CARES Act & Your Business - $10,000 Grant, Paycheck Protection Program, Stimulus Checks, Unemployment Expansion

UPDATES

As I learn more about these programs, I'll update this section with updates to make sure that you have the most accurate information.

4/6/2020 Update

Urgent Update regarding the EIDL Loan.

4/2/2020 Update:

If anyone submitted an EIDL application before the CARES Act was finalized and before the streamlined application was put in place, from my research it looks like you have to go back in and do it again and make sure you select the option for the $10,000 advance in order to get the grant. The EIDL loans themselves if you get a loan in addition to the grant have a interest rate of 3.75% for businesses and 2.75% for non profits. Initial loan payment is not due for one year after the loan origination date. Unlike PPP loans, there is no loan forgiveness, other than the $10,000 loan advance. In order to get a EIDL loan, a UCC lien is placed against the assets of the business. A personal guarantee is required for loans > $200,000.

4/3/2020 Update:

CARES EIDL $10,000 GRANT UPDATE: There has been a lot of confusion about the EIDL grant. I read the CARES bill where it talks about it and it says the following:

(3) AMOUNT.—The amount of an advance provided under this subsection shall be not more than $10,000.

Administrator has to make requested funds available within 3 days

An advance provided under this subsection may be used to address any allowable purpose for a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)), including— (A) providing paid sick leave to employees unable to work due to the direct effect of the COVID–19; H. R. 748—28 (B) maintaining payroll to retain employees during business disruptions or substantial slowdowns; (C) meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains; (D) making rent or mortgage payments; and (E) repaying

(5) REPAYMENT.—An applicant shall not be required to repay any amounts of an advance provided under this subsection, even if subsequently denied a loan under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)).

So far it does not appear that anyone has gotten the funds within three days. I've looked at tons of forums, comments and discussions and it does not appear that the SBA is meeting that part of the law.

According to several comments from people that have called the SBA, it sounds like they are giving the $10,000 grants based on the number of employees a company has, but there is no clear documentation on what a given employee number does or doesn't do to the percentage of the $10,000 you can receive. The law says nothing about the grant being graduated based on employee number, so it really feels like they are making it up as they go along, which is unfortunate.

I found several comments from people that said they talked to the SBA and the SBA said they haven't processed the advances and they aren't sure where the money is coming from yet.

I also found comments from quite a few people that talked to the SBA about how much of the $10,000 grant you could get and a lot of commenters said the SBA told them that they would automatically get the full $10,000. Other commenters said the SBA told them it would be on a graduated scale based on the number of employees you have. So it does not sound like the SBA employees know what it will be either. I did find this article that quotes an SBA director that saying it would be graduated based on the number of employees:

https://www.bizjournals.com/philadelphia/news/2020/04/01/sba-mid-atlantic-boss-talks-interest-rates-loan.html

Senators and even the nation wide SBA have referred to the $10,000 as a grant and it appears they are going back on it now and making it graduated. Here is a whole discussion relating to that on Reddit.

https://www.reddit.com/r/smallbusiness/comments/fteh73/in_anticipation_of_the_upto_10000_grants_not/

In summation, the government hasn't done a great job in communicating what this grant was and how much people would qualify for and at this point it is still very unclear who will get the grants, when the funds will actually be dispersed, whether it's going to be $10,000 or whether it will be graduated, and, if graduated, the criteria upon which the graduated amounts are based. It seems like it should have been very clearly detailed as part of the bill (800 pages, but they couldn't include another page on it??), but it wasn't and now they are making it up as they go along.

HELPFUL RESOURCES

Senate’s Quick Guide

The CARES bill is huge and confusing, so the Senate came up with a shortened guide to the PPP program. You can download that here:

https://www.sbc.senate.gov/public/_cache/files/9/7/97ac840c-28b7-4e49-b872-d30a995d8dae/F2CF1DD78E6D6C8C8C3BF58C6D1DDB2B.small-business-owner-s-guide-to-the-cares-act-final-.pdf

IRS Phone Number (Individual Filers)

800 829 1040

Economic Injury Disaster Loan Application

This is where you apply for the $10,000 grant.

https://www.sba.gov/page/disaster-loan-applications

Stimulus Check Calculator

https://www.hrblock.com/coronavirus-tax-impact/calculator/

List of Unemployment Offices in All 50 States

https://unemploymentcom.com/directory-display.php

Available Small Business Aid by State

https://www.uschamber.com/article/how-small-businesses-will-benefit-the-coronavirus-aid-relief-and-economic-security-cares-act

Small Business Debt Relief

https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources#section-header-4

SBA Approved Lenders Directory

https://www.sba.gov/local-assistance/find/

CARES Act

Complete CARES Act as passed by the Congress and President.

https://www.sbc.senate.gov/public/?a=Files.Serve&File_id=29FC1AE7-879A-4DE0-97D5-AB0A0CB558C8

Overview

First, before I continue, I’m not a CPA and I’m not giving tax advice and the information I’m providing is based on my own research. Please consult an expert if you want to make sure you are making the right decision for yourself or your small business.

There are four parts of the bill I’ll be talking about:

How you can get up to $10,000 FREE as a grant through the Economic Injury Disaster Loan & Advance program. Very simple to apply! $10 Billion available for this.
How you can get a FORGIVEABLE LOAN as part of the $349 billion Paycheck Protection Program.
Expanded unemployment benefits that can help your employees, but can also help you. For the first time, unemployment benefits have been expanded to include self employed and contract employees. So if you work for yourself and your business is suffering, you can apply!
The individual stimulus check and how to get that as quickly as possible.

Part 1: Applying to Get Up To $10,000 Free

As I mentioned earlier, as part of the CARES act you could get $10,000 or more for free for your small business. If your business has been effected by the health disaster we are experiencing you could qualify.

In this section I’m going to be talking about the aspect of the recently passed CARES act that they are calling the Economic Injury Disaster Loan Advance. You could get $10,000 or more for free if you qualify and if you follow some relatively easy steps.

Here is how you can apply. If you aren’t sure if you qualify or not, fill out the form anyway. It doesn’t hurt to try! The worst that can happen is you get rejected. The link to this form is in the YouTube description below the video.

How Long Will It Take to Get the Funds?

The CARES act specifies that applicants should receive funds within three days of application submission.

Part 2: Paycheck Protection Program

What Is It?

The recently passed “CARES Act” allocated $350 billion to help small businesses keep workers employed during the current health crisis and economic downturn. If borrowers maintain their payrolls during the crisis or restore their payrolls afterwards, the loans will be FORGIVEN (with certain criteria).

The following table provides a break down of approximately how much is allocated to each state(Numbers in Billions). Ranging from $0.7 for Wyoming to $48.3 for California. Allocation is based on the number of small businesses in each state.

Alabama - $4.0	Alaska – $0.9	Arizona - $5.6	Arkansas - $2.2	California - $48.3	Colorado - $6.8	Connecticut - $4.9
Delaware - $1.1	Florida - $18.2	Georgia - $9.0	Hawaii - $1.5	Idaho - $1.5	Illinois - $15.5	Indiana - $6.2
Iowa - $3.2	Kansas - $3.0	Kentucky - $3.4	Louisiana - $4.7	Maine - $1.5	Maryland - $7.3	Massachusetts - $10.8
Michigan - $10.5	Minnesota - $7.1	Mississippi - $1.9	Missouri - $5.9	Montana - $1.1	Nebraska – $2.0	Nevada – $2.6
New Hampshire – $1.8	New Jersey – $11.7	New Mexico - $1.6	New York - $28.3	North Carolina - $8.5	North Dakota - $1.1	Ohio - $11.3
Oklahoma - $3.6	Oregon - $4.6	Pennsylvania - $13.9	Rhode Island - $1.3	South Carolina - $3.8	South Dakota - $1.0	Tennessee - $5.9
Texas - $27.3	Utah - $3.1	Vermont - $0.8	Virginia - $9.4	Washington - $8.7	West Virginia - $1.2	Wisconsin - $6.5
Wyoming - $0.7	District of Columbia - $2.3

The program is open for applications starting in April and going through June 2020.

How Much Can You Borrow?

Loans can be up to 2.5 times your monthly payroll costs, not to exceed $10 million.

For Employers: Per employee annual salary amount that qualifies is $100,000 or less. Payroll costs can include salary, wages, commission, payment for cash tips, payment for vacation time, parental or similar leave, payment of state tax assessed for the employee, retirement benefits, etc.

For Sole Proprieters or similar self employed individuals: Take the some of all income earned from self employment and calculate a monthly income amount and multiple by 2.5.

How Much of the Loan Will Be Forgiven?

The loan forgiveness amount cannot exceed the principal loan amount. Borrowers are eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8 week period starting from the loan origination date:

Payroll costs
Rent for lease agreements such as buildings or equipment
Utility payments
Additional wages paid to tipped employees

Loan forgiveness will be reduced if there is a reduction in the number of employees or a reduction greater than 25% in wages paid to employees. You will have to talk your SBA loan officer for more information on how this aspect is calculated.

Who Is Eligible

According to the bill, you are eligible to apply if, you are:

A small business or 501c(3) with less than 500 employees, which includes full time, part time or contract employees, or employees with similar status.
Individuals that operate as sole proprietors or independent contractors.
A small business, Tribal business entity, or 501c(19) Veterans Organization that meets the SBA size standard.

How You Can Apply

Go to your bank and ask for the SBA loan officer. You can also go to SBA.gov and go through the list of banking institutions in your area that do SBA lending.

Part 3: Unemployment For Self Employed & For Your Employees

The stimulus package greatly expands unemployment benefits. As part of the bill the weekly benefits are increased $600 for FOUR MONTHS, which is a total increase of about $10,400 over what you would normally get. That is ON TOP of the you would usually get in your state for unemployment insurance. If you have any employees that you’ve had to lay off, make sure they know about these benefits and how to apply.

If you are a business owner, work part time, an independent contractor, or work a gig job, such as Uber, are you are also eligible to apply under the new bill. In the past you would not have been eligible. Expanded eligibility will be valid through the end of 2020.

The $600 additional benefit will be valid through the CARES Act enaction date and July 31, 2020.

If your employees or your business has been effected, apply today!

How to Apply

Go to your state unemployment website and complete the application. Every state has a different application process, so you’ll have to follow the guidelines for your state. I put a link in the video description that takes you to a directory that has links to the employment websites from all 50 states. If you fall into the self employed category, some state application processes may say your are not eligible. In that case you will need to contact your state unemployment office and tell them you fall into the self-employed category and they’ll fix it in the system.

Part 4: Getting Your Stimulus Check Fast

What you could get:

If you make below $75,000, you could get 1200 if you are an individual, if you make below $150,000, you could get 2400 if you are a married couple. PLUS an additional $500 for each child, which is based on the children you had listed on your 2018 or 2019 tax return.

If you make over $75,000 as an individual or $150,000 as a married couple, the benefits start phasing out.

FASTEST: Completed 2019 Tax Return & Included Bank Information

The people that will get the money the fastest are the ones that have completed their 2019 tax returns and have provided your routing and account number in the “Refund” section of the 1040 form. Check your completed form, if you did that, that will be you and you will automatically get a direct deposit with the stimulus amount that you qualify for. It should happen sometime in the next couple weeks.

FASTER: Completed 2019 Tax Return, but DID NOT include routing information. The fix is simple, but it may take some time. Have a copy of your 1040 on hand for reference and call the IRS at 800-829-1040 and have them ADD your bank routing information to your return. You’ll likely be on hold for quite awhile, so find something on Netflix to watch – maybe the show Tiger King that everyone is raving about. Joint filers, make sure you provide bank info for an account both partners are on.

FAST: File your 2019 Tax Return right now and provide your bank information when you do so. You can file online with Turbo Tax, on the IRS website or whatever your preferred method is.

NOT AS FAST: Don’t file your 2019 tax return. If you want to take an extension and don’t want to file your 2019 taxes right away, the IRS will use your 2018 tax return.

If you don’t have your routing info on any of your tax returns, you’ll get mailed a check but that will take longer to get.

HELPFUL RESOURCES