Small business relief from the CARES Act

By Faire

The new CARES Act has appropriated $377B in funds for small businesses. To help you understand what relief is available, we've summarized the 2 new loans.

Additional highlights from the CARES Act

$300B in relief for you and your customers is coming

American singles making $99k or less, or households making $198k or less, should see funds in as soon as 3 weeks.

Businesses are getting a tax break

Business and income taxes will be deferred and, if you've fixed up your store over the last 2 years, it should be easier to write off that expense.

Plus, additional support for our communities

There will be vastly expanded unemployment benefits, support for our healthcare system, and more.

Read the full CARES Act


Understanding the new loans

According to the Senate, small businesses can get both EIDL and PPP loans, as long as they don't pay for the same expenses. Before taking both, check with a financial advisor or lender.

The overall package is pending guidance from the SBA, but there are steps to take now. While circumstances may affect your loan eligibility, we hope this informational resource helps, and encourage you to also seek personalized advice from qualified professionals.

LOAN 1: Get a $10,000 advance in 3 days or less

The Economic Injury Disaster Loan (EIDL) is an emergency program offering small business loans up to $2M. It also includes a grant for eligible businesses to receive a cash advance of up to $10,000 that you're not required to repay.

Who should consider EIDL?

Smaller businesses who require less cash

Loans are available up to $2M per business. You may want to consider this option if you have less than $65k in annual operating costs—the advance may be greater than the loan forgiveness. You can qualify for up to $200k without a personal guarantee or collateral.

Businesses who need immediate cash

If the 3-day $10,000 disbursement will help you pay payroll, provide sick leave, or finance debt, you may want to consider this option.

Who is eligible?

Across all 50 states, any business with less than 500 employees who has been operating since Jan 31, 2020 and has been adversely impacted by COVID-19 is eligible for the $10,000 grant. Certain restrictions may apply if you have affiliates or outside investors. 

Certain restrictions may apply if you have affiliates or outside investors. 

According to the Senate, if you took advantage of the EIDL grant award of up to $10,000, that amount would be subtracted from the amount forgiven under PPP.

What's the application process? 

The grant application is available online through the SBA's application portal. 

If you have previously applied under the old application form, you'll need to reapply for the advance now that the system is updated with a streamlined application.

What paperwork will I need?

You'll just need your credit score and the new self-certification form—no tax returns required.

How soon will I see relief?

The $10,000 grant will be administered within 3 days of submitting your application. Additional loan relief is being offered on a first come, first serve basis to businesses across all 50 states, so you may see longer wait times for loans.

Apply for an EIDL now 

LOAN 2: Get 8 weeks of operating expenses back

The Paycheck Protection Program (PPP) program forgives 8 weeks of operating expenses for approved business owners who maintain their payroll through the end of June 2020. The amount of money from the loan you spend to cover payroll, utilities, rent, or mortgage payments and associated interest can be forgiven. Any other payments can be deferred by 6 months.

 

Who should consider PPP loans?

Medium-sized businesses who need more cash

Relief from the PPP loans program will go up to the lesser of $10M per business or 250% of monthly payroll expenses (including certain benefits), while the EIDL program is capped at $2M.

Businesses with over $65k in annual operating costs

A business with at least $65k in annual operating expenses covered by the loan can get 8 weeks of that back, equalling a $10k reimbursement or more.

 

Who's eligible?

Any business with less than 500 employees (including sole proprietors, self-employed, and "gig economy" individuals) that has been operating since February 15, 2020.

Any business who maintains payroll until at least June 30, 2020 is eligible for loan forgiveness. Companies can correct past reductions in payroll by rehiring to receive full loan forgiveness. 

Certain restrictions may apply if you have affiliates or outside investors. 

According to the Senate, if you took advantage of an EIDL grant award of up to $10,000, that amount would be subtracted from the amount forgiven under PPP. You can take out a state bridge loan and still be eligible for the PPP loan.

What's the application process? 

The current application is long and complicated. The SBA has up to 15 days to establish new rules, and it's likely that they will shorten the application dramatically. For now, talk to an SBA-approved lender to understand their requirements. 

You can either apply through the SBA or directly with any number of SBA-approved lenders, like J.P. Morgan or Wells Fargo. The number of available lenders is expected to increase to meet the demand. 

The application deadline is June 30, 2020.

What paperwork will I need?

As it's set up today, this option requires a lot of paperwork. We're hopeful that the amount required will be reduced, but here are some helpful documents to have ready:

  • 3 years of income tax returns
  • Profit and loss (P&L) statement
  • Projected financial statements
  • Names and addresses of any subsidiaries
  • Business certificate or license
  • Loan application history
  • Business lease
  • Your résumé

How soon will I see relief? 

Loans from the SBA have historically taken about 45 days, but we're hopeful that funds will be distributed faster. The CARES Act is removing steps to help expedite relief, including allowing approved lenders to make decisions on applications without having to go back to the SBA for approval. The SBA is also bringing on new lending partners to help with quicker fund dispersal.

Apply for the PPP program now

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Reposted from Faire. For more information, please visit the Faire website.

 

 

Tags: COVID-19

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What Caterers Need to Know About the PPP2

“I think people are just tired of trying.”

I was talking to Roy Porter the other day, one of the best minds in catering, about why I was so excited about the new round of PPP and he made that statement. The good news is that this round is *so* much better.

This new round of PPP is finally some great news for event professionals and, in spite of what 2020 brought, you need to take action on it asap. It finally feels like someone wrote a letter to Congress about the event industry and then Congress actually read it.

We recommend talking to your accountant for your specific information, but we wanted to share our interpretation of the highlights.

 

What is PPP?

It’s a US government loan incentive program to help businesses recover from COVID. This was initially released in April of last year and was very quickly changing. Unfortunately for caterers, it was less than geared towards event professional. Initially, the release didn’t consider self-employed people or how COVID affected our companies. Then, even if you did qualify, we ran across the problem question of, “Do I just hire everyone back when there are zero catering events?” 

The second round of PPP has been much more successful. There are several key things they’ve implemented keeping our industry in mind.

It’s important to note: this is an actual loan but it also is forgivable if used within the forgivable guidelines.

What is so different about this time around than last?

  • One of the most important differences is that only the hardest hit industries qualify. This makes it easier to qualify and actually get the funds before they run out.

  • This time around, they’ve expanded what is qualified for being forgivable. You used to be only able to spend a small % on non-payroll. But they realized, not everybody can just hire their team back again immediately. So they’ve allocated up to 40% on non-payroll expenses to be forgivable. In addition, they’ve allocated 4 new categories of non-payroll items that are included.

  • Covered worker protection expenditures: operating or capital expenditure made to comply with COVID-related requirements established the Department of Health and Human Services, the Centers for Disease Control the Occupational Safety and Health Administration or by state and local governments.
  • Covered operations expenditures: payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing of payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records, and expenses.

  • Covered property damage costs: costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation.

  • Covered supplier costs: expenditures made to a supplier that were a) essential to the operations of the entity at the time the expenditures were made and b) made pursuant to a contract or purchase order in effect any time before the covered period or, for perishable goods, any time during the covered period.

Is it even worth the effort of signing up? What if I tried last time and they ran out of money?

Yes! There are several key differences mentioned above that make it worth it. Plus, they’ve limited the number of companies who qualify down to the specific companies who have been hurt the most.

What if I’ve received the previous PPP?

You can still qualify! You have to have used all of your funds from your previous loan.

If this is a first time PPP, can we still use the 2019 numbers?

Yes. Initial Borrowers are required to satisfy the eligibility criteria set forth in the original CARES Act, which allows you to choose between a couple periods. Here's what the Smart Asset Blog has on that:


"To calculate your payroll costs, you can use averages costs from calendar year 2019 or from the previous 12 months. If your business launched in July of last year or later, you can use the average monthly costs from January 1, 2020 to February 29, 2020. (Many banks are telling applicants with older businesses to use this year’s numbers if they are more favorable to them than last year’s.) If you are a seasonal business, you can use the numbers from February 15 or March 1, 2019 to June 30, 2019.


Does the Full-time Employee maintenance still apply?

Based on what we're seeing, the answer is still yes - the FTE maintenance applies with some slight changes. 

What if I’m self-employed?

You can still qualify. There’s a specific formula that is calculated based on profit from your Schedule C. Keep in mind that if, in 2019, you tried a smart tax play of reducing your profit to the max, you’ll qualify for less.

When does it open?

It's open now until March 31. But apply ASAP!

How much do I qualify for?

If you have a NAICS code that begins with 72, you can qualify for 3.5x. If you’re self-employed, it’s based on your schedule C. 

How difficult is it to apply?

You can plan on some leg work, but most of it will actually be involved with coordinating with your bank or accountant. They’ve extremely simplified down the application for businesses getting less than $150k. If you're a Curate customer, we're glad to assist you in pulling reports to show that your revenue dropped.

How long do I have to spend the money?

You'll be able to choose between an 8 week period and 24 week period. The longer period will allow you to have more time to make the expenditures but the shorter period would allow you to get your loan forgiven quicker.

Who do I talk to?

Your bank / Accountant

What if I don't have a bank that is working with me?

Our friends at Nowsta mentioned last PPP they were able to work with a great bank called Customer's Bank. We're trying to connect with the bank still to confirm, but it's a good starting point.

 

Additional Information:

https://www.journalofaccountancy.com/news/2021/jan/sba-treasury-issue-ppp2-guidance.html

https://gusto.com/blog/business-finance/ppp-round-2

https://www.nav.com/blog/self-employed-how-to-apply-for-a-payroll-protection-program-ppp-loan-600275/

Topics: COVID-19

The Second Round of PPP

“I think people are just tired of trying.”

I was telling an event pro out of California the other day why I was so excited about the new round of PPP and he made that statement. The good news is that this round is *so* much better.

This new round of PPP is finally some great news for event professionals and, in spite of what 2020 brought, you need to get ready asap to make this happen. It finally feels like someone wrote a letter to Congress about the event industry and then Congress actually read it.

We recommend talking to your accountant for your specific information, but we wanted to share our interpretation of the highlights.

 

 

Speak to PPP Specialist

What is PPP?

It’s a US government loan incentive program to help businesses recover from COVID. This was initially released in April of last year and was very quickly changing. Unfortunately for event pros, it was less than geared towards us. Initially, the release didn’t consider self-employed people or how COVID affected our company. Then, even if you did qualify, we ran across the problem question of, “Do I just hire everyone back when there are zero weddings and events?” 

The second round of PPP has been much more successful. There are several key things they’ve implemented keeping our industry in mind.

It’s important to note: this is an actual loan but it also is forgivable if used within the forgivable guidelines.

We've created a special hotline for anyone who wants to ask more specific questions.  Call us at 1-888-991-2365.  If we can't answer right away, please leave a message our our PPP specialist will follow up.

 

What is so different about this time around than last?

  • One of the most important differences is that only the hardest hit industries qualify. This makes it easier to qualify and actually get the funds before they run out.

  • This time around, they’ve expanded what is qualified for being forgivable. You used to be only able to spend a small % on non-payroll. But they realized, not everybody can just hire their team back again immediately. So they’ve allocated up to 40% on non-payroll expenses to be forgivable. In addition, they’ve allocated 4 new categories of non-payroll items that are included.

  • Covered operations expenditures: payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing of payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records, and expenses.

  • Covered property damage costs: costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation.

  • Covered supplier costs: expenditures made to a supplier that were a) essential to the operations of the entity at the time the expenditures were made and b) made pursuant to a contract or purchase order in effect any time before the covered period or, for perishable goods, any time during the covered period.

  • Covered worker protection expenditures: operating or capital expenditure made to comply with COVID-related requirements established the Department of Health and Human Services, the Centers for Disease Control the Occupational Safety and Health Administration or by state and local governments.

Is it even worth the effort of signing up? What if I tried last time and they ran out of money?

Yes! There are several key differences mentioned above that make it worth it. Plus, they’ve limited the number of companies who qualify down to the specific companies who have been hurt the most.

What if I’ve received the previous PPP?

You can still qualify! You have to have used all of your funds from your previous loan.

What if I’m self-employed?

You can still qualify. There’s a specific formula that is calculated based on profit from your Schedule C. Keep in mind that if, in 2019, you tried a smart tax play of reducing your profit to the max, you’ll qualify for less.

When does it open?

It's open now until March 31. But apply ASAP!

How much do I qualify for?

It’s 2.5x your monthly payroll. If you’re self-employed, it’s based on your schedule C. If you are food services provider or have a NAICS code that begins with 72, you can qualify for 3.5x.

How difficult is it to apply?

You can plan on some leg work, but most of it will actually be involved with coordinating with your bank or accountant. They’ve extremely simplified down the application for businesses getting less than $150k. If you're a Curate customer, we're glad to assist you in pulling reports to show that your revenue dropped.

How long do I have to spend the money?

You'll be able to choose between an 8 week period and 24 week period. The longer period will allow you to have more time to make the expenditures but the shorter period would allow you to get your loan forgiven quicker.

Who do I talk to?

Your bank / Accountant

What if I don't have a bank that is working with me?

Our friends at Nowsta mentioned last PPP they were able to work with a great bank called Customer's Bank. We're trying to connect with the bank still to confirm, but it's a good starting point.

 

Have for questions?

Schedule a meeting with our PPP specialist who can help with your specific questions and share helpful resources to help you secure this loan.

Speak to PPP Specialist

 

Additional Information:

https://www.journalofaccountancy.com/news/2021/jan/sba-treasury-issue-ppp2-guidance.html

https://gusto.com/blog/business-finance/ppp-round-2

https://www.nav.com/blog/self-employed-how-to-apply-for-a-payroll-protection-program-ppp-loan-600275/

Topics: COVID-19

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