Resources to navigate small business financial options
I wanted to write to you today to give you some important information that will hopefully make the next 30 to 60 days a little easier. As many of you know the government has been hard at work putting together some loans/grants to assist with the lost revenue and the expenses of small businesses. While there are many articles and resources out there the overload of information can be confusing. Hopefully we can help with the chaos and point you in the right direction.
Let’s start with the most important part of this process. Use the resources you have available to make sure you are applying for and utilizing every option you can to weather the storm. If you already have a good relationship with your bank many have become SBA 7a lenders just within the past week making them a great source of information and helping to steer you in the right direction. Reach out to your accountant for help and also if you have not filed taxes for 2019 they can help with the extension that is currently available. Now is a great time to reach out to your local small business development center for information not only with relief but with other tools they can assist with.
Here is the summary of the two SBA programs set up recently via the CARES act to help small businesses during the COVID-19 crisis. The CARES act bill itself can be found at: https://www.congress.gov/bill/
Paycheck protection program (PPP) – provides small businesses with funds which can be used primarily for payroll with some relief for interest on mortgages, rent, and utilities. This loan/grant is on a first come first serve basis so don’t delay in getting an application submitted.
For a top line overview of the PPP program, go to: https://home.treasury.gov/
Please find additional information for borrowers located at: https://home.treasury.gov/
This is a short term loan program to provide support, primarily payroll, up to $10 million. If used as agreed, the loan is forgiven at the end of the eight week loan period. Essentially it becomes a grant. It requires the request for PPP to go through an SBA 7A lender or as designated by SBA, Check with your local bank to ensure they are an approved lender. Small businesses and sole proprietorships can file applications at participating lenders as soon as April 3, 2020. The application timeline may be subject to change but is the best information we have as of today. This program, as of today, can only be applied for once. Please click the link above for application information, and a sample application the SBA has provided.
It is important to note that lenders have not yet been given guidance on the PPP program. The SBA is supposed to provide standard operating procedures for specifically how to apply and process these loans on April 3rd. For what we currently know in regards to the information that will need to be collected as a part of the loan application, please see below:
- A completed, signed, and dated application form, which includes some certifications on the business history and operations
- Documentation that shows total payroll costs for the last 12 months. This can include:
- Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
- Employee benefits including costs for vacation time, parental, family, medical, or sick leave
- Allowance for separation or dismissal
- Payments required for the provisions of group health care benefits including insurance premiums
- Payment of any retirement benefit
- State and local taxes assessed on compensation
Economic Injury Disaster Loan Program (EIDLP)
Businesses can apply today directly to the SBA for this low interest loan program. It is important to note that this loan program is not applied for through a Lender, but rather through the SBA directly. The primary purpose of this loan program is to provide businesses with operating capital for those that have experienced substantial loss of revenue due to the Coronavirus. Repayment is required, but the first payment deferred for a year, then repaid at a 3.75% fixed rate based on a 30 year amortization. The limit on assistance is $2 million per company. The SBA Economic/Disaster Assistance Program is live and can be found using the link above. Unlike last week, when the site blew up due to incredible volume, it has been operational this week. I have had several members successfully make applications.
One topic that I have received from multiple repair facilities about if they need the loan and if they should take the loan. I had a great conversation with one of them about how he views the situation that I would like to share. If you’re like most hard working small businesses you have put in your time and your taxes paid each year to both the state and federal government. This loan/grant should be treated much like a tax credit to receive a portion of what you have paid in over the years.
Now on to a few pieces of information from us here at Go Powertrain.
- Keep in mind our many financing solutions to provide your customers so they do not need to come up with the money upfront for big jobs. Even if they are not powertrain keep it in mind and with the rates dropping daily it’s never been a better time to finance.
https://go-powertrain.com/financing/
- We are open and here to help you with anything you need. We do business with many repair facilities and the amount of information we consume grows by the day. Looking for ideas on marketing, best practices, or just general information feel free to give us a call and ask
- We offer programs to help with marketing including business cards, mailers, and more. Now with a little more free time it is a great time to double down on marketing efforts.
Sincerely,
Aaron Barnhart
Owner, Go Powertrain