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HOT TOPIC [COVID-19] Forgiveable SBA Loans For Small Biz and Freelancers

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PizzaOnTheRoof

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Just a heads up, the stimulus bill includes $10 billion in grant money and loans to small businesses and self-employers.

If I read it correctly, you can get a $10k min GRANT even if you’re denied for the SBA loan.

The SBA loans max out at $10 million I think, and are FORGIVEABLE when spent on payroll or utilities.

YES, THIS IS BASICALLY FREE MONEY FOR YOUR BUSINESS.

As far as I know it’s first come first serve so hop to it:


HOW TO APPLY:
 

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1step

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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
 
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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
Your right, it's based on payroll or 1099s. I've updated the post.

HERE is the actual bill itself. I'm not an expert on this stuff just wanted to get the info out there for somebody that might need it.

I don't think the loan page is updated yet, or they will just use the same forms and program.
 

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HERE is the actual bill itself. I'm not an expert on this stuff just wanted to get the info out there for somebody that might need it.
I usually look for summary’s on stuff like this. 67 pages is a lot to digest and typically if you read 3-4 summaries in 1/10th the time you can get a good enough grasp at least on the basics.
 
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Found a video on how to apply for the loan.

And yes, it IS the disaster SBA loan program.

 

Scot

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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.
 

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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.
Did you have to submit tax returns etc.
 

aeden

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If you have US employees, contractors, or if you're an independent, this looks like a no-brainer. What I'm curious about is what will be considered in the utilities that are covered. For example, will hosting costs for online businesses in the US be considered utilities?
 

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Juan Pimentel

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Can you get it even if you’re business wasn’t affected?
 

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Nope, all they asked were 2019 income and 2019 COGS. No additional documentation.
I just read that they send you an advance of $10,000 within three days
 

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I just read that they send you an advance of $10,000 within three days
Correct. Even if you aren’t approved, you get it. And it’s forgivable if spent on salary for employees. There also are no personal guarantees or collateral requirements.
 

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Correct. Even if you aren’t approved, you get it. And it’s forgivable if spent on salary for employees. There also are no personal guarantees or collateral requirements.
If you don’t get approved for the loan The $10,000 is a grant that you can use on anything.
 

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I did it. Lets see what happens. Thought it was odd that I got the application number on the last step, but no email from them. You'd think they would have an auto responder.
 

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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
 
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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.
Yep. That’s why everyone should at least apply.

Worst case you just don’t qualify.

Hell, Joe Schmoe EBay flipper might even qualify.

No sweat to the government, it’s first come first serve.
 

MoneyDoc

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Wow you guys are lucky...

Here in Canada we just get a $40000 interest free loan if we paid between $50k-$1mill in payroll in 2019.

I don't have employees and I haven't put myself on payroll yet.
 

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Vigilante

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Wow you guys are lucky...

Here in Canada we just get a $40000 interest free loan if we paid between $50k-$1mill in payroll in 2019.

I don't have employees and I haven't put myself on payroll yet.
No cash has flowed yet from the stimulus package or these SBA loans. Time will tell.
 

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Scot

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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.
 

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The online application is really quick and lightweight. The CPA dude implied there was lots more to fill out. I assume they'll contact us for any additional info? CPA strongly implied you had to get it right the first time or you'd lose out while they were backfilling your app info.
 

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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.
 

Ted

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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 COVID-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.
 

pmaloneus

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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.

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?
 

Vigilante

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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.
 

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