SEVERAL NEW UPDATES FOR SMALL BUSINESSES:
SBA ECONOMIC INJURY DISASTER LOAN & THE $10K FORGIVEABLE ADVANCE
The SBA Economic Injury Disaster Loan (EIDL) is a low-interest (3.75%), long-term (up to 30 year term) loan that will not require a payment up to 1 year after signing your promissory note. These loans can be used to pay for working capital needs during this health crisis. If the amount requested is under $25,000, no collateral will be required.
First of all, if you were able to apply for an SBA Economic Injury Disaster Loan (EIDL) last week before the system crashed and changed, there may be other resources that you can apply for on their new streamlined application process at: https://covid19relief.sba.gov/#/. Here is information from the SBA on that particular resource:
“We know you are facing challenging times in this current health crisis. The U.S. Small Business Administration is committed to help bring relief to small businesses and nonprofit organizations suffering because of the Coronavirus (COVID-19) pandemic.
On March 27, 2020, President Trump signed into law the CARES Act, which provided additional assistance for small business owners and non-profits, including the opportunity to get up to a $10,000 Advance on an Economic Injury Disaster Loan (EIDL). This Advance may be available even if your EIDL application was declined or is still pending, and will be forgiven.
If you wish to apply for the Advance on your EIDL, please visit www.SBA.gov/Disaster as soon as possible to fill out a new, streamlined application. In order to qualify for the Advance, you need to submit this new application even if you previously submitted an EIDL application. Applying for the Advance will not impact the status or slow your existing application.
Also, we encourage you to subscribe to our email updates via www.SBA.gov/Updates and follow us on Twitter at @SBAgov for the latest news on available SBA resources and services. If you need additional assistance, you can find your local SBA office and resource partners at www.SBA.gov/LocalAssistance. If you have questions, you may also call 1-800-659-2955.”
Another option is the PayCheck Protection Program that is geared towards businesses that still have staff employed, or would like to bring their furloughed employees back into operation. More information on this loan is below:
PAYCHECK PROTECTION PROGRAM FAQs for Small Businesses
(Shared from the US Senate Committee on Small Business & Entrepreneurship)
PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION SHEET: BORROWERS
The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.
The loan amounts will be forgiven as long as:
- The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
- Employee and compensation levels are maintained. Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for 6 months.
When can I apply?
- Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
- Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
- Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.
Where can I apply?
You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit http://www.sba.gov for a list of SBA lenders.
Who can apply?
All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail). For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.
What do I need to apply?
You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Click HERE for the application.
What other documents will I need to include in my application?
You will need to provide your lender with payroll documentation.
Do I need to first look for other funds before applying to this program?
No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement).
How long will this program last?
Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.
How many loans can I take out under this program?
Only one. What can I use these loans for? You should use the proceeds from these loans on your:
- Payroll costs, including benefits;
- Interest on mortgage obligations, incurred before February 15, 2020;
- Rent, under lease agreements in force before February 15, 2020; and
- Utilities, for which service began before February 15, 2020. What counts as payroll costs? Payroll costs include:
- Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
- Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
- State and local taxes assessed on compensation; and
- For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
How large can my loan be?
Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
How much of my loan will be forgiven?
You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll.
- Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
- Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
- Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
How can I request loan forgiveness?
You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.
What is my interest rate?
0.50% fixed rate.
When do I need to start paying interest on my loan?
All payments are deferred for 6 months; however, interest will continue to accrue over this period.
When is my loan due? In 2 years.
Can I pay my loan earlier than 2 years?
Yes. There are no prepayment penalties or fees.
Do I need to pledge any collateral for these loans?
No. No collateral is required.
Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement. ***However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.***
What do I need to certify?
As part of your application, you need to certify in good faith that:
- Current economic uncertainty makes the loan necessary to support your ongoing operations. · The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
- You have not and will not receive another loan under this program.
- You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
- Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
- All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
- You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.
Where can I apply for the Paycheck Protection Program?
You can apply for the Paycheck Protection Program (PPP) at any lending institution that is approved to participate in the program through the existing U.S. Small Business Administration (SBA) 7(a) lending program and additional lenders approved by the Department of Treasury. This could be the bank you already use, or a nearby bank. There are thousands of banks that already participate in the SBA’s lending programs, including numerous community banks. You do not have to visit any government institution to apply for the program. You can call your bank or find SBA-approved lenders in your area through SBA’s online Lender Match tool.
You can call your local Small Business Development Center (419-631-8772 or email email@example.com) or Women’s Business Center and they will provide free assistance and guide you to lenders.
The Jobs and Family Services division have been extremely busy trying to process more unemployment cases in a matter of a few weeks, than they normally do in an entire year! So yes, their system is not operating as effectively as it normally does, but it’s not their fault. Their tools and website were never intended for this huge influx of people.
There are multiple ways to furlough employees (if you’ve exhausted the above options to maybe keep employees on from above, or maybe those options do not apply to your circumstances). The cost of this is not the same as it would be to an employer if this was not an unprecedented circumstance though, so the cost is being mutualized. Here is some information that may be helpful for those furloughed employees: http://jfs.ohio.gov/ocomm/pdf/How-to-Help-Unemployment-Claimants.pdf and the form to expedite their filing because of COVID is: http://www.odjfs.state.oh.us/forms/num/JFS00671/pdf/.
Shared Work: If you have a situation where it warrants keeping employees on for part of their time, you can also consider the Shared Work option, where an employee can claim unemployment for the remaining hours they are not working their normal hours. More info on that can be found here: http://jfs.ohio.gov/ouio/SharedWorkOhio/
Self Employed Unemployment: Currently, the DJFS website: (http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm) states that there are no unemployment benefits for the self-employed. Governor Dewine is requesting federal funds to potentially offer this benefit though, so keep updated on this at their website.
Treasury, IRS and Labor announce plan to implement Coronavirus-related paid leave for workers and tax credits for small and midsize businesses to swiftly recover the cost of providing Coronavirus-related leave
The U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.
The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
· Paid Sick Leave for Workers
For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.
· Complete Coverage
Employers receive 100% reimbursement for paid leave pursuant to the Act.
- Health insurance costs are also included in the credit.
- Employers face no payroll tax liability.
- Self-employed individuals receive an equivalent credit.
More info on this can be found on the IRS website at: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.
FFCRA REQUIRED PAID SICK TIME INFO:
The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide their employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19. These provisions will apply from April 1, 2020 through December 31, 2020.
► PAID LEAVE ENTITLEMENTS Generally, employers covered under the Act must provide employees: Up to two weeks (80 hours, or a part-time employee’s two-week equivalent) of paid sick leave based on the higher of their regular rate of pay, or the applicable state or Federal minimum wage, paid at:
- 100% for qualifying reasons #1-3 below, up to $511 daily and $5,110 total;
- 2/3 for qualifying reasons #4 and 6 below, up to $200 daily and $2,000 total; and
- Up to 12 weeks of paid sick leave and expanded family and medical leave paid at 2/3 for qualifying reason #5 below for up to $200 daily and $12,000 total.
A part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.
The DOL Employee Rights Poster on this can be found at: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
This poster MUST be posted in your workplace on April 1, 2020, with your other required posters. If employees are working remotely, it should be sent to your employees by email. A FAQ can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions
More info on this Act can be found here (including employer requirements): https://www.dol.gov/newsroom/releases/whd/whd20200324
Please note: Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.
The new Federal Income Tax Deadline has been extended to July 15. You will not need to file an extension to file by July 15. If you are anticipating a return, you should file as soon as you can.
The State Income Tax deadline is also now July 15th. Check with your local municipality if they are also extending their deadline to July 15th, as they may not be.
ECONOMIC IMPACT PAYMENTS FROM IRS:
Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child.
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
More info can be found: https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
AG Yost Warns of an Outbreak of Scams Related to Coronavirus
(COLUMBUS, Ohio) — Fear and uncertainty surrounding the coronavirus pandemic could give rise to an outbreak of scams, Ohio Attorney General Dave Yost warns.
“COVID-19 is not the only thing we have to protect ourselves against,” Yost said. “Thieves and crooks prey on fear and uncertainty. Ohioans need to inoculate themselves against an outbreak of scams with knowledge and good practices.”
Yost encourages Ohioans to follow these tips to avoid coronavirus-related scams:
- Watch out for emails claiming to be from the Centers for Disease Control and Prevention (CDC) or other expert sources with special advice or information about the coronavirus. Legitimate information is available for free on the CDC’s website.
- Ignore online advertisements promoting cures for the coronavirus. According to the Federal Trade Commission, “There currently are no vaccines, pills, lotions, lozenges or other prescription or over-the-counter products available to treat or cure Coronavirus disease 2019 (COVID-19) online or in stores.”
- Research nonprofit organizations and crowdfunding campaigns before donating. A database of registered charities is available on the Ohio Attorney General’s website. Avoid groups that pressure you into donating and never donate via cash, gift cards, wire transfer or prepaid money card. These are the preferred payment methods of scammers.
- Be cautious of anyone going door to door offering coronavirus testing or temperature readings and requesting personal information. Call law enforcement immediately if you see a suspicious person. Never let strangers into your home.
- Beware of emails and other attempts to “phish” for your personal, financial and medical information. When in doubt, do not share. If the source claims to be your bank or a government agency, confirm they are legitimate by calling the organization at a phone number you have verified.
- When online, avoid clicking on unknown links or pop-ups and never download any suspicious email attachment. Doing so could infect your devices with malicious software designed to steal your personal information or lock your computer until you pay a ransom.
Consumers who suspect an unfair or deceptive sales practice should contact the Ohio Attorney General’s Office at www.OhioProtects.org or 800-282-0515.
TIPS FROM RHONDA ABRAMS:
“DO THIS SOON
It’s easier to get deferrals or reductions on bills if you contact vendors BEFORE you are in trouble. This is your job this week.
IDENTIFY YOUR BILLS: Collect the most recent statements of all accounts you pay regularly, not just monthly, but quarterly, semi-annually, and annually. These may be on your credit card bills—especially for services like website hosting and cloud-based applications. Contact the people you normally work with, such as a sales representative at a key vendor (for instance, in my business—a publishing company—it may be our book printer or distributor).
MAKE CALLS AND SEND EMAILS: For each account, call your sales representative, agent, or customer service, and do the following: Explain your situation: “my business is temporarily shut/reduced due to the coronavirus” (I’d use the term “temporarily” so as to indicate you’re going to be back in business) and ask to either or both lower your rate or defer payment.
UNDERSTAND YOUR VENDOR’S SITUATION: Some of your most important vendors are independent contractors and small businesses. They’re probably in the same boat as you. Try to pay their bills, meet their needs as much as possible. That big telecom company or website hosting company you use is in much better position to ride this out than they are.
BE COURTEOUS: Your vendor may be in the same situation you are—especially if they are a small business too.
NEGOTIATE: You don’t have to take the first “no” for an answer. Remember, a deferral or payment plan is also a good outcome for you now. Banks and big corporations have made public statements saying they’ll work with customers.
WHO’S MOST IMPORTANT: Identify who are your most important vendors and start talking to them NOW. This is especially true if you have independent contractors you depend on. Make sure you keep a good working relationship. And figure out which vendors you could do without if your business changes dramatically, and pay those last.” – Rhonda Abrams