CARES Act Details
The CARES Act allows for 6 months of existing SBA loans to be forgiven. It is currently unknown what you need to do to get this or if it is automatic. If you are not sure if an existing loan is an SBA loan, please ask your creditor.
What can you do right now? Determine if you have existing loans that are eligible by speaking with your lenders.
Paycheck Protection Program Loans/Forgiveness
- The Small Business Administration resumed accepting PPP loan applications on Monday, April 27 at 10:30 a.m. EDT from approved lenders on behalf of any eligible borrower.
- Please read the PPP Borrower Information Fact Sheet and the PPP Frequently Asked Questions (updated 4/24/20) - some of the information has changed from previously released documents--such as the Interest rate and the term!
- New Paycheck Protection Program Loans will forgive up to 8 weeks of payroll, if you keep employees on from February 15-June 30, 2020 (on a sliding scale). Additional funds obtained through the PPP Loan are amortized at 4% interest for up to 10 years and can only be used for payroll, rent, loan interest, utilities, and employee benefits.
- As we understand it right now, the loan amount will be 250% of average total monthly payroll (including benefits). If employees or owners make more than $100k/year, they are capped at the 100k level for the purposes of the loan.
- We believe sole proprietors/independent contractors, and members of LLCs will be able to count as employees, but may need to demonstrate their costs differently.
PREPARE - Gather your payroll records and be ready to provide monthly numbers. We understand there are questions revolving around, "Should I lay-off employees now that this PPP Loan is out there?" This is a dicey question and one that cannot be answered properly without absolute final/accurate information. That being said, AVCOG’s SBDC Advisors are happy to speak you about your situation to guide you towards the correct moves right now.
Employee Retention Credit
The Employee Retention Credit Program provides a fully refundable tax credit for 50 percent of wages, up to $10,000, for each employee kept on the payroll by businesses that have taken a financial hit because of the pandemic. Businesses qualify if they have been fully or partially shuttered by government order, or if their gross receipts are below 50 percent of what they took in during a comparable quarter in 2019. They are no longer eligible once their gross receipts rise above 80 percent of the comparable quarter.
The IRS published guidelines for businesses that want to apply for the credit, which is applied against the employers’ share of payroll taxes.
Updates to the SBA Disaster Loan (EIDL)
- Applying for an EIDL now makes you eligible for an advance up to $10,000 that you do not need to pay back. There is a place in the application where you request this grant and will enter your banking information. The funds will be direct deposited into your account within three days.
- The new EIDL application does not save - once you start you must finish. Review the "New EIDL application slides" to preview the application before starting.
- If you need to check the status of your application, email email@example.com or call (800) 659-2955. SBA has brought in outside resources for the online application and call center support to shorten wait times.
What can you do right now? If interested in a Disaster Loan, apply now: https://www.sba.gov/page/disaster-loan-applications
FAQ 1: I already applied for the Disaster Loan (EIDL). Do I need to reapply to be eligible for the $10,000 advance/grant?
Pay attention to recent correspondence from the SBA. Applicants are receiving different instructions depending on when they filed and which version of the application was used. Our best advice is to follow any instructions the SBA has given you. If you have not received instructions or if you have been instructed to do so, re-apply for the SBA Disaster Loan which is now a MUCH EASIER process. https://www.sba.gov/page/disaster-loan-applications
FAQ 2: Can I get both an EIDL and a PPP?
Yes, you can get a SBA Disaster Loan and a Paycheck Protection Program Loan (PPP), but the $10,000 grant/advance from EIDL will be deducted from the forgivable payroll loan. Also, the funds received from the loans cannot be used for the same purpose. AVCOG SBA Advisors can certainly help you determine which (or both) loans are best for your situation. Call or email to schedule an appointment.
Unemployment - New CARES Update
Self-employed/sole proprietors/independent contractors are now eligible to receive unemployment, if you are not in operation. As of today (3/31/20), you CANNOT apply yet, but benefits will be retroactive. You should NOT try, as initial rejection may slow the process. Keep an eye on the website notice at the top of the screen: https://www.maine.gov/unemployment/ .
Check out www.sba.gov/coronavirus