There will be opportunities.
We’ve seen many company’s capitalizing on opportunities from Coronavirus related contracts, and other services that help people with working remote.

There will be some losses.
However, an appropriate response can massively lessen the damage and we’re here to support you every step of the way!
If you have an opportunity or risk on the horizon and want to discuss it, give me a call.

The Government Is Creating Opportunity
The government has announced billions of dollars in loans (potentially interest free) for businesses in 43 states that have been negatively affected by coronavirus. We will be providing consulting services helping businesses apply for these loans, decide what to spend the money on, and a plan for repayment. There may also be direct cash support, we’ll know soon.

Reduction in payroll tax for someone that is sick up to $2,000 per sick employee is about to pass the Senate. There may be further payroll tax reductions, holidays, and there have even been signals for  permanently removing the payroll tax. In any case, this will require planning.

On March 17^th, the Treasury Department announced it will postpone the April 15^th tax-payment deadlines for millions of individuals and companies, providing another 90 days to pay your 2019 income-tax bills in an unprecedented move. On March 20^th, the Treasury Department announced that the April 15^th filing deadline for both individual and business tax returns has been moved to July 15^th as well. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.

All states are expected to be added to the list of eligible disaster areas. You can find the up-to-date list at https://disasterloan.sba.gov/ela/Declarations/Index. The loan application process will be handled virtually through www.sba.gov/disaster with no field offices being set up (note: this is a good thing). There is a customer service number specifically set up for this program that is available to answer questions (1-800-659-2955) or email at disastercustomerservice@sba.gov.

The loans will have 30-year terms with a 3.75% interest rate. They will have a full deferment for the first year with no payments due for the first 12 months. Most types of businesses will qualify including some that aren’t eligible for typical SBA guaranteed loans such as passive real estate owners and non-profits that sell a product. The business will have to be “small” as determined by their NAICS code and matched to the SBA size standard for that code (https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf).

The funds will be for working capital needs related to business operations. This includes items typically thought of as working capital, i.e. payroll (including any regular salary of the owner(s)), rent, etc., but it can also include paying fixed debt obligations such as a mortgage payments, paying back short-term or bridge loans made by lenders specifically for this purpose and credit card debt related to these economic circumstances. Borrowers must maintain receipts for all proceeds from the loan for three years in case of an audit.

The amount available to a borrower will primarily be determined by dividing last year’s gross profit in half up to $500,000. If a borrower needs more than $500,000 and their gross profit calculation will support this, there is a slightly more involved calculation that can allow up to $2,000,000. Historically, 95% of borrowers have used the first calculation. To qualify for the loan, the SBA will pull an Experian credit score. The SBA will not say what the minimum score requirement is, but our understanding is that most businesses will qualify.

Historically the average processing time on these loans has been 3 days with disbursement within 30 days. Obviously, the volume should be substantially higher for the current economic relief loans than previously loans, but the SBA still plans to turn these loans around as quick as possible. Disbursement will be one lump sum directly into the customer’s account.