Amy Dalen, JD and Ben DiGirolamo, CPA, JD from HBK’s Tax Advisory Group along with Manufacturing Industry Expert, Amy Reynallt and Frank Turocy, CPA, MSA give an update on FFCRA & CARES Act: Loans and other provisions that affect you and your business.

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Presentation

The U.S. Chamber of Commerce Foundation has created the Save Small Business Fund to support small businesses in economically vulnerable communities affected by COVID-19. The fund is offering $5,000 grants, which must be used for business expenses. As a grant, the money does not need to be repaid, but recipients will be expected to report on how it was used and its impact on the business. To apply, organizations must meet the following criteria:

• Be a small business or chamber of commerce
• Employ between three and 20 workers, including the owner but not including workers classified as independent contractors
• Have been harmed financially by the COVID-19 outbreak
• Be located in an economically vulnerable community, identified by zip code, in the U. S. or its territories

Access to the funds is restricted to employers in vulnerable communities, which are determined by the Distressed Communities Index, a measure of economic well-being calculated by the Economic Innovation Group. To determine if your area is eligible, visit https://savesmallbusiness.com/#apply and enter your zip code. Eligible organizations can begin applying on Monday, April 20, at 3:00 p.m. EST at https://savesmallbusiness.com/#apply. Grants will be awarded weekly until funds are depleted, but applicants need to apply only once to be eligible. If you have applied for or are receiving other grants, loans or other funding, check your documentation to ensure there are no provisions that would prohibit or restrict your access to the Save Small Business Fund. For questions or to discuss COVID-19’s effect on your business, contact a member of the HBK CPAs & Consultants team at 330-758-8613.

On March 13, the U.S. Small Business Administration (SBA) announced that low-interest disaster recovery loans of up to $2 million will be available to businesses affected by the COVID-19 crisis. These Economic Injury Disaster Loans (EIDL) provided term loans that are intended to support the working capital needs of businesses affected by COVID-19. The EIDL program provides only term loans, not lines of credit. As of April 16, 2020, the SBA has noted on its website that the SBA is unable to accept new applications for this program due to funding availability. Applications that have been submitted will be processed on a first-come, first-served basis.

At this time, it is unknown whether Congress will approve additional funding for this program.

As some applications continue to be processed, it is still important for businesses to understand their eligibility and other program details. To be eligible, businesses must be located in a declared disaster area. The SBA has declared all fifty states, Washington D.C., Guam, Virgin Islands, Puerto Rico, Northern Mariana Islands, and American Samoa as disaster areas, meaning that eligible businesses from these areas may apply.

Agricultural enterprises, casinos, and companies in the cannabis industry may not be eligible to obtain SBA Loans. In addition, religious and charitable organizations may also be ineligible, although some non-profit organizations will be able to obtain these loans.

Funds can be used to pay fixed debts, such as bank loans, payroll, accounts payable, and other bills. Loans are not intended to support growth initiatives, investment, or other non-working capital needs. Loans will be offered with terms of up to 30 years and interest rates of 3.75 percent for small businesses and 2.75 percent for non-profit organizations. While all applicants must prove the crisis has hurt their business, details of individual loans will be determined on a case-by-case basis. Generally, loans will be awarded to companies that do not have access to other funding.

To further help organizations affected by a disaster, the SBA is offering some deferment options. The SBA will automatically defer existing SBA disaster loans through the end of the 2020 calendar year. In addition, new EIDLs will allow for one-year deferments. During any deferment, interest will continue to accrue.

Through the CARES Act, “emergency advances” became available in an amount up to $10,000 for loan applicants. On April 13, 2020, the SBA emailed applicants noting that this emergency advance would be capped at $1,000 per employee, up to $10,000. Note that the emergency advance does not need to be repaid, although it may reduce the amount of forgiveness available through a Paycheck Protection Program loan.

Applicants applied directly through the SBA, at sba.gov/disaster and submitted information including the SBA Loan Application (Form 5) and an IRS 4506-T (tax return release). Those who have not been contacted by the SBA may still be asked to submit documents including recent federal income tax returns, personal financial statements, schedules of liabilities, financial statements, deed/lease information, and their employer identification number (EIN) available. Note that applicants are subject to credit checks, resulting in hard inquiries.

For questions or to discuss COVID-19’s effect on your business, contact a member of the HBK CPAs & Consultants team.

Join Frank Turocy, CPA, MSA, and Amy Reynallt, MBA as they give another update on the recently enacted Paycheck Protection and Loan Forgiveness Programs and changes to the SBA Economic Injury Disaster Loans.

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Did you miss our webinar Paycheck Protection Program, Loan Forgiveness, and SBA EIDL Changes: What You Need to Know ?

Join Frank Turocy, CPA, MSA and Amy Reynallt, MBA as they discuss the Paycheck Protection and Loan Forgiveness Programs and the recent changes to the SBA Economic Injury Disaster Loans (EIDL).

Download the presentation materials.

The COVID-19 crisis has left many businesses struggling and in need of economic support. Recent legislation has expanded or created additional availability to business loans. The U.S. Small Business Administration (SBA) Economic Injury Disaster Loans and CARES Act Payroll Protection Program are now offering loans to qualifying businesses. We anticipate applications for the loans will be addressed, at least to some extent, on a first-come, first-served basis, so businesses that want to apply are encouraged to do so as soon as possible. Several pieces of information may be requested, including tax returns and business financial statements. The information requested will depend on the loan program requirements and the amount of the loan. Among the information that the SBA or other lender will request:

• Personal Financial Statement
• Form 4506-T
• Schedule of Liabilities
• Form 940, 941, and 944

  Personal Financial Statements, often required from individuals applying for credit, summarize a person’s net worth. For its Loans, the SBA requests use of its Form 413 for 7(a) loans, like the Payroll Protection Program, or Form 413D for disaster programs, such as Economic Injury Disaster Loans (EIDL). The information requested on both forms is similar:

• Personal assets, including cash, savings accounts, automobiles, and real estate
• Personal liabilities, including debt to banks, mortgages, and unpaid taxes
• Sources of income, including salary, investment income, and real estate income
• Contingent liabilities, including endorsements, legal claims, and provisions for federal income tax
• Life insurance policies held

  IRS Form 4506-T, the form titled IRS Request for Transcript of Tax Returns, allows certain tax transcripts to be released, fee-free, from the IRS to you or to the party you designate. Schedule of Liabilities is a suggested schedule of liabilities, as provided on SBA Form 2022, which asks for the following information on your notes, mortgages, or accounts payable:

• Creditor name
• Original loan amount
• Issue date
• Current Balance
• Whether the liability is current or delinquent
• Maturity date
• Payment amount and frequency
• How the loan is secured

  Form 940, 941, and 944 are IRS Forms that report information associated with your payroll.

• Form 940 is the Employer’s Annual Federal Unemployment (FUTA) Tax Return. Employers complete this form annually to report the company’s federal unemployment taxes.
• Form 941 is the Employer’s Quarterly Federal Tax Return. This form contains information about income taxes, social security tax, or Medicare tax withheld from employees’ paychecks. It also reports the employer’s portion of these taxes.
• Form 944 is used by small employers whose payroll tax liability is $1,000 or less. These employers file once annually instead of quarterly.

  If you are compiling payroll internally, you are likely familiar with these forms and filing requirements. If you are using an outside payroll service, they are likely providing you with copies of the appropriate forms, either in hard copy, via email, or through your payroll service online portal. As you navigate through the loan application process, the SBA or your lender will help you identify the forms and information relevant to your loan request. Not all loan applications will require the same information. Complete the requested information quickly and accurately. If you are not comfortable doing this on your own, contact HBK for assistance.