probably take longer.

Here is a check calculator to see exactly how much you’ll get.

For Business Taxpayers

A 50 percent refundable payroll tax credit on wages paid up to $10,000 during the pandemic for certain employers. With conditions, the credit is available for all employee wages for employers of 100 or fewer employees. For employers of more than 100 employees, the employees need to be retained but not currently working due to the pandemic.

    • You must pay the taxes first.  They will be refunded later as a tax credit.
    • This tax credit is not available if the employer takes an SBA paycheck protection loan

In addition, there is a delay of employer-side Social Security payroll tax payments, with 50 percent owed on December 31, 2021 and 50 percent owed on December 31, 2022.

Expansion of the net interest deduction limitation (which currently limits a business taxpayer’s ability to deduct interest paid to 30 percent of EBITDA) to 50 percent of EBITDA for 2019 and 2020. This will increase liquidity for those businesses with interest-bearing debt during the pandemic.

PAYCHECK PROTECTION PROGRAM (PPP) in the CARES ACT

Applications are supposed to be ready starting this Friday, April 3, 2020. If things move swiftly, a PPP loan could be funded in a few weeks after you submit the paperwork. The SBA has 15 days from the date this bill was signed to issue guidelines and clear up the gray areas. 

You apply directly with your bank (if they are approved as a lender for this program), not through the SBA. Call your bank to find out if they are approved to lend through this program. (The US Treasury is in the process of approving more lenders). There is also an SBA email to send your request to and they’ll find you a lender lendermatch@sba.gov You have until June 30, 2020 to apply.

The loan requires no fees, no personal guarantees and no collateral to secure it. You don't have to demonstrate hardship. Your business had to be operational on Feb 15, 2020 and it had to have employees for whom it paid salaries and payroll taxes, or a paid independent contractor. You also must provide “a good faith certification that the loan is necessary due to the uncertainty of current economic conditions.” 

Highlights

If you were operational on Feb 15, 2020, and had employees or paid independent contractors, you can get a loan for 2.5 times your average monthly payroll (average  over last 12 months; in business less than 12 months, slightly different way to calculate the average).  The wages of employees paid over $100,000 annually can’t be added into the calculation.  You can include wages, health and retirement benefits, payroll taxes and payments to independent contractors in the calculation.

Once you receive the loan, you must spend the money in 8 weeks. How you spend the money determines if you must pay it back or if you don’t have to pay it back (in which case it is a forgivable loan). 

If you use the money for payroll costs, rent, utilities, mortgage interest (not principal) and interest on debt existing prior to Feb 15, 2020, it becomes a forgivable loan and you don’t pay it back. It is a forgivable loan – if you follow the rules -- to retain your employees and/or bring back laid-off employees, and pay their wages for 8 weeks. (But one article said that if you bring back laid-off employees, you will be required to repay a portion of the loan, so that is unclear.)

You must show documentation to the lending bank how you used the loan.  If you used it for payroll costs, rent, utilities, mortgage interest (not principal) and interest on debt existing prior to Feb 15, 2020 they will forgive the loan and you don’t have to pay it back.  The banks have 15 days after you submit your documentation to decide if your loan is forgivable or not.

If you use it for other things in addition to or instead of payroll costs, rent, utilities, mortgage interest (not principal) and interest on debt existing prior to Feb 15, 2020, that portion of the funds you used for those other purposes will be considered a loan that will need to be paid back. 

The good news?  Any part of the loan that must be paid back will have attractive terms, (even if none of your loan qualifies for forgiveness.) For example, you don’t have to start repaying the loan for six months to a year. After that time, the maximum interest rate will be 4% and repayment can be stretched for up to 10 years. And remember this loan was granted without fees, personal guarantees, collateral etc.

How does this Paycheck Protection Program help restaurants and bars who have already laid off all their employees?

That’s a good question. The devil is in the details, which are currently confusing. Please make sure you get everything in this section clarified with your lender so you understand how this will play out in your situation.

It appears that if you laid off employees from Feb 15, 2020 onward, you are allowed to use their wages in the PPP calculation and you can use the (forgivable) loan funds to re-hire them and pay them for 8 weeks. The retroactivity provision is intended to encourage rehiring and allow you to retain your workforce. The bill recognizes that it is in everyone’s best interest to treat employees fairly and retain them. In addition, a retained workforce will be critical for restaurants and bars to get quickly back on their feet when they can open again. 

But realistically, you might wonder “What if I retain my wonderful staff, pay them with the PPP funds I received, but the restaurant can’t pay its bills and there’s a chance there will be no restaurant job for them to come back to?” My hunch is that the average wage calculation and the fine print are designed to give you a little extra cash beyond what you use for payroll – because the bill allows you to apply the forgivable loan portion to rent, utilities, mortgage interest and interest on existing debt existing prior to Feb 15, 2020. So it seems reasonable to assume that the funds you receive plus the fine print, somehow allow you to stretch the forgivable loan funds beyond just payroll costs. But you'll have to clarify this.

BIG NOTE:  As I mentioned earlier, the language in the bill is confusing and needs to be clarified. Make sure you get clarification on all the fine print from your lender especially surrounding how the loan can be used and if there are any prohibited uses. And consult with your CPA, CFO and attorney.

SBA ECONOMIC INJURY DISASTER LOAN (EIDL)– Corona Virus Related Assistance.

SBA Economic Injury Disaster Application here. Make sure you click on the Corona Virus Related Assistance link.  It takes you to a very short, streamlined application. (It takes 5 - 10 minutes to fill out.)

The streamlined application will allow you to request a $10,000 advance. 

(The CARES Act provides a new emergency advance of $10,000 for small businesses that apply for an SBA economic injury disaster loan (EIDL). The SBA says they will fund the advance within 3 days.  The advance may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent, and mortgage payments.  Two days ago, word on the street was that the advance did not need to be repaid, even if you are denied the EIDL. But things keep morphing so fast, I would confirm that with the SBA when they follow up with you about the advance.  If I get more information, I'll note it at the top of the blog.)

The streamlined application asks for very simple business information, personal contact information, owner information, bank information and revenues and COGS for the 12 months prior to the disaster (which is stated as Jan. 31, 2020.)

After submission, you'll get an application number.  And a statement that they'll notify you at your email for any additional information.

SBA DISASTER LOAN – Economic Injury Disaster Loan (EIDL). 

Last week, there was no streamlined Corona Virus Related Assistance application for the EIDL. You had to fill out the longer EIDL application.

I'm including information for the long form EIDL because it still applies.

EIDLs are loans up to $2 million with interest rates of 3.75% for businesses and 2.75% for nonprofits, and principal and interest payments deferred up to 4 years.  The EIDL loans may be used to pay for expenses that could have been met had the disaster not happened, including payroll and other operating expenses. 

Pros

Low interest loans, max of 4% interest, up to 30 years to pay back, no strings attached for what you spend it on.

Cons 

You must show hardship, and you may have to provide collateral or a personal guarantee over $25,000.  It’s a loan, not a grant or a forgivable loan – you must pay it back. 

In the lengthier EIDL application process required last week, below are the documents they asked for.  It might be a good idea to have this information handy because they might ask for it as a follow up to the streamlined application.

One-page application – needs basic business information, owner information and insurance information.

One-page Economic Injury Loan Supplemental Form - You just fill out your revenues and COGS for the last 12 months. Plus show any other sources of income received as result of the disaster.

Tax Information Authorization (IRS Form 4506T) - Completed and signed by each applicant, each principal owning 20 percent or more of the applicant business, each general partner or managing member; and, for any owner who has greater than 50 percent ownership in an affiliate business.

Federal Tax Return - Complete copies, including all schedules, of the most recent Federal income tax returns for the applicant business; an explanation if tax returns are not available.

Personal Financial Statement (SBA Form 413) - Completed, signed, and dated by the applicant, each principal owning 20 percent or more of the applicant business, and each general partner or managing member. For the Personal Financial statement, you’ll need to show personal assets e.g. checking, savings, IRAs, cars, retirement assets, real estate, etc. and personal liabilities e.g. mortgage, rent, car payments, other loans etc.

Schedule of Liabilities - list all fixed debts for the business (SBA Form 2202 may be used)

For help with applying for an Economic Injury Disaster Loan, call 800-659-2955 or email disastercustomerservice@sba.gov. You can also use a text telephone (TTY) by calling 1-800-877-8339

IS THERE A LIMIT TO WHICH SBA EMERGENCY LOANS I APPLY FOR?

A small business may apply for an EIDL Corona Virus Related Assistance loan plus the $10,000 advance plus the Paycheck Protection Program (PPP) loan. 

Please note that the amount forgiven under a Paycheck Protection Program loan will be decreased by the $10,000 advance.

Here is a good resource for understanding the different kinds of loans.

SBA EXPRESS BRIDGE LOAN (EBL) - approved by Congress on March 25, 2020

Receive up to a $25,000 loan while you wait for other loans (like SBA disaster loan or Payroll Protection Program loan). If you are approved for other SBA loans, you will have to pay the SBA Express Bridge Loan (EBL) back.

Pros

  • It is processed by your existing banker – provided they are on the approved EBL lender list already
  • No personal guarantee or collateral required
  • It is effective for bills incurred from the date of the Covid-19 disaster – officially March 13, 2020
  • You can apply for the loan for up to six months after date of the disaster
  • Maximum loan is 7 years
  • Funds can be used to support the survival or re-opening of the business and must be used as working capital

Cons

  • Several forms to fill out
  • Although one site said that the SBA could process the paperwork in as little as 36 hours, it appears that the loan itself could take 45 to 90 days to get disbursed.
  • Like all 7(a) SBA loans, you must prove you can’t get credit elsewhere.
  • You must meet their business and personal credit score requirements
  • Interest rate allowed is up to Prime plus 6.25%
  • There are application fees (depending on your bank) up to $250
  • Annual service fees and late payment fees are allowed


SOURCE MATERIAL USED

https://www.congress.gov/bill/116th-congress/senate-bill/3548/text

https://content.natlawreview.com/article/president-trump-signs-historic-2t-covid-19-stimulus-bill

https://www.kiplinger.com/tool/taxes/T023-S001-stimulus-check-calculator-2020/index.php?utm_source=SYN-yahoo&utm_medium=referral&rid=SYN-yahoo

https://www.natlawreview.com/article/paycheck-protection-program-sba-loan-program-expanded-cares-act

https://content.natlawreview.com/article/president-trump-signs-historic-2t-covid-19-stimulus-bill

https://content.natlawreview.com/article/covid-19-paycheck-protection-program-solution-you-have-been-waiting

https://www.cantwell.senate.gov/resources-and-information-for-washingtonians-and-small-businesses-navigating-the-covid-19-crisis

https://cdcloans.com/blog/small-business-guide-cares-act/

https://www.dallasnews.com/business/2020/03/27/texas-small-business-gets-a-lifeline-up-to-10-million-with-no-collateral-and-loan-forgiveness/

https://www.nytimes.com/2020/03/26/business/coronavirus-stimulus-small-business.html

https://content.natlawreview.com/article/cares-act-what-employers-need-to-know-about-historic-stimulus-package

https://www.murray.senate.gov/public/index.cfm/newsreleases?ID=ABE3F00F-A96B-4F16-9B81-D505D40DAAE1

https://www.schatz.senate.gov/coronavirus/small-businesses

BUSINESS CRISIS MANAGEMENT RESOURCES

https://bench.co/blog/operations/covid19-shut-down-business/




Joan Kitterman
Joan Kitterman

Author