A lot of small business owners are vaguely aware of the Federal government passing various laws related to the Covid-19 virus, but it’s not 100% clear on exactly what is in them (some bills are over 1000 pages!) or how we can utilize the benefits.

This guide aims to make it clear in plain English what’s available and how to get it. Note that there are some qualifications and addendums that this may not be 100% accurate to your specific small business, but should apply to 99% of small businesses out there. 

Summary:

• You can apply online and get $10,000 in 3 business days for free if you don’t qualify for a regular SBA loan. UPDATE: There are delays on this – see below.
• You can get 2.5 times your monthly payroll in a loan that has 6 months without payments, 1% interest and can largely be forgiven if you use it to cover payroll. 
• You can apply for both programs above. 
• You can get tax credits for paying required sick time under new rules. 

Who Is This Guide For? 

Since 99% of employers have 50 employees or less, this guide is only for private businesses (including sole proprietors) with less than 50 employees (not owned by other businesses). If you have more than 50 then we recommend our Small Business Action Plan article which lists the various laws and benefits that apply to those with 500 to 51 employees. 

What’s Available?

First, let’s get clear on the help that’s available. I won’t confuse you with the various legislation “Act” names and other things that just tend to make things hard to understand. Here is the help that’s available. 

Resource #1: $10,000 Grant and up to $2 million Economic Injury Disaster Loan (EIDL)

Pay attention, because this is somewhat confusing if you’re not familiar with how SBA loans work. Typically, the Small Business Administration (SBA) will help businesses get loans that suffer from a disaster and this is called an Economic Injury Disaster Loan (EIDL). Private banks actually give the loans but they are guaranteed by the SBA. 

You can get approved for up to $2 million depending on your credit, etc. Importantly, they’ve waived a “personal guarantee” of loans under $200,000 – that’s huge. 

This new resource is different – it’s a grant that you can get right away (within 3 business days) and you don’t have to pay back if you don’t qualify for the EIDL loan! This is basically free money to any small business who can claim they are being affected by Covid-19 and don’t qualify for other SBA loans.

How to Apply

Visit https://covid19relief.sba.gov and simply complete the application online. The information is fairly simple and you should have the required information on hand or at least be able to estimate most required information (annual revenue, cost of goods sold, etc.). So, you will be applying for an EIDL but you will automatically be given the $10,000 grant to cover payroll and other qualified business expenses within 3 business days. 

NOTE: Make sure to check this box at the end of the application to apply for the $10,000 Grant portion of the EIDL. 

How Long Will It Take?

As mentioned, you can get the Grant in 3 business days. EIDL loans will take longer but the government is trying to expedite. I’ll update this page when I know more. 

UPDATE 4/4/2020: We’re hearing reports that it is taking much longer than 3 days as of April 10, 2020 but we’re hearing that the funds are coming and apparently you can register and track your loan online with the SBA.

UPDATE 4/14/2020: We’re now hearing reports that the Grant is only being given at a rate of $1,000.00 per employee up to 10 employees. Either the initial information they provided was a lie or they changed the rules after seeing demand. Not sure which is worse but disgraceful behavior from the SBA.

Update 4/30/2020: These are being funded and it appears to be roughly 3 weeks after applying but varies from business to business.

More Information

Visit the SBA website. You can also contact the SBA directly by calling 1-800-659-2955 or via email at [email protected] 

Resource #2: Paycheck Protection Program (PPP) Loan up to $10 Million

NOTE: This program is starting April 3rd for businesses and April 10 for independent contractors but we believe that some banks are accepting applications now. Best to get in line first. Note that you can apply to this one as well as the EIDL above but this loan seems to have better interest rates and forgiveness. 

As long as you have fewer than 500 employees and were in business on or before February 15, 2020 (and can certify that Covid-19 has negatively impacted your business), you can get a loan for 2.5 times your average monthly payroll (for previous 12 months) up to $10 million. 

So, for example, if your payroll is $40,000/month then you could get $40,000 X 2.5 = $100,000. There are no payments for 6 months, no collateral or personal guarantees and the interest rate is 1%. The term is for 2 years.

NOTE: What you pay 1099 contractors are NOT included in this amount since they can apply for the PPP on their own starting April 10.

Even better, here’s more details from the SBA:

 “The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.”

Apparently, whatever is used within the first 8 weeks will be forgiven on the loan. This is another fantastic opportunity for small businesses. If your business has been affected by Covid-19 then I’m not seeing much harm in applying for this loan. There are no prepayment penalties, the interest rate is low and a good portion of the loan can be forgiven. 

How to Apply

You have to apply directly with an existing SBA-approved bank. Here’s a list of their top 100 lenders and a listing by zip code but I would recommend you contact your existing bank and see if they are an SBA-approved lender and if not, whom they recommend.  Here’s the sample application form from the Treasury Department – download that and then get your information and documentation ready to go because it may take some time to get approved. The better your information the faster you get approved! 

UPDATE: Quickbooks has been approved as an SBA Lender so if you’re a customer I would recommend them if your bank is not being responsive.

How Long Will It Take?

The government says they are encouraging bankers to expedite these loans, some in days so ask your banker and make sure you get your documents ready to go. I’ll update this page when I know more. 

UPDATE: As of April 10, banks are taking much longer than expected but funds are still being distributed. We still recommend going to your current bank first.

UPDATE: As of April 30, there is a new round of funding for the PPP program from the government, however the larger banks like Chase, Bank of America and Wells Fargo have been limited to only a certain percentage of the money. Currently, we’re recommending you contact a local bank, PayPal (you don’t have to have a PayPal account) or Womply (who seem to be funding faster than the big banks).

UPDATE: Read this article on PPP Loan Forgiveness to make sure you meet the qualifications to have your loan forgiven.

Resource #3: Tax Credits for Employees Dealing with Covid-19

The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide their employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19. These provisions will apply from April 1, 2020 through December 31, 2020.

Here are the qualifying reasons: 

1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
2. has been advised by a health care provider to self-quarantine related to COVID-19;
3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
4. is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
5. is caring for his or her child whose school or place of care is closed (or child care provider is unavailable) due to COVID-19 related reasons; or [SEE BELOW FOR IMPORTANT EXCLUSIONS FOR SMALL BUSINESS]
6. is experiencing any other substantially-similar condition specified by the U.S. Department of Health and Human Services.

However, the Department of Labor is exempting certain businesses with fewer than 50 employees. From the Department of Labor: 

“The FFCRA covers private employers with fewer than 500 employees and certain public employers. Small employers with fewer than 50 employees may qualify for an exemption from the requirement to provide paid leave due to school, place of care, or child care provider closings or unavailability, if the leave payments would jeopardize the viability of their business as a going concern.” 

Specifically:

“Small businesses with fewer than 50 employees, including religious and nonprofit organizations, are exempt from two aspects of the FFCRA’s provisions — (1) paid sick leave due to school closure, place of care closure or child care provider unavailability for COVID-19 related reasons; and (2) emergency paid leave under the Family and Medical Leave Act (FMLA) — when doing so would jeopardize the viability of the business, DOL said. An “authorized officer” of the business must determine whether it meets this criteria, according to the guidance.” 

So if you have 50 or less employees and you are an “authorized officer” and can clearly document that complying with the act would jeopardize the viability of the business then you are exempt from point #5 above specifically and perhaps the others. I will update this section when I have more guidance. 

What You Have to Provide to Employees

Send your employees (full and part time) the Official Notice and follow the instructions for posting it correctly (email will work if you send it to all employees). 

You will pay the required sick time (which is in addition to any current sick time or PTO offered). However, you will get a tax credit for the sick time. For example, if you owe $8000 in taxes to the IRS for payroll but you paid out $5000 in sick time, you only have to deposit $3000. Many payroll providers have already added the category of “emergency” pay to their systems to properly track this and make sure you get proper refunds. Make sure you track this as well. 

More Information

1. IRS Summary of the Bill
2. Employer obligations in the new bill
3. What employers need to know
4. What it means for small business

Summary

Update: Here’s a nice summary of the various other benefits of the CARES Act.

I’ve spent much of the last week or two reviewing articles, PDFs, webinars and emails and none of them really made it clear how easy it was to apply for some quick cash and what a good deal the loans are, especially the PPP. I recommend every small business owner to consider taking advantage of these benefits if your business is even remotely affected by Covid-19. 

Have any other advice or tactics that can help? I will continue to update this page with everything I can. Leave a comment below or email me matt – at – mycompanyworks.com.

Please stay positive, healthy and safe!

Matt Knee
Founder/President
MyCompanyWorks, Inc.

Something we’ve been hearing over and over recently from clients and potential clients alike goes something like this: “I’m going to wait until the election is over to see if I should start my business” or something similar. Some existing business owners have said similar things in regards to expanding their business, spending money on marketing or capital improvements, etc. Basically, they want to see what the political environment will be like before pulling the trigger on any big decisions.

While that seems like the prudent thing to do, let’s go over the reasons why that might not be the best strategy:

1. Gridlock will be likely
2. You’ll lose months of momentum and experimentation
3. Your best competitors will not have such hesitations

1. Gridlock will be likely:

Hillary Clinton, should she win, will almost certainly be dealing with Republican majority in the House and maybe the Senate. Republicans only need one house to block any meaningful legislation. There’s also a lot of “bad blood” going around this election season so there’s yet another reason why the 2 parties are likely not to agree on much – in this case, gridlock of our government is a “feature, not a bug” so when American’s can’t agree, the government usually can’t either. Also, recent scandals (emails, Benghazi, etc.) may cause both parties to fight from day one.

Donald Trump, should he win, will also be dealing with a hostile congress, even if it is Republican majorities in both houses. He’s made many enemies in his own party, in particular, Paul Ryan who is the Speaker of the House. Trump getting much legislation through in this environment is unlikely. Also, the Democrats will be extremely angry at his tactics to secure the Presidency so they’ll likely be willing to block anything just to spite him.

2. You’ll lose months of momentum and experimentation

In the small business world, speed, momentum and being able to test your product, message, marketing and other things is critical. Speed is one of the main advantages of small business. If you wait around for months to even start a business or spend money on improving your business you’re likely to lose momentum to other competitors. Speaking of…

3. Your best competitors will not have such hesitations

Many have written about the vast fortunes that were created in recessions/depressions and challenging political environments. The lesson is that while their competitors were petrified to move or even downsizing, smart entrepreneurs were taking advantage of tough times to “buy low” (investments, property, etc.), expand their business, simplify and streamline their operations and keep moving forward. Recessions are usually a convenient excuse to not do anything.

Should I worry at all?

Sure, any political or economic environment is unpredictable by nature, but these worries are usually not justified for small businesses or startups. It’s large companies that have the most to lose. Small business is nimble, quick to adjust and ultimately much more suited to survive the worst. Focus on the positive, the opportunities that even bad environments can bring and you’re much more likely to thrive.

Great post from Jason Calacanis:

1. Unrelenting attention to detail.

2. Impeccable taste.

3. Indefatigable passion.

4. Absolute conviction.

5. Unwavering vision.

6. Boundless curiosity.

7. Mercurial motivator.

One or two of these will help you make a living.

Three or four of these will make you successful.

Four of five of these will make you a legend.

Five or six of these will make you iconic for all time.

All seven will make you Steve Jobs.

Read the whole thing.

Bad news is all around us and only seems to be getting worse each day. Our nation’s leaders are deadlocked about how to solve our problems while the president runs amok with promise and rhetoric that don’t translate to his ability. Unemployment is soaring and the deficit has reached the stratosphere. China is taking the lead as a global power while the USA falters…and our younger generations don’t seem to care that our nation is getting worse, not better.

In a great article from USA Today, a plan is proposed that it’s time for small business to come to America’s rescue—and it can be done. Just as it’s been done before. More than 20 million new jobs—many from startups that grew into billion dollar companies like Amazon.com and Starbucks—were created during the great boom of the Clinton administration. During Reagan’s presidency, great economic progress was fueled by the sentiment that small businesses and entrepreneurs could account for almost all of that growth.

It’s a fact that small business helps America. According to the Small Business Administration, an astonishing 99% of companies with payroll are small businesses—and those companies employ more than 50% of the working public and create an impressive 80% of new job growth.

Small business propels the country forward—and if our stubborn political leaders want to get our country moving again and reclaim our spot as the greatest nation on earth, they need to start putting forth the policies that help small businesses and entrepreneurs do their job. According to the World Entrepreneurship Forum, a global think tank dedicated to small business, some top methods for promoting entrepreneurship include:

• Reform tax and regulatory environments so as to make it easier, faster, and less costly for entrepreneurs to set up enterprises.
• Create entrepreneurship-friendly support institutions that provide technological knowledge, market information, business know-how, certification services, access to capital, and other essential business support.
• Understand entrepreneurship by making it known that entrepreneurs are positive agents of social change, wealth creation, transparency, sustainability, and innovation.

If we had a comprehensive 21st Century Entrepreneurship Act it would include tax reform and regulatory ease. It would include immigration reform to woo the best and brightest entrepreneurs and engineers to our country. It would increase access to capital and help more startups actually start up.

Now Washington just needs to wake up and give small business a chance to save America. Write or call your congressperson and tell THEM to get to work!

Happy New Year everyone! Let’s make it a great 2011. This is, of course, our busy season but I ran across a good post that I wanted to quote for you here:

Every morning, we all wake up, and our houses may be worth less than the mortgages on them, and our 401(k)s may be worth less than our lunch, and our salaries or revenues or consulting bills may be down – maybe even down a lot – but we’re waking up in the U.S. of A., where every day is another chance to kick ass and take names.

Buck up, everyone, and go and achieve excellence.