CARES act forgivable loans for businesses

[String&stick]

Hey guys,

I'm curious how many members are small business owners that would like information passed along as it comes out in regard to the giant bill that was passed.

I am a Branch manager at a bank and we are preparing to roll out info and applications for loans made available through the 2 trillion dollars bill passed last week.

I know I have seen some people that are small business owners, or own companies and thought I could pass along what I'm getting if anyone wants to hear.

If there aren't any responses then I'll let this topic die, but if there are questions I will help pass along what info that I can as it will be pretty uniform across the country.

I know some don't like banks or borrowing and I totally understand that, but if this can help keep some heads above water I want to help where I can.

A little info for now:

All of this will be administered through your local banks that do Small Business Administration guaranteed loans. So you should be able to work locally as most Banks do these loans.

Application period is set to open tomorrow, Friday April 3rd for sole proprietors and small businesses and April 10 for self employed and independent contractors. Deer

Right now most funds are to help keep paying people (wages, commissions, benefits, taxes on comp., Etc.) but some can be used for rent, utilities, or interest on mortgages.

No collateral will be required.

Again if there Is some interest I will look to share more and help answer questions as I can. You can also PM me or call your local bank (they will be cranky as they will be receiving lots of calls so be patient with them!)

 

[Texasbuckeye]

I am curious about the forgiveness...has anything been said yet about how this is forgiven and how much is forgiven?

 

[Billy Goat]

Are these numbers correct? Trying to run everything down but can't be certain.

Must maintain 90% employees. From what your staff was in February in June need to have 90% retention. Is this positions or the exact same employees?

Max loan is 2.5 times your monthly payroll? Is this based on an average payroll from a year? Or will it be based on the month of February?

75% of the loan must go to payroll. I'm assuming this includes healthcare costs?

Thanks. These are things I'm having trouble confirming. These are conditions that must be met for the loan to be forgiven, I think. Otherwise it will be converted to a regular loan at a rate of around 4-4.5%

 

[String&stick]

@Texasbuckeye
The loan CAN be 100% forgiven if the funds are spent appropriately. You will have to provide documentation as to your expenses prior to receiving the loan, and then down the road you will have to provide proof of how funds were used in the 8 weeks after the loan was received.

You must also show proof of maintaining or bringing back workers. You will still receive some forgiveness if you reduce staff, but the forgiveness will be reduced.

Also if sounds like the servicing lender aka your bank, will be helping determine your forgiveness level.

 

[WV Mountaineer]

What about seasonal workers? Payments on equipment come whether it’s mowing season or not. Meaning grass crews were not the people on my construction crew.

They are two separate businesses. I’m trying to get a commitment on one guy for mowing and landscaping. But, have no intentions of using the other three from last year. Do you know how that would be analyzed?


The lawn care business is my major concern. Without people full time. It’s also where most of the debt is.

Thank you for bringing this to light.

 

[String&stick]

Are these numbers correct? Trying to run everything down but can't be certain.

Must maintain 90% employees. From what your staff was in February in June need to have 90% retention. Is this positions or the exact same employees? Nothing that we have received is showing percentages. What we have states that if employment is reduced, the forgiveable amount will also be reduced. But the way things are worded, if you have already laid off or fired people, you have until June 30 to rehire.

Max loan is 2.5 times your monthly payroll? Is this based on an average payroll from a year? Or will it be based on the month of February? My docs state the max loan amount will be 2x avearage monthly payroll costs + 25%. So established normal business take 2019 average payroll. If you are a seasonal or new business you will need to use an "applicable" time period. (This is not defined and sounds like it will be up to lender decision) my guess is if you own a landscaping business in Montana, they want you to use what you normally would pay out in April and May/June, as those are the months supposedly being covered.

75% of the loan must go to payroll. I'm assuming this includes healthcare costs?
Yes, payroll includes the following
1. Salaries, wages, or tips (capped at 100k on an annualized basis for each employee)
2. Employee benefits (cost of vacation, parental, family and medical leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payments of any retirement benefits)
3. State and local taxes assessed on compensation
4. For sole proprietor or independent contractors: wages, commissions, income, or net earnings from self employment. Capped at 100k annualized for each employee.

Thanks. These are things I'm having trouble confirming. These are conditions that must be met for the loan to be forgiven, I think. Otherwise it will be converted to a regular loan at a rate of around 4-4.5%

As far as we are being told, the rate is fixed at .5% and it does not convert. Now if you needed more than 2 years to repay the unforgiven portion. . . All bets are off.

 

[String&stick]

What about seasonal workers? Payments on equipment come whether it’s mowing season or not. Meaning grass crews were not the people on my construction crew.

They are two separate businesses. I’m trying to get a commitment on one guy for mowing and landscaping. But, have no intentions of using the other three from last year. Do you know how that would be analyzed?


The lawn care business is my major concern. Without people full time. It’s also where most of the debt is.

Thank you for bringing this to light.

Is the lawn care new or established from last year?

(Nothing is 100% right now as the Gov is rolling things out as fast as they can and letting lenders figure it out or call with questions, but I will answer as best I can!)

 

[NDGuy]

How would it work for self-employed people? My wife own's her own hair shop.

 

[String&stick]

Sorry just. Saw you don't want the 3 from last year so obviously the lawn care was established last year.

My understanding is they are going to look at seasonal workers based on what you would be using in this time of year had it been a "normal" year.

So for my local guy that is bringing back his normal 2 guys to mow lawns, we are taking last year's April and May payroll, factoring for raises, and plugging in numbers)

For a new hire, I would think you would be fine looking at last year's numbers for guys (hours or commission) and estimating based off of that what your guy would need. They don't want misused funds but their main goal is keeping people working, so in my PERSONAL opionion they will lenient on people that are working to employ staff.

I would just document you reasons for hiring 1 instead of 3 back and that it was a plan prior to corona virus.

 

[Billy Goat]

Thanks. I'm having trouble getting information from lenders. I hate to be taking advise from some guy on the internet but right now it seems like it's the best option. It gives me something to atleast check and try to cross match. Asking questions based on two businesses. One a restaurant of 35 employees. The other a landscaping business that of course has seasonal employees.

Getting handed paperwork but even that is vague and I'd like to have ducks in a row as close as possible by tomorrow morning.

 

[String&stick]

Self em

How would it work for self-employed people? My wife own's her own hair shop.

Self employed can apply starting the 10th. She is going to treat things like she is the employee and look at her average monthly income. She can also pay rent or mortgage interest, but must pay mortgage principal out of what she receives as wages from that portion of things.

If she rents chairs in her salon to other beauticians she should encourage them to also file as self employed and they can then get a loan for their earnings plus rent and then they can still pay her.

So long as she doesn't fire herself or spend over 25% on utilities, rent, etc. These seem the most straight forward for forgiveness

 

[NDGuy]

Self em


Self employed can apply starting the 10th. She is going to treat things like she is the employee and look at her average monthly income. She can also pay rent or mortgage interest, but must pay mortgage principal out of what she receives as wages from that portion of things.

If she rents chairs in her salon to other beauticians she should encourage them to also file as self employed and they can then get a loan for their earnings plus rent and then they can still pay her.

So long as she doesn't fire herself or spend over 25% on utilities, rent, etc. These seem the most straight forward for forgiveness

And where would she apply? Check with local bank/credit unions?

 

[Gunnersdad49]

I am in to learn more. We keep getting "wait for more information" from our local SBA. Nobody seems to know how these things work.

 

[menhaden_man]

We are tracking too...

 

[String&stick]

Thanks. I'm having trouble getting information from lenders. I hate to be taking advise from some guy on the internet but right now it seems like it's the best option. It gives me something to atleast check and try to cross match. Asking questions based on two businesses. One a restaurant of 35 employees. The other a landscaping business that of course has seasonal employees.

Getting handed paperwork but even that is vague and I'd like to have ducks in a row as close as possible by tomorrow morning.

I totally understand and to be honest lenders are flying half blind.

To give you an idea, this got passed Friday last week, we got a role out on late Monday and Tuesday and everything is vague at best. So we send off questions and try to get some answers. It will be a cluster F for sure! And no bank gets excited for 100% unsecured loan that the government is going to Guarantee, but then put stipulations on how to qualify to be forgiven!

Have they given you the paycheck protection program info sheet? It helps a little.

Also a lot is up to each lender to interpret so opinions will differ as banks try to help while also protecting themselves

 

[ID_Matt]

I totally understand and to be honest lenders are flying half blind.

To give you an idea, this got passed Friday last week, we got a role out on late Monday and Tuesday and everything is vague at best. So we send off questions and try to get some answers. It will be a cluster F for sure! And no bank gets excited for 100% unsecured loan that the government is going to Guarantee, but then put stipulations on how to qualify to be forgiven!

Have they given you the paycheck protection program info sheet? It helps a little.

Also a lot is up to each lender to interpret so opinions will differ as banks try to help while also protecting themselves

I work at a local bank as well and this describes the situation pretty well. Vague information at best and definitely a cluster F. I think it will be a great program and we have been encouraging people to get on board. It was extra tough when the articles started being published Friday telling consumers to contact the banks immediately but the banks didn't get any direction or anything until Tuesday.

 

[String&stick]

@Billy Goat

I know what you mean. Its a tough call to make. I do think (completely personal thought not from the bank) there will be more stimulus for small businesses to come. This is projected to cover 2 months and many areas are already saying they will be shut down at least that long.

It will be interesting. My biggest advice to business owners is call your banker and start talking now. Banks will have to work with people and if your an honest person they will want to help you the most.

Sketchy businesses that haven't worked with the bank on things they need to improve will get pushed to the bottom of the pile. Be proactive even if you just don't know how it's gonna work!!

Also I'm not an expert or guru by any means and I don't claim to know what your banker will say or how he will interpret things. But if you'd worried about your business and want to bounce things off of "A banker" prior to talking to "YOUR banker" shoot me a PM and I'll get you my email or cell number.

Not asking people for their financial info (please dear God never send that to a stranger!) but if you want to bounce ideas, ask questions, or run scenarios prior to talking to your guy I'll help where I can.

I love this community and I hate thinking of guys losing their business so if I can help In any way I will!

And if you worry about your Bank kicking you out or shutting you off, just know your bank is worried about people giving up and filing bankruptcy instead of trying to make a plan.

There will be a lot of restructuring and extending going on in the coming months for tons of loans!

 

[Billy Goat]

@Billy Goat

I know what you mean. Its a tough call to make. I do think (completely personal thought not from the bank) there will be more stimulus for small businesses to come. This is projected to cover 2 months and many areas are already saying they will be shut down at least that long.

It will be interesting. My biggest advice to business owners is call your banker and start talking now. Banks will have to work with people and if your an honest person they will want to help you the most.

Sketchy businesses that haven't worked with the bank on things they need to improve will get pushed to the bottom of the pile. Be proactive even if you just don't know how it's gonna work!!

Also I'm not an expert or guru by any means and I don't claim to know what your banker will say or how he will interpret things. But if you'd worried about your business and want to bounce things off of "A banker" prior to talking to "YOUR banker" shoot me a PM and I'll get you my email or cell number.

Not asking people for their financial info (please dear God never send that to a stranger!) but if you want to bounce ideas, ask questions, or run scenarios prior to talking to your guy I'll help where I can.

I love this community and I hate thinking of guys losing their business so if I can help In any way I will!

And if you worry about your Bank kicking you out or shutting you off, just know your bank is worried about people giving up and filing bankruptcy instead of trying to make a plan.

There will be a lot of restructuring and extending going on in the coming months for tons of loans!

Have already been enrolled in a SBA small loan that was a credit line. Hadn't used it til this hit. Have people to work with, it's just nice to have another individual who is familiar with it because sometimes details get missed.

I'm just a dumb redneck in the hills trying to figure this stuff out.

 

[String&stick]

And where would she apply? Check with local bank/credit unions?

Yes check with your local banks to see if they participate with the SBA. Go to www SBA.gov and you can find a list of SBA lenders in your area. Program is the same at all of them so find one you like or already work with.

 

[pk_]

Yes check with your local banks to see if they participate with the SBA. Go to www SBA.gov and you can find a list of SBA lenders in your area. Program is the same at all of them so find one you like or already work with.

Do we need to first fill out the application at SBA.gov?