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SBA loan options for small businesses impacted by COVID-19 (Banks start accepting PPP applications on Friday, 4/3/2020!)

In these unprecedented times of turmoil and uncertainty, I hope you and your loved ones are safe, healthy, and dancing at D Nice's virtual parties! See you there this weekend!

As you may know, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law on March 27, 2020. As a fellow small business owner and attorney, I've spent an extensive amount of time understanding and interpreting the significant impacts that COVID-19 has had on the economy. In particular, focusing on how the CARES Act affects small business operations. In order to preserve as many American jobs as possible in the face of COVID-19, the U.S. Small Business Association ("SBA") is making disaster loans available to certain businesses. 

Here are two loan options on the table and some of the main points you should know as of today:

  • The EIDL or SBA Disaster loan (7b), APPLY HERE - https://covid19relief.sba.gov/#/

  • Paycheck Protection Program (PPP, 7a), or the "forgivable loan"

SBA Disaster Loan (EIDL) (7b):

  • Loans up to $2 Mil to pay for other operating expenses

  • Fixed interest rate of 3.75%

  • You can apply now and get up to a $10K advance on the loan within 3 business days.

  • The advance becomes forgivable if you don't get approved for the full loan.

  • When the other documents are submitted, it may take up to 6-7 weeks to have an SBA loan officer assigned.

Paycheck Protection Program:

  • Loan up to $10 Mil to pay for wages, payroll taxes, Independent Contractors, rent, and utilities.

  • You will need to track your payments for the above line items.

  • As long as you use the funds for that, they become forgivable, tax-free!

  • The application process will be handled by banks.

  • Banks and loan officers are supposed to start accepting applications for the Paycheck Protection Program starting Friday, April 3rd.

  • Each bank may have its own application and approval process.

  • You MUST keep an accounting of expenses you spend the loan proceeds on.

  • If you don't keep accurate accounting, then this will turn into a full-fledged loan that you have to pay back.

  • You can use the funds to pay for payroll, rent, utilities, and benefits.

  • Yes, you can apply for both loans (some stipulations apply).

  • Business owners are encouraged to apply as soon as they can as funds are limited.

Information you will need:

  • Most recent Federal income tax returns

  • Personal Financial Statement

  • Schedule of Liabilities listing all fixed debts

  • MUST complete SBA paperwork

  • Year-end profit-and-loss statement and balance sheet for that tax year

  • A current year-to-date profit-and-loss statement

  • Monthly sales figures for increases in the amount of economic injury

New information is constantly becoming available. The applicability and advantages of either loan will depend upon the applicant's business. The best way to get current information is to contact us directly. We are working full time, answering calls, and checking email. Should you have further questions or concerns, please reach out. Email Victoria Rose at vrose@arscounsel.com today to set up a consultation.

Please share this note with your network. Thank you.
 

Yours in hand washing,

Almuhtada

Almuhtada Smith