The CARES Act was signed into law today. The SBA Economic Injury Disaster Loan (EIDL) program has been accepting applications for about three weeks. The EIDL application is complicated and requires extensive information to be submitted both at the application stage and during the process of the loan request.
EIDL provides up to $2Million and rates are: 3.75% 30yrs PROFIT Businesses; 2.75% 30yrs NON-PROFIT Organizations
ALL business owners negatively impacted should immediately apply for EIDL assistance. You can find the application on SBA.gov and click on the amber-colored COVID-19 banner at the top of the page. Download the
application forms, complete and sign, and upload with accompanying documentation. Be thorough for the best chance of speed and success. ALSO: check off ONLY EIDL financing otherwise your application will be held up.
From our CPA James Henderson, there are many solutions for business owners. Some are external. Like loans, SBA or otherwise, loan modifications, tax credits, grants and vendor/landlord accommodations. Some are internal, like expense management, cash flow projections/management, client revenue deferral, new service offerings, and staff lay-offs. This crisis times scream for a holistic coordinated/planned approach, rather than a knee-jerk “get a quick loan for cheap” approach
I have viewed many of the seminars regarding the SBA EIDL and CARES act financing, and have several clients engaged in the process. One thing that has come up over and over again is the necessary involvement of the business owner’s CPA valued advisor to get the right program in place depending on a client’s particular circumstance. There are payroll tax credits available for retaining your workforce. And with some deeper dive, probably a lot more.
If you do not work with a CPA, our friends at Aurora Consulting are offering free advice and an affordable consulting fee if a business needs their direct assistance to collate the information and complete and submit the application to SBA. SBA allows a consulting fee up to $2500 maximum. Linda and Trevor have agreed that they will charge only $750.00 as their consulting fee to complete and submit an EIDL application. They will accept a $250.00 upfront payment with the balance due later at a date to be agreed upon by both parties. They don’t want to negatively impact your already-strangled cashflow and are willing to work with anyone who needs their assistance. Basic advice and guidance is free of charge.
They attended a webinar provided by the Governor of Connecticut, Ned Lamont, to discuss the basics of the CARES Act to provide assistance to business owners.
Here are highlights from the webinar with more to follow in another newsletter soon:
CARES Act website is not active yet
SBA.gov website does not yet have CARES Act information
Programs will not be available for a week or two
It is recommended to apply for BOTH EIDL and CARES Act financing. Get the applications in process. Once a determination is made for approval, you should then choose which of the two loans works best for your needs.
CARES Act Loans are basically an SBA 7a Loans up to $5MM, short term loans that will be converted to grants if you retain employees.
Employee Retention: this has been most actively discussed in the media and seems to be a priority of the CARES Act financing options. That leads to other questions about how to qualify and that aspect remains to be seen based on the soon-to-be-released CARES Act guidelines from SBA
RECORD KEEPING: Step up the quality of your record-keeping in terms of Employees and Operating Expenses. A mention was made that “forgiveness” of the loan will be decided after an interview and query for proof or Employee retention and that funds were used for Operating Expenses.
SBA does not yet have a timeline when the Lender guidelines will be available to follow for lending but there is an urgent priority within SBA to coalesce the information from the CARES Act and to get information to SBA Lenders
501C3 organizations are eligible under EIDL and CARES Act
500 employees or less
They are looking to access the Small Business Owners Guide for CARES Act which should be available tonight and we will share pertinent information with you in other email newsletter updates
Linda and Trevor have been fielding calls and queries from anxious business owners all week. They are doing their best to parse the information and get ACCURATE information to you. We strongly recommend you slow-down your decision-making. We’ve already seen some business owners making bad decisions to obtain capital out of desperation. We use the phrase “EVER-EVOLVING” to describe the lending atmosphere in general, and the emergency programs specifically.
Please contact Aurora Consulting and mention that you received this message from us, please SHARE this email with anyone you feel may find the information useful.
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