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Let’s put politics aside for a few minutes and look at how your business can survive CoVid-19. Whilst our health care workers are fighting for the country and its people, it’s vital too that businesses survive. On Friday the $2 trillion rescue package was signed into law and unlike 2008, there is considerably more for small businesses. It’s not just the Wall Street Bankers this time, it’s your turn.

Whilst Trump, his businesses and family are barred from receiving financial support, it’s not the same for your business or you personally.

The legislation called the Coronavirus Aid, Relief and Economic Security Act, CARES Act, includes a $350 billion loan assistance for businesses with fewer than 500 employees (including sole proprietors, independent contractors and anyone otherwise self-employed – 1066). Under the bill, loans can be used to meet payroll and cover certain other expenses such as electricity and water utilities or even insurance premiums. 

Let’s dive straight in. The CARES Act creates a new type of loan for the  United States Small Business Administration (the “SBA”) to administer. 

The National Law Review stipulates that ‘Unlike the disaster loans, these forgivable loans are not tied directly to establishing losses suffered during the national disaster — there is a presumption of negative impact from COVID-19. These loans do not require collateral or guarantees”. What this means to you is that the other eligibility requirements of the SBA loan participation (e.g., average annual receipts) are not applicable, and this program is available (i) to many new businesses not otherwise able to avail themselves to the SBA loan programs, and (ii) provides much friendlier terms than traditional SBA loan programs.’

The first amazing point is that by just by applying for business support, regardless if granted or declined a loan, you’ll get $10,000. Now I am not a CPA, just a marketing expert, so you need to fully confirm this for yourself and get professional advice.  But my understanding is small businesses applying for a loan will be eligible for up to a $10,000 emergency grant via the US Small Business Administration— which would be subtracted from the forgiven loan amount, even if they don’t give you the grant – can you believe this!

The National Law Review provides a little more technical detail. ‘The CARES Act also creates a new grant program under the SBA’s Office of Disaster Assistance to provide quick relief for applications awaiting processing of SBA Economic Injury Disaster Loans (“EIDL”). Loan applicants can get up to $10,000 to cover immediate payroll, mortgage, rent, and other specified expenses. This grant does not have to be repaid. A business that receives an EIDL can apply for, or refinance its EIDL into, the forgivable loan product.

The next interesting point is the word ‘forgiven’, that means that you may not even have to pay the loan back. It’s forgivable so just don’t spend it on stupid stuff like a vacation, as they’ll want it back if you take advantage of their generous support. It seems any money spend in the first 8 weeks’ support staff is forgiven immediately. You can use it to financially support staff when you have no work for them – you might even consider encouraging them to volunteer to help health professionals, emergency services or elderly neighbors or other amazing schemes that are being set up across the nation. 

It is estimated that there will be $350 Billion in the Small Business Administration fund as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The link to the SBA forms is at the end of the article, but what else is available for you?

The CARES Act Stimulus package includes:

  1. Loan forgiveness grants to small businesses and nonprofits to maintain the existing workforce and to help pay for other expenses like rent, mortgage and utilities;
  2. Offers SBA emergency grants of up to $10,000 to provide immediate relief for small business operating costs;
  3. Subsidizes 6 months of payments for small businesses with existing SBA loan

Unlike previous loans where you have had to prove credit was unavailable to you elsewhere, this act waives this regulation. Not to mention, there are NO personal guarantees required – clearly Trump referenced his own experience with that clause!  

With the CARES Act, the loans can be up to 2.5 times your monthly payroll (even if it’s just you on the payroll) or $10 million, whichever is less.

Note that there is a limit for $100,00O per employee per year. I’ve read the CARES Act section and it appears if an employee earns more than $100,000 per year, the claim can only include the first £99,999 pro-rated to a monthly sum, for example, $8,333 per month times 2.5. Therefore you could get a loan of £20,833 for each employee earning over $100,000. You will need to take advice from your CPA or Attorney as I am not qualified in this area to give professional advice.

Payments can be deferred by up to a year, and businesses will be able to apply for forgiveness of the loan (or a portion of it), based on the amount used during the eight weeks following loan approval. Any amount not forgiven would have a maximum interest rate of 4%. An unsecured loan at 4% or less over 10 years is an awesome deal.

Download the SBA Disaster Loan Application at https://www.sba.gov/page/disaster-loan-applications

CARES Act Personal Support

With everyone being encouraged to stay at home and self isolate its creating huge financial problems for families across the country.  With more Americans testing positive every day, employers are suggesting working from home. At Click Convert we are in our second week of home working for clients – Skype does get to you in the end, believe me, it never stops.  But not all people can work from home, think of all those bars, restaurants and hotels that have closed and the entire travel and aviation industry in shutdown.

With so many unemployed, where are they to find money to survive? The $2 Trillion coronavirus stimulus package is that rescue package. It’s a one-time social payment, but it may be repeated later, to help those struggling through the crisis

“The bill also provides funding for $1,200 tax rebates to individuals, with an additional $500 payments per qualifying child. The rebate begins phasing out when incomes exceed $75,000 (or $150,000 for joint filers).”

All working Americans (those of you who filed your 2018 or 2019 tax return) will get a payment, but it is dependent upon how much you earn. To assist you with this, there is a calculator at https://www.omnicalculator.com/finance/stimulus-payment#the-idea-behind-the-coronavirus-stimulus-package

As long as your income does not exceed $99,000 or $136,000 as a head of the household, you are eligible for the loan? I know it seems a bit of a bitch, but there will be a huge number of Americans left high and dry by this. It’s all too easy to have large mortgage payments, cars and kids leaving those over $99,000 helpless. 

For example, a married couple with 2 kids earning a $150,000 income in 2019 will receive $3,400. 

How do I apply?

It’s automatic, the payment will be transferred directly into your bank account. I think we all gave banks details ( if you didn’t you’ll get a check in the mail) in the 2019 tax return. Who would have thought giving the government your bank details would be a good idea? Next thing you know, we’ll have a free European health care system too (we actually might at the end of this). 

As a side note, I once read that Presidents are never remembered for what they planned. Trump wanted to “Make Us Great Again”, it might be that he ended his presidential term making us healthy again!

Anyway, who thought reading a blog would get you $10,000 for free and 2.5 times your business costs. Simply put, the government is going to give you 2.5 times your monthly business revenue less your profit. 

If anyone is struggling with marketing or how to set up a work from a home office, give us a call – I’ll cover in detail in my next blog how we got set up remotely and all the tools we use.

Finally the disclaimer, you will need to take advice from your CPA or Attorney as I am not qualified in this area to give professional advice, I am just giving you a heads up.