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PPP Changes Ease Loan Forgiveness

(Updated  June 24, 2020)

UPDATE:  The deadline to apply for a PPP loan is June 30, 2020. 

  • As of June 20th, approximately $100 Billion remains in the program and available for loans.
  • The modified forgiveness terms makes it much easier to ensure your loan is forgiven.

In an effort to address limitations of the Payroll Protection Program (PPP) loans, the Senate passed, and the President sigened, a House version of the legislation to update the program.

As a PPP borrower:

  • You can optionally extend the eight-week period to 24 weeks, making it easier to reach full forgiveness.
  • Your payroll expenditure requirement changes to 60% from 75%, but is now “all or nothing” instead of scaled based on percentages.
  • You can use the 24-week period to restore staffing and wages to the levels needed for full forgiveness. The deadline is also extended to December 31, 2020 from June 30, 2020.
  • You may be able to invoke one of three exceptions if unable to fully restore the workforce.
    1. You can exclude employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic.
    2. You can adjust calculations if you cannot find qualified employees
    3. You can adjust calculations if you are unable to restore business operations to Feb 15, 2020 levels due to on-going COVID-19 operating restrictions.
  • You now have five years to repay the loan instead of two years
  • Your interest rate remains at 1.00%
  • You are now eligible to defer payroll taxes under the CARES Act, even though you are a PPP borrower.

Detailed Guidance from CDC on Re-Opening Businesses

(Published 5/8/20)

As reported by the Associated Press, scientists at the Centers for Disease Control and Prevention (CDC) prepared a report providing specific guidance for re-opening for different types of businesses and organizations. The report, Guidance for Implementing the Opening Up America Again Framework, was due to be released on May 1st, but was blocked by the administration.  We are providing a link to a copy of the leaked report.

As business owners and leaders, we are responsible for the safety of our employees, customers, and others with whom we come in contact.  The more factual information and science-based guidance we have, the better. For our businesses to survive and grow, we will need to operate safely and effectively in the months ahead.  We need to prepare and execute plans well.

Click here to see the report.

5 Ideas for Successful Remote Shopping and Customer Pickup Services

As more areas of the country move into Phase 1 of re-opening the economy, you may be able to offer remote shopping and curbside (no contact) pickup.  While you may already have a way to hold items for pickup by customers, moving completely to the “take out” model of business requires you to make changes and scale your processes.  Here are 5 ideas to improve your customer experience:

1. Accept Online and Advance Payments

Customers paying online or by phone before coming for their pickup dramatically reduces the in-person interaction needed to complete the sale. This is safe for your employees and your customers.

  • Adding a shopping cart experience to your website is not a simple process; check with your web developer and verify they have the experience to create a secure, easy to use flow for your customers.
  • If adding a shopping cart experience to your website is not feasible in the short term, you have alternatives:
    • Check with your current card processing service; many offer payment portals that can work well in this situation.
    • Spin up a separate online store using a turnkey solution, like Shopify, to which you can upload inventory and product information
    • Create an online payment account via services like PayPal or Venmo (make sure you have or create a company-specific account)
  • Remember that you must still comply with PCI regulations.  Make sure employees know that when taking credit card information, they should not write down or otherwise record the information expect to put it into the POS or card processing systems.

2. Offer Video Shopping Appointments

Allow customers to schedule video shopping appointments, during with a member of your staff can walk the store and help your customers pick out items.

  • Use a secure video meeting tool. If you use Microsoft Office 365 or G Suite, you already have access to video meetings via Microsoft Teams and Google Meet, respectively. Employees should NOT be using personal accounts, email addresses, or phone numbers to setup or run these sessions.
  • Roll out a scheduling tool that lets customers pick from preset, available times.  Bookings is a free tool included with MS Office 365.  Tools like Calendly integrate with both G Suite and Office 365 services.
  • Get a few tripods with phone/tablet holders.  This will allow a single employee to manage the camera while displaying merchandise. It also makes for a “steady” shot and better shopping experience.

3. Live Chat with Customers

Give your customers an easy way to get in touch with you once they are on your website.

  • Live chat is an inexpensive way for customers to communicate with your team.
  • Most live chat solutions allow your staff to answer questions and transfer the conversation.  Staff working from home can cover the live chat service and answer most customer questions. The chat can be transferred to in-store staff as needed.

4. Create a “Service Desk” for Customer Questions

Going beyond live chat, let your customers interact with you however they want, when they want.  At the same time, you can enable staff working from home to support the team working in-store.

  • Setup a cloud-based service desk phone system that allows multiple team members to answer calls, text messages, and voice messages.
    • Employees sign in as ‘agents’ and can indicate when they are available / not available to answer calls.
    • The system will route calls to an available ‘agent’ in a round robin basis or other priority that you configure.
    • Using a “soft phone” application, your employees access the system via computer or mobile device; their personal phone numbers and information remain private.
  • Setup a shared inbox to allow your staff to respond to, and manage, email communications.
    • More than a distribution list, a managed shared inbox lets your team assign emails and discussion threads to employees and track their work and progress.
    • Using the shared inbox, employees’ personal information and individual work emails remain private.
    • Employees can connect/disconnect to the service as needed to cover shifts

5. Measure Customer Satisfaction

Follow up every sale with a thank you email and solicit customer feedback.

  • Cloud-based customer satisfaction (CSAT) tools let you embed one-click feedback questions into your email templates. These often use familiar green, yellow, and red icons to indicate satisfaction levels.
  • CSAT tools can also solicit comments. These comments can be used to identify and resolve customer issues, as well as generate testimonials for your web site and marketing efforts.
  • More advanced CSAT tools can also ask a “Net Promoter Score” question, so you can measure how many of your customers would recommend your business to others.

A Final Note: As you implement these (or other) ideas, procedures, and technologies, remember to take care of your “back office” and employees. Initiating or improving your customer pickup services means new and changed processes. You may also decide to change roles. For example, some stores dedicate one team member per shift to process online payments as a way of managing access to the tools and information.  Take the time to train your staff and make sure they are comfortable with the changes.  Also, solicit their feedback and ideas. They probably have suggestions that will help you impress your customers.


Please contact us for a free Response and Recovery Assessment. We are happy to discuss ideas and solutions, and to assist with getting the technologies and training in place.


 

CARES ACT II – Emergency Funds for SMBs

(Updated 5/7/20)


5/7 Update: The EIDL program loans are now limited to $150,000 as the demand is dramatically outpacing funding.  The SBA is processing previously received applications in the order received. new applications are only accepted for certain US agricultural businesses, per the 5/5/20 update.  See news reports from CNBC.com and the Washington Post.

5/5 Update: The Small Business Administration has opened the Economic Injury Disaster Loan program, including emergency advances of up to $10,000 to U.S agricultural businesses.  For more information on eligibility and the application process, click here.


Late this week, Congress passed and the President signed a $480 billion package of additional COVID-19 relief funding.  Of this, $310 Billion is for Payroll Protection Program (PPP) loans and an additional $60 Billion is earmarked for the Economic Injury Disaster Loan (EIDL) program.

If want to apply for a PPP loan, the time to act is now.

The SBA Payroll Protection Program (PPP) re-opens with a new round of funding at 10:30 AM ET on Monday April 27th. The program provides an additional $310 Billion in funds, $60 Billion of which are earmarked through smaller credit unions and banks, and to minority, women, and veteran-owned businesses. If you do not have a SBA lender, now is the time to check with local banks and credit unions.

If you submitted a PPP loan package before and did not get a confirmation number, there is conflicting information about whether or not you have to re-apply. We strongly suggest that you contact your bank or lender to confirm that they plan to process your existing application. If you cannot confirm, you should prepare a new application package with the payroll and financial reports updated to the new “last 12 months.”

If you did not previously submit a PPP loan application, we suggest you prepare the application and materials now, so that you can provide them to your lending bank first thing Monday morning. While banks may differ in their specific requests, you package will most likely include the following:

  • SBA PPP Borrower Application Form
  • Payroll report for last 12 months, including:
    • All W-2 pay information, less required exclusions
    • State & Local Taxes Based on Compensation
    • Employer healthcare costs
    • Employer contributions to retirement plans
  • 2019 Form 940
  • Form 941 for last 12 months (last four reported quarters)
  • Certification of Beneficial Ownership
  • Ownership Report (names, titles, ownership percentages)
  • Copy of legal ID — Drivers License or Passport — for any owner over 20%
  • Retirement plan declaration (that you have/do not have a company retirement plan)

Most payroll companies have created reports specifically designed to provide the necessary information.

Am You Eligible?

You are eligible if you are:

  • A small business with fewer than 500 employees
  • A small business that otherwise meets the SSA’s size standard
  • A 501(c)(3) with fewer than 500 employees
  • An Individual who operates as a sole proprietor
  • An Individual who operates as an Independent contractor
  • An Individual who is self-employed who regularly carries on any trade or business
  • A Tribal business concern that meets the SBA size standard
  • A 501(c)(19) Veterans Organizati0n that meets the SBA size standard

In addition, some special rules may make you eligible:

  • If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
  • If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply

What Will Lenders Want to See?

In evaluating eligibility, lenders are directed to consider whether the borrower was in  operation before February 16. 2020 and had employees for whom they paid salaries and payroll taxes or paid independent contractors.

Lenders will ask you for a good faith certification that:

  1. The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations
  2. The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments
  3. Borrower does not have an application pending for a loan that duplicates the purpose and amounts applied for here
  4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan that duplicates the purpose and amounts applied for here (Note: You may be able to fold emergency loans received since Jan. 31, 2020 into this loan)

If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents, such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.

Please also note that lenders will NOT look for:

  • That you sought and were unable to obtain credit elsewhere
  • A personal guarantee (not required for the loan)
  • Collateral (not required for the loan)

How Much Can You Borrow?

Loans can be up to 2.5 times your average monthly payroll costs, not to exceed $10 million.  You Payroll Cost is the sum of included payroll costs less excluded payroll costs, as follows.

Included Payroll Costs for Employers: the sum of payments of any compensation with respect to employees that is a:

  • Salary, wage, commission, or similar compensation
  • Payment of a cash tip or equivalent
  • Payment for vacation, sick, or family medial leave
  • Allowance for dismissal or separation
  • Payment required for the provisions of group health care benefits, including insurance premiums
  • Payment of retirement benefits
  • Payment of state or local tax assess on the compensation of the employee

For Sole Proprietors, Independent Contractors, and Self-Employed Individuals: the sum of  payments of any compensation to, or income, that is a wage, commission, income, net earnings from self-employment, or similar compensation, and that is an amount that is not more than $100,000 in one year, as pro-rated for the covered period.

Excluded Payroll Costs:

  • Compensation of an individual employee in excess of an annual salary of $100,000, prorated for the period of Feb. 15 to June 30, 2020
  • Payroll taxes, railroad retirement taxes, and income taxes
  • Any compensation of an employee whose principal place of residence is outside the United States
  • Qualified sick leave wages for which a credit is allowed under Section 7001 of the Families First Coronavirus Response Act

Note that special rules apply for businesses not in operation for all of 2019 and for calculating average wages for seasonal employees.

Will This Loan be Forgiven?

Borrowers are eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8-week period beginning on the date of the origination of the loan.

  • Payroll costs (see above for criteria)
  • Interest on the mortgage obligation incurred in the ordinary course of business
  • Rent on a leasing agreement
  • Payments on utilities (electricity, gas, water, transportation, telephone, or internet)
  • Additional wages paid to tipped employees

The amount of the loan forgiveness will be reduces if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Staffing and wage reductions occurring in the period starting Feb. 15, 2020 and ending 30 days after the enactment of the CARES Act shall not reduce the amount of loan forgiveness IF the staffing or wage reductions are eliminated by June 30, 2020.

Prepare Your Business for the Next Normal

(Updated 5/4/20)

With some states and local jurisdictions beginning to loosen or remove stay-at-home and essential business orders and advisories, many small businesses will begin to adjust for the next phase of response and recovery.  For some, this will be a re-opening; for others it will be another shift in how we conduct our business on a day-to-day basis.  Either way, the process will be a minefield of financial, operational, legal, liability, and personnel issues. Before “flipping” the sign from closed to open, plan your return with care and compassion. Both will be needed to keep your employees, customers, and business safe.

Prepare the Groundwork

Guidance on opening is coming from many sources. We recommend a top-down approach, starting at the federal level and working down the your local municipalities and property owners.

  1. Start with the expertise and guidance from the US Centers for Disease Control and Prevention (CDC).  The CDC website  provides guidance for different types of businesses and gathering places that centers on three mitigation strategies:
    • Personal protective measures (e.g., hand-washing, cough etiquette, and face coverings) that persons can use at home or while in community settings
    • Social distancing (e.g., maintaining physical distance between persons in community settings and staying at home)
    • Environmental surface cleaning at home and in community settings, such as schools or workplaces.
  2. Review current laws and regulations under the Families First Coronavirus Recovery Act (FFCRA). This legislation requires almost all employers to provide expanded sick time, medical leave, and family leave pay for employees dealing with illness or childcare issues themselves or within their immediate family unit.  Make sure your return to work plans accommodate these programs and
  3. Second, understand your state’s rules and regulations with with respect to physically opening your business.  Many states are staging how they will allow business to open.  Then, check with local governments where your business is located and where your employees live.  In some states, municipalities and counties are adjusting how they implement state and federal orders and advisories to address local needs and issues.
  4.  Understand your state’s unemployment rules and regulations. In some states, lifting of stay-at-home orders may mean employees are no longer eligible for unemployment even if you keep your business closed or cannot bring everyone back to work. Your team will have differing concerns and levels of comfort; it is important to provide them with timely and accurate communications.
  5. Check with your landlord. Many office and retail complexes are setting up guidelines and rules for how businesses can and will be able to operate in their properties.  Some office complexes, for example, are limiting access to employees only and restricting access to trades and delivery personnel.
  6. Ask your landlord what additional steps they will be taking to clean and sanitize bathrooms, elevators, stair railings, door handles, and other common areas and high touch surfaces.  You and your employees will want and need to know how safe the environment will be when then return to the office or store.

With an understanding of how you can and want to take your next steps, create a Communications Plan.  More than just determined who, when, and how you will share information with employees and other stakeholders, the plan should provide a clear and easy way for employees to get answers to their questions.  As many smaller businesses do not have internal HR resources, you may want to assign a particular manager or executive team to the role.  If you have a contracted HR service or consultant, you will need to coordinate both the process and information. Set clear expectations for how quickly you will answer questions and how answers to common questions will be addressed to the company at large.

Prepare Your Place

As you do your groundwork, begin planning and putting your workplace together for the return of staff.  Social distancing is the current normal. With an expected recurrence of COVID-19 in the fall, social distancing will be part of our lives, and work places, for some time to come. For employees to return, you may be considering:

  • Setting up protocols to ensure that workers who may be ill, or have been exposed, do not enter the workplace and accidentally infect others.
  • Placing dividers between work spaces, or re-configuring your office layout to create separation.
  • Acquiring additional office space, temporarily, to allow more team members to return.
  • Requiring the use of masks or other appropriate personal protective equipment (PPE). Depending on your work environment, this may be full-time or only when employees leave personal work spaces and head to common or communal areas.
  • Cleaning and sanitation of common areas, like kitchens and break rooms, and high touch surfaces.
  • Coordinating disinfection and sanitation efforts with building management and neighboring businesses in leased office spaces.
  • Ensuring availability of cleaning supplies, disinfectants, and sanitizers.
  • Creating a means for employees to express concerns about the work environment and actions of others, without fear of retribution.

For some businesses, the safest course of action will be establishing split shifts or a rotating schedule of employee teams working in the office. Doing so can ease physical separation issues, but we should expect that some employees will need to, or want to, continue working from home.

Prepare Your People

Communications — timely, open, and honest — will be critical for successfully taking the next steps with your business.  For many, personal anxiety and stress will be high as we navigate shifts in our personal and work lives.

Provide your team as much information as possible on what to expect, and how things will move forward, as you go through each upcoming phase of your plans.

As you communicate with your team, keep in mind that employees may be dealing with personal COVID-19 impacts, such as:

  • Death of a family member of close friend
  • Sick or quarantined family member(s)
  • Loss of income by a spouse/partner/family member
  • Supervision of children learning from home
  • Lack of available daycare
  • Anxiety and stress
  • Feeling unable to return to working in the office

Be prepared to deal with the human side of Covid-19, not just the logistics.

  • Anticipate and have answers ready for employees about your requirements and their options
  • Establish a feedback loop and listen to staff issues and concerns
  • Engage your HR staff, service, or consultants to assist with communications, feedback, and responses
  • Update plans and timing as needed to mitigate staff concerns and business conditions

Prepare to Settle In

Set Expectations

As noted, above, experts are telling us to expect local/regional COVID-19 outbreaks throughout the fall and winter. With this expectation, we should plan for future stay-at-home orders and business restrictions. These will likely vary by location, complicating your planning efforts.

Remote work will be part of our operations for the foreseeable future. As you plan your next steps, make sure that your team is ideally equipped to continue working from home.

In the scramble to respond to stay-at-home orders, many businesses make necessary technology decisions for the near-term.  Now is the time to step back and take a long-term view. Employees may be working on home computers, using personal software, and working in a less-then-ideal space. Many businesses are also finding employees have signed up for free or consumer IT services to work around limitations, such as difficulty accessing files on company servers.  We still have a responsibility to keep information secure and private, and our employees and businesses safe.

Get Your IT Resources in Place

Settling in means adapting work environments — at the office and in employees’ homes — to our anticipated reality.

  • Improve security and access to company systems and data
    • Move data from on-premise servers to cloud file services to improve access and security; Map drives to cloud-data for compatibility with desktop software
    • Use Remote desktop and VDI solutions to move on-premise applications to the cloud, providing easy, high performance access without distributing data to remote computers
  • Ensure employees have workable use of your phone system (see this post for more info)
  • Reduce the need for remote PC, VPN and other remote access solutions that increase cost, complexity, and delays
  • Eliminate the need for shadow IT services by helping employees use existing capabilities in your productivity suite
  • Provide devices for employees that do not usually work from home
    • Consider rental, lease, and device-as-a-service option to manage costs
  • If unable to provide devices, upgrade home computers:
    • Add memory for performance and ensure the ability to run business applications
    • Deploy licenses of business software, even if employees are using consumer versions of the applications
    • “Next Gen” endpoint protections from viruses, malware, and ransomware
    • Web filtering and DNS security to prevent malware from infected websites
  • Provide employees with helpful accessories, such as noise cancelling headsets for video calls

We are here to help you plan and execute your next steps.  Our free Response and Recovery Assessment will help you with your planning, fully utilize your existing IT Services, and identify budget-friendly solutions to address any unmet needs and priorities. Email us or complete the form on our home page to schedule your assessment.


 

Coronavirus and the American with Disabilities Act

(Published 5/4/20)

The US Equal Opportunity Employment Commission (EEOC) has published guidance on the applicability and limits of the Americans With Disabilities Act (ADA) and the Rehabilitation Act.

While the ADA and Rehabilitation Act rules continue to apply, the do not interfere with, or prevent employers from following the guidelines and suggestions made by the CDC regarding steps employers should take regarding the Coronavirus (COVID-19).

The EEOC has provided guidance, consistent with these workplace protections and rules, that can help employers implement strategies to navigate the impact of Coronavirus (COVID-19) in the workplace.

IRS Employee Retention Credit

If you did not receive a Small Business Interruption Loan under the Paycheck Protection Program, you may be eligible for a tax credit of up to $10,000 per employee paid in 2019 using the Employee Retention Credit.

As noted on the IRS web site, The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer’s employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS.

Click Here to Learn More.

 

Solve Your COVID-19 Phone Issues

As we are reaching out to customers and others in our network, we are seeing about 15% of business with serious phone problems.  The most common issue is that the person answering the business’ phone is unable to forward a call to other employers, nor can they provide a direct number without sharing a private home or cell phone number. It is more difficult to keep your business moving when you cannot properly answer calls.  Call backs and emails only go so far.

The good news is that you can use cloud-based, voice over IP (VoIP) phone services to solve this problem without replacing your current phone service.  And, several vendors are offering free services to small businesses.

How it Works

We effectively overlay a cloud VoIP service over your existing phone system/services.

  • We setup a VoIP phone service for your business, but do NOT port over your existing numbers.
  • We auto-forward your current business lines to the VoIP service
  • Within the VoIP services:
    • Employees can, answer and make calls using “Soft Phone” software on the computers or via a app on their smart phone. The cell number remains private.
    • We can setup groups or departments that simultaneously ring multiple people, or round-robin in a team, to ensure inbound sales and service calls are answered.
    • Use the embedded voice mail, or forward calls back to an individuals normal extension/voicemail (depending on system capabilities)
    • Enable texting/chat services (in most VoIP services), if needed.
    • Integrate audio and video conferencing services, if needed.

Several VoIP providers we work with are offering multiple months of free service. While they are hoping you like the service enough to switch permanently, this is an affordable temporary solution.

Call us or email us for more information.


 

CARES ACT Emergency Funds for SMBs

(UPDATED 4/21/20)


4/21/20 Update – Senate Approves More PPP and EIDL Funding; Prepare Now.

Late this afternoon, the US Senate passed a $480 in COVID-19 relief funding.  Of this, $310 Billion is for PPP loans and an additional $60 Billion for the EIDL program. If want to apply for a PPP loan, the time to act is now.  While it will take time for the House of Representatives to vote, the President to sign, and the SBA to restart the process, you need to be ready.  Here is an action plan:

  • Contact a banker who will take your application and help you apply.
    • If you have an SBA lender, this is the best place to start.
    • If you do not have a SBA lender, contact your business banker.  If you bank is not participating in the program, ask them for a personal referral and introduction to a SBA lender in their network of contacts.  The personal introduction is key, as banks will want to serve existing customers first.
    • If you do not have a banking relationship, contact the manager of the branch you use.  Do not be embarrassed to introduce yourself and the number of years you have used their bank. Relationships matter, even you are creating a new one.
    • About $60 Billion of the PPP program is earmarked for small banks, rural banks, and credit unions.  The intent is to ensure more money makes it to small businesses that bank locally. Local relationships and introductions can help you connect with a lender that will do more than take your application and put it in a pile.
    • Fintech companies, including PayPal, Intuit and others, as well as American Express are participating in the program. If you have a business relationship, these may be another resource.
  • Ask your banker for a checklist of information you need to prepare. The rules are not expected to change, so they should have this on hand.
  • Ask your banker when they will start accepting applications.  Ask them to notify you once their portal is open or when they are accepting packets by email.  Many banks will take your packets and queue them up for entry as soon as the SBA program opens.
  • Gather and review the information now; have your packet ready.  Reach out to your payroll firm; many have created special reports with the information you need to include with your application.

With proper preparation, your application can closer to the front of the line.

4/16/20 Update – Applications for  PPP and EIDL Programs Have Been Halted

  • Funding for the Payroll Protection Program and the Economic Injury Disaster Loan program has been fully committed.  Per the SBA website:

SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

4/10/20 Updates – Important Changes to SBA Programs

  • Caveats on SBA ‘grants’ program: Inc. Magazine is reporting that the SBA clarified the SBA EIDL grant program, indicating the amount would be $1,000 per employee, up to $10,000, rather than a fixed $10,000 grant.  Note that the article’s link to the SBA Bulletin is no longer available online. ALSO, the SBA site now states that businesses will receive funds “in a few days”, a change from the prior 3 business day expectation.
  • Change in payments for EIDL loans: The New York Times is reporting that the SBA is limiting initial funding of EIDL program loans to $15,000 — far below the program expectations of loans up to $2 million.  The $15,000 would be in addition to the “up to $10,000” advance/grant.  There is no information whether the loans are capped at $15,000 or if they are controlling disbursements for the few months. This restriction could be due to limited funding.  As reported by CNBC, “… nearly 4 million businesses had applied for EIDL funding for a total of $383 billion, adding that Congress has allocated $17 billion for the program.”

4/06/20 Updates – Paycheck Protection Program and Debt Relief

From the SBA information site.

  • On Friday 4/2, the SBA changed and updated the Paycheck Program Protection loan application and required documentation.  In addition to annual payroll reports and copies of your 940 for 2019, you need to provide quarterly 941’s and payroll reports.  Check with your lender, as you may need to resubmit your application package.
  • On Friday 4/2, the SBA Debt Relief website was changed to state that the SBA will automatically make six (6) months of payments on existing SBA 7a and 504 program loans.  We recommend contacting your SBA lender to confirm.
  • If you apply for the EIDL, you are eligible for a $10,000 forgivable advance (even if you do not close on the EIDL). You may also qualify for a $25,000 bridge loan.  Applying for the EIDL now, however, may impede your ability to secure a Paycheck Protection Program forgivable loan. We recommend speaking with your lender BEFORE submitting your EIDL application.

4/01/20 Updates – Paycheck Protection Program

From the SBA information site.

  • You can apply through any existing SBA 7(a) 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 in the program.
  • Lenders may begin processing loan applications as soon as April 3, 2020.
  • If you wish to begin preparing your application, you can download a sample form to see the information that will be requested from you.

The Coronavirus Aid Relief and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses who maintain their payroll during this emergency. These loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.

Am You Eligible?

You are eligible if you are:

  • A small business with fewer than 500 employees
  • A small business that otherwise meets the SSA’s size standard
  • A 501(c)(3) with fewer than 500 employees
  • An Individual who operates as a sole proprietor
  • An Individual who operates as an Independent contractor
  • An Individual who is self-employed who regularly carries on any trade or business
  • A Tribal business concern that meets the SBA size standard
  • A 501(c)(19) Veterans Organizati0n that meets the SBA size standard

In addition, some special rules may make you eligible:

  • If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
  • If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply

What Will Lenders Want to See?

In evaluating eligibility, lenders are directed to consider whether the borrower was in  operation before February 16. 2020 and had employees for whom they paid salaries and payroll taxes or paid independent contractors.

Lenders will ask you for a good faith certification that:

  1. The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations
  2. The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments
  3. Borrower does not have an application pending for a loan that duplicates the purpose and amounts applied for here
  4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan that duplicates the purpose and amounts applied for here (Note: You may be able to fold emergency loans received since Jan. 31, 2020 into this loan)

If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents, such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.

Please also note that lenders will NOT look for:

  • That you sought and were unable to obtain credit elsewhere
  • A personal guarantee (not required for the loan)
  • Collateral (not required for the loan)

How Much Can You Borrow?

Loans can be up to 2.5 times your average monthly payroll costs, not to exceed $10 million.  You Payroll Cost is the sum of included payroll costs less excluded payroll costs, as follows.

Included Payroll Costs for Employers: the sum of payments of any compensation with respect to employees that is a:

  • Salary, wage, commission, or similar compensation
  • Payment of a cash tip or equivalent
  • Payment for vacation, sick, or family medial leave
  • Allowance for dismissal or separation
  • Payment required for the provisions of group health care benefits, including insurance premiums
  • Payment of retirement benefits
  • Payment of state or local tax assess on the compensation of the employee

For Sole Proprietors, Independent Contractors, and Self-Employed Individuals: the sum of  payments of any compensation to, or income, that is a wage, commission, income, net earnings from self-employment, or similar compensation, and that is an amount that is not more than $100,000 in one year, as pro-rated for the covered period.

Excluded Payroll Costs:

  • Compensation of an individual employee in excess of an annual salary of $100,000, prorated for the period of Feb. 15 to June 30, 2020
  • Payroll taxes, railroad retirement taxes, and income taxes
  • Any compensation of an employee whose principal place of residence is outside the United States
  • Qualified sick leave wages for which a credit is allowed under Section 7001 of the Families First Coronavirus Response Act

Note that special rules apply for businesses not in operation for all of 2019 and for calculating average wages for seasonal employees.

Will This Loan be Forgiven?

Borrowers are eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8-week period beginning on the date of the origination of the loan.

  • Payroll costs (see above for criteria)
  • Interest on the mortgage obligation incurred in the ordinary course of business
  • Rent on a leasing agreement
  • Payments on utilities (electricity, gas, water, transportation, telephone, or internet)
  • Additional wages paid to tipped employees

The amount of the loan forgiveness will be reduces if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Staffing and wage reductions occurring in the period starting Feb. 15, 2020 and ending 30 days after the enactment of the CARES Act shall not reduce the amount of loan forgiveness IF the staffing or wage reductions are eliminated by June 30, 2020.

What are The Next Steps?

The SBA needs to identify lenders that will facilitate the program. As such, this program is not yet on the SBA’s COVID-19 Resource Center.

You can download the US Chamber of Commerce’s guide here.

We do recommend that you contact your current SBA lender, if you have one, or your business banker. Get on their call list once the program is up and running.  Your accountant and bookkeeper will need to pull financial information, so give them a heads up as well.

COVID-19 Resources for SMBs

Updated 03/30/20; Additions in italics.

As a service to our clients and to small and midsize businesses, we are collating resources to help you mitigate the economic and business impact of the COVID-19 emergency.

Some of these resources are informational, others are tools that can help you adapt your business to current conditions. This post covers the following topics and will be updated regularly.

  • Tools & Services for Remote / Virtual Work
  • Informational Webcasts
  • Emergency Financial Assistance (updated 3/3o)
  • Customer Engagement Tools
  • HIPAA Compliant Video Conferencing in G Suite
  • Free / Discounted Phone and Communication Services

Tools & Services for Remote / Virtual Work

Informational Webcasts

  • We are posting information webcasts from multiple sources in our News & Events calendar. Please check the calendar for dates and times.
    • Open Office Hours — Cumulus Global
    • COVID-19: General FAQs for Employers — Massachusetts Health Council (MHC) & Associated Industries of Massachusetts (AIM)
    • The Remote Worker: Effective Virtual Meetings – Brainstorm, a Cumulus Global partner in learning
  • NOTE: While some events may be from organizations in our area, we expect the information to be useful to all small and midsize organizations.

Emergency Financial Assistance:

  • In Massachusetts:
    • The Massachusetts Growth Capital Corporation has halted its disaster loan program to avoid conflict with the SBA Economic Injury Disaster Loan (EIDL) program (see below)
  • In ALL States:
    • With the passage of the CARES Act, additional loan programs will be available.  See this post for info on the loan/forgiveness program.
    • The U.S. Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) program is available to most businesses nationally.  Start here: https://disasterloan.sba.gov/ela
      • The Small Business Administration (SBA) has made an important adjustment to the terms of its Economic Injury Disaster Loan Program (EIDL). Moving forward, EIDL loans will defer payments for the first year (twelve months) of the loan.
    • The SBA launched an Express Bridge Loan Pilot Program offering emergency loans up to $25,000. Click here for information.

Customer Engagement Tools

  • Live Chat
    • Adding live chat to your website can help you facilitate sales and customer service, and can provide a role for your sales team.
    • Contact us to discuss solutions
  • Phone Services
    • Providing remote workers access to your business phone system helps facilitate customer interactions.
    • Contact us if your current phone system does not let you easily extend to employee laptops, tablets, or phones.
    • We have affordable ways to improve communications, often by augmenting your current phone services.
  • Webcast Services
    • Webcasts and video meetings and want to engage customer, employees, and other face-t0-face.
    • If you are running G Suite or Office 365, you have the ability to run video meetings and broadcasts without additional costs.
    • Contact us if you want to learn more or need assistance running a meeting.
    • We can also assist with more advanced web/video meeting services.

HIPAA Compliant Video Conferencing in G Suite

  • Hangouts Meet, the new video meeting service in G Suite can be used for HIPAA compliant video sessions
  • Hangouts named video calls are not covered by G Suite’s HIPAA Business Associate Agreement (BAA)
  • For best practices, administrators should make Meet the default for video meetings and disallow use of classic Hangouts and chat.  These settings can be limited to specific groups of users, if appropriate.
  • Contact us for assistance with these settings and/or user training.

Free/Discounted Phone and Communication Services

  • Several VoIP and online meeting providers are offering free or dramatically discounted services for up to 90 days.
  • These services can be configured to work with your existing phone services to extend access and features to employees that do not normally work remotely
  • Contact us to discuss your needs, workflows, and options.