[C0VlD-19] Forgiveable SBA Loans For Small Biz and Freelancers

[Vigilante]

This is what I was thinking too, but thoughts on future planning? Meaning do you get it in case something happens and you can use that loan to bridge the gap? Torn on this myself.... I applied, but don't know If i would take the money if i got approved. The wife mentioned the exact thing you did and mentioned how it made her feel 'greedy'.

My concern is we're fine right now, but in case anything happened, am I going to kick myself for not applying for it?

Whether you take it or not is only going to affect you. They are going to print and bring the money anyway regardless of your personal ideological objection. The money is going out with or without you. You abstaining doesn’t help anybody else. They are just going to print more.

I am about as fiscally conservative and libertarian as they come but part of that is taking care of yourself first and foremost. If you know the money is available and going out whether you take any or not, objecting on ideological grounds is only going to affect you personally. At the end of the day, the money is still going to flow.

In fact, while we are writing this they are drafting yet a third stimulus bill. There’s more money flowing out.


Boycotting this isn’t going to change the net impact of the cash flow. It will only change the net impact of the cash flow to you. It’s the same reason that if they ever put socialized medicine to the vote I would take it. I would take it because it’s going to happen with or without me, but abstaining from it knowing it is happening anyway only hurts me.

 

[CareCPA]

This is going to be an unpopular opinion around here, and not targeted to anyone specifically (since I don't know most of your businesses), but I don't really care.

I would encourage you to think hard about whether you need these programs. Most of you want to be a capitalist, but that means weathering the tough times as well.

I have clients, and I know others, who have literally gone to zero revenue. The money in these Bills sounds like a lot, but a couple hundred billion really isn't going to go far considering how many businesses have been forced by the government to close.

We aren't applying for any of these programs. Could we qualify? Probably. And how are they going to be able to underwrite millions of applications anyway?

But we'll survive without it, and maybe it will go to my client who does escape rooms and has literally ground to a halt, or one of the many restaurants in our town that has been forced to close but still needs to make rent payment (and retain their chef).

I'm not going to be the reason someone else has to shutter their business due to a government-mandated close.

 

[MJ DeMarco]

I'm gonna go on the record to say this: In several months, to several years, we will hear stories about how these programs were bilked for millions by unscrupulous third-parties ... kinda like Medicare fraud.

This is a fraud shit-show waiting to happen... just saying.

 

[Envision]

I just received a $40k revolving line of credit (Canada) for paying $50k-$1mill in payroll in 2019. Applied Friday, received the funding today. Converts to a 5 year loan at 5% interest on Jan 2021. No payments required until Jan 2023. Interest free until Jan 2023.

Full payment required by Dec 31 2025.

Pay $30k back before Jan 2023, remaining $10k is forgiven.

Great job by the Canadian government in my opinion!

How? They shut down private business and then gave you a limited line of credit with terms and 5% interest for the privelege of being able to use money you didnt need before this happened.

The canadian government is a complete joke and has been for the past several years with Trudeau leading it.

I get alot of the sentiments in this thread. But its mind blowing to me how everyone is just taking this like this is how it's supposed to be.

The government came in and shut down capitalism, mortgaged everyone + their kids futures, and is telling you - it needs to be paid back with interest for the privilege of saving your business.. If my business was more drastically affected id be absolutely livid.

And to @Vigilante and @CareCPA point... Im about as much of a capitalist as it gets. But this isnt capitalism anymore. Theyre bailing out any company with a pulse, the government is taking stock in public companies, and people are being literally paid by the government to live...

Literally this is everyone receiving their checks+stimulus this week and paying it back out the next.
https://media.giphy.com/media/g8A6kKFew4w0w/giphy.mp4

Capitalism was sold out a long time ago.

And the argument of what else are they going to do in a situation like this? is simple. Don't let it get to a situation like this, we've had virus' consistently for the past decade and no one did anything to prepare. Blows my mind that these morons in office are so quick to pull the fed lever when they could have allocated some of our tax dollars to preparing for a virus.

 

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[Vigilante]

This is going to be an unpopular opinion around here, and not targeted to anyone specifically (since I don't know most of your businesses), but I don't really care.

I would encourage you to think hard about whether you need these programs. Most of you want to be a capitalist, but that means weathering the tough times as well.

I have clients, and I know others, who have literally gone to zero revenue. The money in these Bills sounds like a lot, but a couple hundred billion really isn't going to go far considering how many businesses have been forced by the government to close.

We aren't applying for any of these programs. Could we qualify? Probably. And how are they going to be able to underwrite millions of applications anyway?

But we'll survive without it, and maybe it will go to my client who does escape rooms and has literally ground to a halt, or one of the many restaurants in our town that has been forced to close but still needs to make rent payment (and retain their chef).

I'm not going to be the reason someone else has to shutter their business due to a government-mandated close.

You are assuming there is a finite amount of Fiat currency being printed and that if you take it it means somebody else’s deprived of it. Meanwhile, they are doing a third stimulus as we type. This is unprecedented window. If you pass, it’s not like it is going to your client that operates a escape room only if you abstain. The money is still flooding out, you’re just not going to receive any.

I 100% percent understand and honor your choice. However, you need to understand it is your money that is flowing out.

I’ve paid more taxes in the last few years than most people pay in a lifetime. I have no problem clawing some of it back, Especially during a window where my own cash flow is crippled.

 

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[1step]

I think most of what you posted is a bit misleading.
If I understand correct the amount is based on 2.5x your payroll only and is only forgiveabale if used on payroll and rent. this is for the forgiveable sba loans that were part of the stimulus package today.
In addition is the the disaster loans through the sba which you linked to. It is a completely separate program and not forgiveable. Interest rates on those are 3.75% and a year payment free.
the forgiveable loans will be given out by banks starting next week

 

[biophase]

100%

The basic requirement is that you had a business As of three months ago. That’s about it. The business doesn’t even have to prove that it was ever doing anything.

For some reason, I don't think any of these things will come true. I just can't see a $10,000 advance from the government that is forgiven so easily.

I think they hammered a simple bill through Congress and now they are figuring out how to walk it back.

 

[ChickenHawk]

Although this program doesn't apply to me, I'm all for everyone who pays into the system getting what they can. And why? It's because as entrepreneurs, you'll be expected to pay your "fair share" when the bill comes due. Or the bill will be passed on to your kids and grandkids.

During the last bailout, bank executives gobbled up million-dollar bonus while small entrepreneurs and home-owners were shafted. The government is flinging money everywhere. This may or may not cause inflation. Whatever happens, you'll be paying for it down the line, and IMO, it's your duty to your family to make sure you've reaped some benefit for all the a$$-raping level of taxes you've paid, or will pay in the future.

And just for the record, I'm hugely against big government. But they're growing anyway and printing money like there's no tomorrow. If you can't stop them, you might as well do what you can to protect yourself for the potential collapse.

 

[MoneyDoc]

I just received a $40k revolving line of credit (Canada) for paying $50k-$1mill in payroll in 2019. Applied Friday, received the funding today. Converts to a 5 year loan at 5% interest on Jan 2021. No payments required until Jan 2023. Interest free until Jan 2023.

Full payment required by Dec 31 2025.

Pay $30k back before Jan 2023, remaining $10k is forgiven.

Great job by the Canadian government in my opinion!

 

[biophase]

My bank finally started taking applications for the PPP loan yesterday. I filled out the form but chickened out when it was time to affirm the money was "necessary". Up until now I have been all about taking advantage of whatever handouts are available. But hard to claim it's needed when the loan amount equates to less than 3% of cash on hand.

I got my EIDL grant today!

 

[Gary]

My $10,000 from EIDL is pending in my business account. My credit was run yesterday and the money deposited today. I haven't had one email or phone call from the SBA since I applied weeks ago, so I thought I was not close to getting any funds. Then Bam! There it is.

 

[Lex DeVille]

Got an email this morning with next steps for the loan portion of the EIDL. They quoted for $15,500 at 3.75% over 30 years.



The second page had a bar (I forgot to screen capture) that lets you adjust the loan amount (only adjust downward) if you don't need the total.

Identity verification was nothing. It was four questions like: "Which of these numbers is associated with an address you've lived at?" with multiple-choice responses.

After that, I clicked submit and it went on its way for processing.

 

[Rivoli]

No cash has flowed yet from the stimulus package or these SBA loans. Time will tell.

There’s actually one good source i found on an EIDL. Check it out
He got $200k from the EIDL

https://www.reddit.com/r/smallbusiness/comments/fqsses View: https://www.reddit.com/r/smallbusiness/comments/fqsses/was_approved_for_the_sba_disaster_loan_relief/

 

[CareCPA]

You are assuming there is a finite amount of Fiat currency being printed and that if you take it it means somebody else’s deprived of it. Meanwhile, they are doing a third stimulus as we type. This is unprecedented window. If you pass, it’s not like it is going to your client that operates a escape room only if you abstain. The money is still flooding out, you’re just not going to receive any.

I 100% percent understand and honor your choice. However, you need to understand it is your money that is flowing out.

I’ve paid more taxes in the last few years than most people pay in a lifetime. I have no problem clawing some of it back, Especially during a window where my own cash flow is crippled.

My crystal ball says there's going to be less and less appetite to pass more stimulus. The stuff that was easy to agree to has passed. The Bills coming down the pipeline are likely to be a lot more partisan because there is substantially less urgency.

If your cash flow is crippled, then apply for the loan. I'm not here to say who does and does not deserve it. I'm explaining my thought process since on FB (and even some of this forum) I see a lot of "GIVE ME ALL THE FREE MONEY." I don't think the help will be unlimited, which means there is a finite amount that will be available in the next couple months.

Maybe I'm wrong and the cash will keep flowing, but in the short term the cash is finite, and there will absolutely be people who will be denied these loans due to lack of funds.

 

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[G-Man]

I look at taking money from the government about how I look at taking money from any other criminal enterprise. Do I deserve it more than them? Sure. But I really don't wanna get shot in the face.

@CareCPA has his moral high ground
@Vigilante has his 10k
@G-Man keeps his balance with the mob as close to zero as possible

 

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[Vigilante]

Nobody has heard anything yet so it appears that the 72 hour window to fund the $10,000 advance appears to be incorrect.

 

[Vigilante]

This seems like a tremendous shit show, with a law that passed but with zero intention to follow the law by the SBA. The economic recovery side of this was supposed to (under law) issue direct advances from the federal government to small businesses of $10k. Never happened. Not one person has reported getting it.

 

[Vigilante]

SBA Under Fire for Failing to Get Aid to Struggling Small Businesses

A federal program to help small companies weather the coronavirus fallout has failed to distribute funds quickly, according to lawmakers, business advocates and entrepreneurs, many of whom are counting on aid to survive.

www.wsj.com

 

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[amp0193]

Insult To Economic Injury: Small Businesses 'Angry, Desperate' Over Emergency Loans In Limbo

Small businesses dealing with the dramatic drop in cash-flow caused by shelter-in-place orders and social distancing thought they would have a quick…

www.tpr.org

Been some people reporting getting funded for PPP loan on reddit.

Nothing yet on the EIDL advance.

 

[becks22]

Got a call from my banker just now. My SBA PPP loan has been approved. Funding will be in my account sometime in the next 8-10 business days. Edited to add that I was approved for my full amount that I asked for which was 8 weeks of payroll or a little over 25K.

 

[CareCPA]

Yep, just got that email too.

Email:
Dear Applicant,

On March 29, 2020, following the passage of the CARES Act, the SBA provided small business owners and non-profits impacted by C0VlD-19 with the opportunity to obtain up to a $10,000 Advance on their Economic Injury Disaster Loan (EIDL). The Advance is available as part of the full EIDL application and will be transferred into the account you provide shortly after your application is submitted. To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.

This sparks an interesting conversation in to how vague the legislation is (and often is, not just in the case). For example, in the Emergency EIDL Grants section of the CARES act it states:
"(1) IN GENERAL.—During the covered period, an entity included for eligibility in subsection (b), including small business concerns, private nonprofit organizations, and small agricultural cooperatives, that applies for a loan under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) in response to COVID–19 may request that the Administrator provide an advance that is, subject to paragraph (3), in the amount requested by such applicant to such applicant within 3 days after the Administrator receives an application from such applicant. "

Note it says the entity may request it, it doesn't say the SBA needs to approve it. I imagine this gives the SBA the leeway to actually administer the amounts in any way they see fit? I am not a lawyer, just interpreting what I see.

I'm guessing if you're requesting the emergency grant in the first place, you probably don't have the money to hire an expensive lawyer to go against the SBA on this one, so you just kind of take whatever they give you.

Definitely a crappy situation, and not what people were expecting.

PS: a second round of funding for the PPP program was shot down last week, showing how the situation has now become political. This is why I said I wasn't counting on unlimited funding for it.

 

[Envision]

Meh... I'm 100% Capitalist as well.

I stay out of politics.

But I do agree with you. I'm not a fan of my government. However, compared to other countries, I think it was faster, easier, for a business to get a loan.

Agreed with you on that part. And I am Canadian, so whenever my mom and my uncles start talking it usually ends up being a shit talk Trudeaufest so that will come out from me sometimes. lol sorry.

 

[amp0193]

I just read that they send you an advance of $10,000 within three days

Here's to hoping... Applied this morning.

 

[Vigilante]

I just applied for the Disaster Loan (7b) directly on the SBA website. Took less than 5 minutes.

We'll see what I'm approved for, as it doesn't actually let you apply for a specific dollar amount.

Would be crazy of they deposit the $10k by Friday

They might. Government is PRINTING MONEY right now like it was the .com boom

 

[garyfritz]

Correct. Even if you aren’t approved, you get it.

So my LLC can qualify for this money as long as I pay it to employees!? (Of which there is one -- me!)

Dang. Off to the SBA site I go.

 

[Scot]

There’s actually one good source i found on an EIDL. Check it out
He got $200k from the EIDL

https://www.reddit.com/r/smallbusiness/comments/fqsses View: https://www.reddit.com/r/smallbusiness/comments/fqsses/was_approved_for_the_sba_disaster_loan_relief/

He applied before they even voted on the bill... Curious to see what it'll be like for those of us who applied AFTER the voted on the CARES Act. I'm hoping that formula doesn't apply, because my COGS was absolutely horrendous last year.

 

[Ted]

Here is some information I received on the CARES Act. This is separate from the Disaster Relief loan posted above but it provides clarification that may be helpful.

The CARES Act Small Business Loan

The Federal Government signed The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law on Friday, March 27, 2020. The $2 trillion stimulus package is aimed in part at assisting small businesses experiencing financial strain due to C0VlD-19. The assistance comes in the form of loans. Your loan may be forgiven if you use the funds to cover the payroll costs and business expenses discussed below. The application process will begin this week.

We begin with a few critical details: (1) CARES loans are only issued through a “certified” CARES Act lender (no application fee or closing costs); (2) the maximum loan amount is 2.5 times an employer’s monthly average of “payroll costs” for the year prior to the loan; and (3) your loan may be “forgiven” if the funds are utilized and documented properly. The “quoted” terms above are further explained below.

Borrower Qualifications:
o Any for-profit or non-profit business with under 500 employees per physical location; sole proprietors and other self-employed individuals; and independent contractors.
o You must have been in operation on 2/15/20 and paying salaries and taxes.
o You must certify that the current economic conditions make the loan necessary to
support ongoing operations AND that you will use the funds to retain workers,
pay wages, mortgage payments, lease payments, and/or utility payments.
o No collateral or personal guarantees are required; there is, however, potential personal liability if you misuse the loan proceeds.

Application Process:
o It starts the week of March 30, 2020.
o You must apply with a certified CARES Act lender. Ask your bank if it is
certified and find out its application procedures.
o Immediately start gathering proof of payroll, rent/mortgage, utilities (electric, gas, water, transportation, phone and internet) costs for the previous year.
o Open a new bank account for the loan proceeds. Only deposit loan proceeds in the account and then only use that money to pay payroll, rent/mortgage interest and utility costs. This will make it easier to get the loan forgiven.

Maximum Loan Amounts:
o You can borrow up to 2.5 times the total average monthly payments for payroll, mortgage, rent, and utilities during the one-year period before the date of the loan. In other words, your loan amount will be about 10 weeks’ worth of your payroll, rent/mortgage and utility expenses. Your loan can’t exceed $10 million.
If you are a seasonal employer then use your average monthly payments from February 15, 2019 to June 30, 2019.
Payroll costs include salary, wages, commissions, or similar compensation, cash tips or equivalent, vacation, parental, family, medical or sick leave, termination benefits, payments for group health benefits and

premiums, payment of retirement benefits, and state and local payroll taxes.

Payroll costs are capped at $100,000 per any individual employee or independent contractor.

Payroll costs do NOT include compensation to employees whose principal place of residence is outside of the U.S., OR qualified sick and family leave for which a credit is allowed under section 7001 and 7003 of the Families First Coronavirus Response Act.

Payroll costs do NOT include taxes imposed or withheld under FICA, and other taxes imposed by the IRS.

There are other exceptions for employers that were not in business in

2019.

 Forgivable Loan Amounts:​

o If you prove you used the loan proceeds ONLY for payroll, rent/mortgage interest (you can’t pay ahead on your mortgage) and utilities for the 8 week period after you get the loan, then you may get that 8 week portion of the loan forgiven. Your

bank must make a decision within sixty days of receiving your loan forgiveness application.

Submit the following documents to your bank when asking for loan forgiveness: (1) verification of full-time employees on payroll, (2) rates of pay for employees, (3) payroll tax filings reported to IRS, (4) state

income, payroll and unemployment insurance filings, (5) cancelled checks, payment receipts, transcripts of accounts showing payments to mortgage lender, rent and utility payments.

o BE AWARE - the forgivable amount of the loan may be reduced if employment levels during the first 8 weeks after you get the loan drop below your employment level during one of the following periods: 2/15/19 – 6/30/19 OR 1/1/20 – 2/29/20. The forgivable amount may also be reduced if employee compensation levels drop by 25% from the previous levels.

Considering the above, you may want to rehire people BEFORE you apply for the loan.

o Any amount that is not forgiven will need to be repaid over a maximum ten-year period with an interest rate capped at 4%.

o The loan can be deferred for no longer than one (1) year, but no less than six (6)

months.

o No prepayment penalties.

o The forgivable amounts are not considered “income” for tax purposes.

The window to apply for a CARES Act loan remains open until June 30, 2020; however, there is sure to be a scramble to secure these funds. The CARES Act has set aside an incredible amount of money for small businesses loans that could very well keep outfits in business and employees making a wage. There is sure to be a long line at any CARES Act certified bank. Be prepared. Be timely. Be in business next year. Use the information presented above to get documents and information in order to apply for a CARES Act loan.

 

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[garyfritz]

I also respect @CareCPA's position. However, in my case, I've already lost $5000 in profit, directly and solely due to COVID. There will probably be more, and I didn't have that much to burn in the first place. So I have no qualms about claiming the $10k if I can.

 

[CareCPA]

I also respect @CareCPA's position. However, in my case, I've already lost $5000 in profit, directly and solely due to COVID. There will probably be more, and I didn't have that much to burn in the first place. So I have no qualms about claiming the $10k if I can.

Then it sounds like you're the type of business this program was meant for.

 

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[GIlman]

This is what I was thinking too, but thoughts on future planning? Meaning do you get it in case something happens and you can use that loan to bridge the gap? Torn on this myself.... I applied, but don't know If i would take the money if i got approved. The wife mentioned the exact thing you did and mentioned how it made her feel 'greedy'.

My concern is we're fine right now, but in case anything happened, am I going to kick myself for not applying for it?

That’s an understandable sentiment, just remember that whether you receive any benefit or not from this law, you will be expected to pay your “fair share” in taxes to repay the debt that was created to create this program. If there was a way to not pay taxes if your didn’t receive any benefit I would be all for it.

Otherwise, I view this just like taxes, you have a legal obligation to pay what you are required, it’s not smart to pay more than you are legally required. Whether it’s a “benefit” or a direct tax fundamentally it’s all the same. It’s all money in and out do the same pot.

 

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