Financial Relief and Support Everything You Need to Know as of April 9, 2020
Daily Webinar | Everything You Need to Know About Financial Relief and Support Clarity Snapshot: The Funding Landscape Government funding Private funding ● As a result of the CARES Act , the US Government ● Private funding options exist, but the is launching unprecedented levels of government specifics vary across providers support for small businesses ● Loan terms will be less flexible and have ● $377B of funding from the CARES Act is directly higher interest rates allocated to small businesses, making it the largest SMB funding program in US history ● We consider this to be more prevalent in ● There is speculation of a CARES Act V2 launching the future. We will update when we have in the next month expanding the total provided to more information. $599B. However, it is still very important to apply to V1. Focus for today
Daily Webinar | Everything You Need to Know About Financial Relief and Support Clarity There are Two Primary Federal Funding Options ● A new $349B program as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act Paycheck Intended to provide American small businesses with eight weeks of cash-flow ● Protection assistance through 100 percent federally guaranteed loans Program ● Can be forgiven and essentially turned into a non-taxable grant ● A long-standing loan program that has now been expanded through the CARES Act. Economic Injury ● Intended to assist businesses in regions affected by declared disasters Disaster Loan ● Major benefit - potential to receive a grant of up to $10K within days of being contacted by a loan officer
Daily Webinar | Everything You Need to Know About Financial Relief and Support Clarity Economic Injury Disaster Loan (EIDL) Any entity type that has suffered substantial economic injury by a disaster, ● Who can apply including Sole Proprietors/contractors ● Your business must have been in operation before January 1, 2020 ● Up to $2M is available in the form of a working capital loan How much ● An emergency grant of up to $10K can be issued within days of being contacted funding can by a loan officer— however, we are hearing of SBA delays at this time you expect? ○ ● The grant received in advance of the loan will not have to be repaid ● The loan amount will need to be repaid, though interest is low (3.75%) and the How much can term-is long (up to 30 years) be forgiven?
Daily Webinar | Everything You Need to Know About Financial Relief and Support Clarity Economic Injury Disaster Loan (EIDL) The are restrictions on what the funds can be used for, it can only be used for ● operating expenses What to ● There’s a high volume of applications —so be patient when waiting to get Consider connected with a loan officer and potentially receiving the grant! The initial disbursement for any amount approved will be no more than $25,000. ● We currently don’t have word on when the rest will be disbursed. ● Applications are now open through SBA’s website: https://covid19relief.sba.gov/#/ How to Apply
Daily Webinar | Everything You Need to Know About Financial Relief and Support Guidance EIDL: An Overview of COGS/COS Cost of Goods Sold (COGS) is the total cost associated with making or acquiring any goods ● sold during the reporting period. ● It’s all about the production costs you incurred, and doesn’t include operational expenses for the general operation of your business. ● Cost of Service is harder to define as it’s industry-specific. Think of a direct input (e.g. a car part if you’re a mechanic) that cannot be used in more than once in a service. ● Subtracting COGS from your Gross Revenue gives you your Gross Profit - this is why the SBA is asking for both on your application. ● Additional reading is available here.
Daily Webinar | Everything You Need to Know About Financial Relief and Support Guidance EIDL: Best practices Apply — While there is uncertainty around grant receipt times, our perspective is that given ● the ease of applying, the potential return on your time is well worth it Being up to date on tax filing is strongly recommended before you apply ● Confused with the application? We have a dedicated team offering support and guidance ● Have your 2019 Gross Revenue and total Cost of Goods Sold amount prepared. Unsure what ● constitutes a Cost of Goods Sold? Check out our blog post here.
Daily Webinar | Everything You Need to Know About Financial Relief and Support Clarity Paycheck Protection Program (PPP) ● Any entity type , including Sole Proprietors ● Your business must have been in operation before February 15th, 2020 Who can apply ● 1099 contractors can apply for this assistance on their own, and should not be included in the business owner’s application ● 2.5 times your average monthly payroll expense —up to $10M How much ● Payroll is defined as W2s that are US-based residents and citizens, up to $100K annually (e.g. If funding can you/your employee makes >$100K annually, it will cap at $100K) you expect? ● For Sole Proprietors and contractors this amount is equal to your average monthly net profit ● If you spend a minimum of 75% of the funds on payroll, and the remaining on rent, leases, utilities, or interest payments on mortgages, the full amount is eligible to be forgiven ● Maintain your number of staff and level of pay—otherwise the total forgivable amount is reduced How much can proportionally be forgiven? ● Bench recommends keeping the deposit and use of PPP funds to one bank account. It’s also imperative you collect all relevant payroll documents, invoices and statements. This will make it easy to apply for loan forgiveness.
Daily Webinar | Everything You Need to Know About Financial Relief and Support Clarity Paycheck Protection Program Applications will be run through SBA backed lenders ● At this time, some lenders are requiring a previous relationship with applicants ● What to While the base requirement is average monthly payroll expenses, supplemental ● Consider documentation may be requested depending on the institution Payments are deferred for 6 months but interest will accrue during that time ● (interest = 1%) ● The PPP application is live as of Friday, April 3rd ● You can apply through an SBA backed lender, or an SBA agent (such as Fundera ) ● Contact your bank to inquire if they have opened applications to their clients How to Apply ● For contractors and self-employed individuals, applications are expected to open on Friday, April 10th (more detailed information is expected this week)
Daily Webinar | Everything You Need to Know About Financial Relief and Support Guidance PPP: Payroll Expenses ● Make sure you have the required documents ready to calculate your average monthly payroll expenses. This includes: ○ Salary and wages per employee (up to $100K in a year) ○ Payment for vacation, parental, family, medical or sick leave ○ Payment upon dismissal ○ Group Health Insurance premiums and benefits ○ Retirement contributions ○ Employer paid portions of state and local taxes ● For Sole Proprietors and Contractors This will be your net income in 2019 as reported in your Schedule C divided by 12. Our blog post with more details can be found here.
Daily Webinar | Everything You Need to Know About Financial Relief and Support Guidance PPP: Banks Update Bank of America Application site: https://about.bankofamerica.com/promo/assistance/latest-updates-from-bank-of-america-coronavirus/small-business-assistance US Bank Requires previous accounts?: Yes Application site: https://apply.usbank.com/applications/business/InquiryForm Requires previous accounts?: No, but they will focus on current clients first Status: Available PNC Application site: https://www.pnc.com/en/customer-service/paycheck-protection-program.html Requires previous accounts?: Yes TD Bank Application site: https://www.td.com/us/en/small-business/covid-sba/#/ppploan Requires previous accounts?: Yes JP Morgan Chase Application site: https://recovery.chase.com/cares1 Requires previous accounts?: Yes Citigroup Application site: https://online.citi.com/US/JRS/pands/detail.do?ID=smallbusinesspppinfo Requires previous accounts?: Yes Wells Fargo Application site (must log in to online banking): https://update.wf.com/coronavirus/paycheckprotectionprogram/ Requires previous accounts?: Yes Unavailable Capital One Application site: https://www.capitalone.com/updates/coronavirus/small-businesses/ Requires previous accounts?: Yes
Daily Webinar | Everything You Need to Know About Financial Relief and Support Guidance PPP: Best Practices ● Contact your existing financial institution to find out if they are taking PPP applications, or will be in the future ○ If you cannot apply to a bank you have a current relationship with, follow up with other community banks in your area ● Keeping up to date with IRS compliant bookkeeping is more important than ever ● Tracking the use of PPP funds to apply for forgiveness is essential ○ Opening up a new bank account for the loan funds is an easy way to stay on top of all of the activity you are using the funds for ○ Keep payroll documents and any applicable invoices or supporting documentation
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