There are already 3 major federal legislative responses to the Covid Crisis, and each is full of opportunities — and responsibilities — for small business owners (including the Covid Disaster and CARES loans).

This list of bullet-points and links will keep you current. I’ll update it as often as possible. Last update: 8:00am March 27, 2020.

Please bookmark this page. Call anytime if we can help.

• The SBA Disaster Relief Loans are already being processed. Apply for up to $2 million at www.SBA.gov. (current as of 03/29/2020)
  • These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
  • SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
  • The website often crashes, so here’s the paper forms
  • When the CARES Act passes (see below) it is expected to modify these Disaster Loan Program as follows:
    • Waives rules related to personal guarantees on advances and loans of $200,000 or less for all applicants;
    • Waives the “1 year in business prior to the disaster” requirement (except the business must have been in operation on January 31, 2020);
    • Waives the requirement that an applicant be unable to find credit elsewhere; and
    • Allows lenders to approve applicants based solely on credit scores (no tax return submission required) or “alternative appropriate methods to determine an applicant’s ability to repay.”

• Paid Sick Time Off and FMLA. The U.S. Department of Labor Published their Guidance on Paid Sick Leave and Expanded FMLA (Family and Medical Leave Act) under the Families First Coronavirus Response Act.
  • There are some exemptions for companies with fewer than 25 employees.
  • Fact Sheet for Employers
  • Fact Sheet for Employees
  • Poster for Employees
  • Note: “Every dollar of required paid leave (plus the cost of the employer’s health insurance premiums during leave) will be 100% covered by a dollar-for-dollar refundable tax credit available to the employer.” (source: SBA.gov) This means that you may not have to go out-of-pocket to pay for this if you are careful. Consult your payroll provider first.
  • Note: “Certain provisions may not apply to certain employers with fewer than 50 employees. See Department FFCRA regulations (expected April 2020).” (sourece: SBA.gov)

• The CARES Act and Payroll Protection Loan Program (full text) is still being ratified by the House of Representatives, but appears to offer the following:
  • A loan in the amount of up to 4x (four times) the monthly “payroll, mortgage payments, rent payments, and payments on any other debt obligations made in the last year.” ($10 million maximum)
  • Application is made through SBA approved lenders. Inquire at your current business bank first. Not all banks are staffed up enough to participate in the application process.
  • Forgiveness of the loan (cancellation of the debt) will be granted in the percentage of the employees you maintain during the period (March – June) versus the same period last year. More specifically, the average number of Full Time Equivalent employees per month in March-June of 2020 compared to the same period in 2019.
  • The forgiven amount is non-taxable. Any un-forgiven loan is becomes an SBA 7(a) loan. Repayment terms are likely to be on a case-by-case basis, but believed to be 10 years at 4%.
  • To get forgiveness, you’ll need to collect the following documents during March – June of this year:
    • “(1) payroll tax filings reported to the Internal Revenue Service;
    • (2) State income, payroll, and unemployment insurance filings;
    • (3) financial statements verifying payment on debt obligations incurred before the covered period; and
    • (4) any other documentation the Administrator determines necessary.”

The Payroll program is completely unprecidented and has an “unlimited” amount of money to Loan.

Be careful with your strategy, however, as it may not be possible to take advantage of all of these opportunities. Before you lay off employees, consider all the angles.

Please call me at FuseCFO for further guidance. (David Worrell: [email protected] or 704-614-2701)

Also, Fuse is offering to manage your loan application processes for a flat fee. Hope we can help you weather the storm ahead.

Stay well,
David Worrell